Country Garden’s delayed results show heavy losses amid falling sales in the Reuters sector

From Clare Jim

HONG KONG (Reuters) – Country garden (HK:), once China’s leading developer and now facing a liquidation suit, is expected to report heavy losses when it reports long-delayed results on Tuesday, analysts said, as a prolonged crisis in the property sector weighed on sales.

Country Garden delayed the publication of its full-year 2023 financial reports and 2024 interim financial reports after defaulting on $11 billion in offshore bonds due in late 2023. As a result, trading in its Hong Kong shares was halted from April 2, 2024.

The accounts will be released later on Tuesday against the backdrop of property sales in China that have shrunk by nearly 50% over the past three years as the industry reeled from an unprecedented debt crisis that began in 2021.

The release of delayed financial results will prompt the embattled developer to seek resumption of trading on the Hong Kong stock exchange, possibly as early as Wednesday.

The delayed results announcement and resumption of stock trading are linked to Country Garden’s efforts to reject a creditor’s liquidation request filed in a Hong Kong court over default on a $205 million loan.

Guangdong province-based Country Garden said last week it had proposed a debt restructuring to creditors that would reduce its $16.4 billion offshore debt by 70%, and had reached an “agreement” with a group of lenders.

The next liquidation hearing will be held on January 20.

EXPANSION OF LOSSES

Country Garden’s expected losses follow two half-year losses since the second half of 2022.

It posted a net loss of 48.9 billion yuan ($6.67 billion) in the six months ended June 2023, widening from a net loss of 6.7 billion yuan in the second half of 2022. The company’s full-year net loss for 2022 was 6.1 billion yuan, compared to 26.8 billion yuan of net profit in 2021.

Country Garden’s annual sales by value fell by more than 70% last year, dropping its national ranking to 16th place from 7th place in 2023, according to property researcher CRIC, a sharp decline for the once-Chinese company top developer by sales.

“The results will certainly show the losses, the only question is how much they will be,” he said Raymond (NS:) Cheng, Head of China Research at CGS International. “It would book big provisions after going out of default.”

Cheng said the market will scrutinize Country Garden’s debt levels in its financial statements, as well as its assets and cash flow because sales and asset values ​​have fallen significantly over the period.

($1 = 7.3303 renminbi)