2023-08-11 12:28:48
Country Garden, which was the largest real estate developer in China and controlled by the richest woman in the Asian giant, Yang Huiyan, has warned that it expects to record losses of between 45,000 and 55,000 million yuan (between 5,675 and 6,937 million euros) in the first half of 2023, deepening the collapse of its listing on the Hong Kong Stock Exchange, where the company’s shares closed at record lows, with a fall of 5.77%.
In a statement to the market, Country Garden has attributed the expected losses to the decrease in the gross profit margin of the real estate business and the increase in the impairment of real estate projects as a result of the drop in sales, as well as the loss related to exchange rate fluctuations.
In this sense, the promoter has reported that in the first six months of 2023 reached about sales of 140.8 billion yuan (17,756 million euros), which represents a 35% year-on-year decline and a drop of 61% when compared to the company’s revenues in the same period of 2021.
Likewise, in the month of July, Country Garden registered a turnover of 12,100 million yuan (1,526 million euros), which represents the fourth consecutive month of year-on-year revenue declineswith a decline of 60% compared to July last year and 78% compared to two years ago.
In 2022 and the first half of 2023, Country Garden, together with its joint ventures and associates, delivered approximately 700,000 and 278,000 property units, respectively. A total of almost 700,000 units are expected to be delivered in the whole of 2023.
“Since 2021, the sector has entered a period of unprecedented difficulties with multiple unfavorable factors, which has resulted in serious problems for sales and financing in the market,” explained the company, which does shake again the Chinese real estate sector barely two years after the start of the problems of another colossus like Evergrande.
Earlier this week, Country Garden shares already plunged more than 10% after various reports indicated that the company had defaulted on two installments of its debt bonds over the past weekend.
In the session this Friday, the promoter’s shares closed at 0.98 Hong Kong dollars, their lowest level since they began trading, with a fall of 5.77%, which came to exceed 14% during some moments of the year. day. So far this year, Country Garden has lost 63% in value.
Country Garden tries to recover without state bailout
Faced with such an “extremely difficult” situation in the sector, the company has highlighted its “self-rescue” efforts to ensure, first of all, cash flows with the goal of minimizing costs and maximizing value.
In this sense, to minimize expenses, Country Garden has undertaken strict control of ineffective production capacity to reduce non-essential operating expenses, in addition to reinforcing cost control and simplifying its organizational structure, including lowering salaries, ” with top management at the helm”.
“Although the company has spared no effort in self-rescue, the market has not yet recovered, the absolute scale of the industry has decreased, and the capital market needs time to regain its confidence,” the company acknowledged, assuming that the pressure on its operating “has increased”, resulting in a relatively significant loss in the first half of 2023.
In particular, due to the recent deteriorating sales and refinancing environment, Country Garden’s available funds “have been reduced”, resulting in liquidity pressure, which management “has given extensive thought” to, after that the forecasts regarding the depth and intensity of the current adjustment cycle “were insufficient”.
Despite these difficulties, the promoter has assured that “it will adhere to its responsibilities” and will spare no effort in the self-rescue, as well as taking effective measures to reverse the situation.
In this way, it will spare no efforts to guarantee the deliveries and operation of projects throughout the country, strictly controlling funds to meet its commitment to the owners, while seeking to resolve liquidity pressure by communicating with all interested parties and considering the adoption of various debt management measures to safeguard the long-term development of the company, so as to preserve value for all parties and safeguard their interests.
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