Country Garden’s estimated H1 loss far exceeded expectation – UBS

 

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Country Garden has issued a profit warning, expecting an interim net loss of 45 – 55 billion yuan, compared with a profit of about 1.9 billion yuan in the same period last year.

The interim loss has far exceeded the broker’s original forecast of a full-year net loss of 6.29 billion yuan, and the market consensus of a full-year net profit of 6.21 billion yuan, UBS said in a note.

Given the recent volatility of Country Garden’s bond and stock prices, UBS believed that the market is not surprised by the profit warning, however, inventory impairment and the recent drop in real estate prices have had a negative impact on other developers, including state-owned ones.

UBS rated Country Garden at Sell, with a target price of HK$1.2.