By Claire Jim
Hong Kong (Reuters) – country garden (HK: ), once China’s top developer and now facing liquidation filings, is expected to post big losses when it reports long-overdue results on Tuesday, analysts said, as a prolonged crisis in the property sector weighed on sales.
Country Garden has delayed the publication of its full 2023 and interim 2024 financial statements after defaulting on $11bn of offshore bonds at the end of 2023. As a result, its Hong Kong shares have been suspended from trading since April 2, 2024.
The reports will be released later on Tuesday amid China’s real estate sales falling nearly 50% over the past three years as the industry grapples with an unprecedented debt crisis starting in 2021.
The release of overdue financial results will put the embattled developer on course to ask for trading to resume on the Hong Kong stock exchange, possibly as early as Wednesday.
The delayed results release and resumption of stock trading are related to Country Garden’s efforts to avoid a liquidation petition filed by a creditor in a Hong Kong court related to its 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 in offshore debt by 70%, reaching an “understanding” with a group of creditors.
The next liquidation session will be held on January 20.
Expansion of losses
Country Garden’s expected loss follows two half-year losses from the second half of 2022.
It reported 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. For the full year 2022, the firm’s net loss was 6.1 billion yuan. 26.8 billion yuan net profit in 2021.
Country Garden’s annual sales fell by more than 70% in value last year, dropping its national ranking from 7th to 16th in 2023, according to a survey by property researcher CRIC, a sharp decline for a firm that once It was China. Best developer by sales.
“The results will definitely show losses, the question is how big they will be,” he said Raymond (NS:) Cheng, Head of China Research at CGS International. “He’s booking big reserves after he’s not satisfied.”
Cheng said the market will scrutinize Country Garden’s debt levels in its financial statements, as well as its assets and cash flow, as sales and property values both fell significantly during that period.
($1 = 7.3303 renminbi)