Country Garden “deeply remorseful” for record loss for first half, warned of default risks
Country Garden “deeply remorseful” for record loss for first half, warned of default risks

Country Garden “deeply remorseful” for record loss for first half, warned of default risks

 

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Embattled property developer Country Garden said that its net loss attributable to shareholder of the listed company was about 48.93 billion yuan in the first half of the year, compared to a net profit of 612 million yuan a year earlier and a 6.7 billion yuan net loss in the second half of 2022.

Revenue reached about 226.3 billion yuan, rising by 40% from a year earlier, but its cost of sales surged 73%, while total liability were unchanged from the end of 2022 at 1.4 trillion yuan.

Its total interest-bearing debts decreased to 257.9 billion yuan, of which 108.7 billion yuan would be due within 12 months, while it had total cash of 101.1 billion yuan.

While the company has been making great efforts to arrange repayments for onshore and offshore debt’s principals and interests, due to continuously worsening property sales and weak refinancing environment, the company’s available fund on book has been declining and is currently facing periodic liquidity stress, it said.

China’s largest private property developer warned on Wednesday of default risks if its financial performance continues to deteriorate, and said it “felt deeply remorseful” for its record loss in the first half.

“If the financial performance of the group continues to deteriorate in the future, the group might not be able to fulfil the financial covenants of these borrowings, which may result in default in these borrowings and cross-default in certain other borrowings,” the developer said in a filing.

Tt added it will consider debt management measures to cope with the remaining overseas debts coming due through the end of June next year, including negotiations with onshore banks on renewing and extending existing loans.

“The company feels deeply remorseful for the unsatisfactory performance,” it said.

Early on Wednesday, Country Garden said it would issue HK$270 million ($34.4 million) worth of new shares to an investment unit of Hong Kong-based manufacturer Kingboard Holdings, which would reduce its outstanding loan to the unit to HK$1.6 billion.

The company said the issue would help “preserve cash resources… and reduce the gearing level.” The new shares, representing 1.25% of the enlarged share capital, would be issued at HK$0.77 each, a 15.4% discount from Tuesday’s closing price.

The results come as Chinese authorities take steps to revive the troubled property market, which accounts for roughly a quarter of the economy. The sector’s woes have raised concerns that it could have a destabilising impact on an economy already weakened by rising unemployment and falling demand.

The property sector has seen many company defaults since late-2021, resulting in uncompleted homes and unpaid suppliers and creditors.