Written by Claire Jim
Hong Kong (Reuters) – Country Park (HK:), once China's largest developer and now facing a liquidation lawsuit, is expected to report heavy losses when it publishes its long-awaited results on Tuesday, analysts say, as a prolonged property sector crisis weighs on sales.
Country Garden has postponed the publication of its full-year 2023 and interim fiscal 2024 financial reports after defaulting on $11 billion in offshore bonds in late 2023. As a result, its shares have been suspended from trading in Hong Kong since 2 April 2024.
The accounts will be released later on Tuesday against the backdrop of a nearly 50% contraction in property sales in China over the past three years as the industry suffers from an unprecedented debt crisis that began in 2021.
The release of delayed financial results will put the beleaguered developer on track to seek the resumption of trading from the Hong Kong Stock Exchange, possibly as soon as from Wednesday.
The publication of the delayed results and the resumption of share trading are related to Country Garden's efforts to stave off a liquidation petition filed by a creditor in a Hong Kong court in connection with non-payment of a $205 million loan.
Guangdong Province-based Country Garden said last week that it had proposed to creditors a debt restructuring that would reduce its $16.4 billion external debt by 70%, and that it had reached an “understanding” with a group of lenders.
The next liquidation session is scheduled to be held on January 20.
Widening losses
Country Garden's expected losses follow two semi-annual losses since the second half of 2022.
It recorded a net loss of 48.9 billion yuan ($6.67 billion) in the six months ending June 2023, deepening from a net loss of 6.7 billion yuan in the second half of 2022. The company's net loss for the full year of 2022 was 6.1 billion yuan, compared to a net profit of 26.8 billion yuan. 1 billion yuan in 2021
Country Garden's annual sales by value fell more than 70% last year, sliding its national ranking to No. 16 from No. 7 in 2023, according to a survey by real estate researcher CRIC, a sharp decline for a company that was once the Chinese powerhouse. Top developer in terms of sales.
“The results will definitely show losses, the question is how big they are,” he said. Raymond (NS:) Cheng, Head of China Research at CGS International. “It will book significant provisions after it defaults.”
The market will examine Country Garden's debt levels in the financial statements, as well as its assets and cash flows because the value of sales and real estate declined significantly during that period, Cheng said.
($1 = 7.3303 RMB)
