(Bloomberg) -- More than a dozen Chinese property firms face the risk of delisting from the country’s stock exchange, an event that will shut an important funding channel for the beleaguered industry.

As of June 1, shares of 10 developers have closed below one yuan in recent sessions, according to BOC International China Co. analysts including Xia Yifeng. Mainland exchanges stipulate that firms are booted if their shares close below the threshold for 20 consecutive sessions. Two more are struggling to avoid breaching that line, the broker says.  

The industry is still in a dire state even as the government has ramped up support to facilitate funding and boost property demand since last year. Sichuan Languang Development Co., a private builder of residential buildings, has delisted from the Shanghai Stock Exchange on Tuesday, the first casualty since CRED Holdings Co. and Lvjing Holding Co. were removed in June 2022, according to data compiled by Bloomberg.

At least three more firms also face a forced exit due to their deteriorating finances, according to BOC analysts. A delisting condition is triggered if a company’s audited annual net profit turns negative and operating revenue is less than 100 million yuan ($14 million).

Among the firms facing delisting is Yango Group Co., whose shares have closed below one yuan for 16 sessions. At its peak in 2015, the stock traded above 11 yuan. 

The number of builders at risk is a large increase from the past, as property firms accounted for just 5% of nearly 200 firms that have been removed the bourses between 2001 through end-May 2023, according to BOC. 

A Bloomberg stock gauge of Chinese developers jumped more than 5% Tuesday amid policy support bets. Bloomberg News reported last week that regulators are considering reducing the down payment in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases. The index has lost about 30% since a January high. 

Some of the larger developers are trying to avoid becoming a casualty. Jinke Properties Group Co., whose shares fell below the threshold in late May, has since successfully boosted the price by unveiling a share purchase plan and announcing cooperation with a state-owned enterprise. 

State media Securities Daily sought to calm investors. While delistings can exacerbate concerns about the industry, “they should be viewed with rationality and seen as a normal phenomenon under the current registration-based IPO system,” according to a commentary on Tuesday. “Delistings should help clear risks in the industry and the firms still have a chance to win back market trust,” it added. 

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