Country Garden’s past results show sharp losses amid sector sales slump By Reuters

Written by Clare Jim

HONG KONG (Reuters) – National Garden (HK:), once China’s leading developer and now facing bankruptcy proceedings, is expected to report a sharp loss when it announces long-term results on Tuesday, analysts say, as the long-term crisis in the property sector is overshadowed by sales.

Country Garden has delayed the release of its full-year financial statements for 2023 and 2024 after paying off $11 billion of offshore bonds by the end of 2023. As a result, its shares of Hong Kong have been suspended from business since April 2, 2024.

The accounts will be released later on Tuesday against a backdrop of China’s stock market slump of nearly 50% over the past three years as the industry reels from an unprecedented debt crisis that began in 2021.

The release of late financial results will put the troubled developer on the path to a possible listing on the Hong Kong Stock Exchange, possibly as early as Wednesday.

The announcement of the delayed results and the resumption of stock trading are linked to Country Garden’s efforts to block a bankruptcy petition filed by a creditor in a Hong Kong court related to non-payment of a $205 million loan.

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

The next closing hearing will be held on January 20.

INCREASE LOSS

Country Garden’s expected losses follow two annual 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 loss of 6.7 billion yuan in the first half of the second of 2022. The company’s full-year loss was 6.1 billion yuan, against a net profit of 26.8 billion yuan in 2021.

Annual Country Garden sales by value fell more than 70% last year, dropping the country’s ranking to No. 16 from No. top producer by sales.

“The results will show losses of course, the question is how big they will be,” he said Raymond (NS:) Cheng, head of China research at CGS International. “It would save great deals after it was destroyed.”

Cheng said the market will examine the country’s debt situation in the financial statements, as well as its assets and cash flow because the price of sales and assets have fallen significantly during that period.

($1 = 7.3303 lots)