Country Garden Holdings Co. expects to report a multibillion-dollar loss for the first half of this year, as the Chinese developer provided more specifics to its recent forecast that helped fuel stock and bond declines.
(Bloomberg) — Country Garden Holdings Co. expects to report a multibillion-dollar loss for the first half of this year, as the Chinese developer provided more specifics to its recent forecast that helped fuel stock and bond declines.
The country’s sixth-largest builder said in a Hong Kong exchange filing Thursday night it anticipates posting a net loss of 45 billion to 55 billion yuan ($6.2 billion to $7.6 billion), compared with earnings of 1.91 billion yuan in the first half of 2022. The company on July 31 only said it expected a loss for the opening half of 2023.
For the first seven months of this year, attributable sales fell 35% to 140.8 billion yuan, Country Garden said Thursday. It had been the country’s biggest developer by sales the past several years.
“Due to the recent deterioration of sales and refinancing environment, the available funds in the book of the company have been continuously reduced, resulting in a phased liquidity pressure,” Country Garden said. The firm earlier this week missed two dollar bond interest payments, starting a 30-day grace period.
The builder is one of the few major Chinese developers yet to default, and a failure to pay its debts would pummel fragile investor sentiment just as Beijing seeks to revive the troubled property market.
Country Garden’s filing didn’t address those coupons, but did say it “will communicate with all stakeholders and consider adopting various debt management measures to safeguard the company’s long-term development in the future, so as to preserve value for all stakeholders and safeguard their interests.”
The firm’s dollar bonds plunged 59% the past month, according to prices compiled by Bloomberg, and shares have fallen 30% as worries about the builder’s debt-repayment abilities surged.
Earlier Thursday, Moody’s Investors Service downgraded the developer by three notches to Caa1, noting “heightened liquidity and refinancing risks in view of its deteriorated liquidity and financial flexibility, sizable refinancing needs and still-constrained access to funding.”
Country Garden said it, together with joint ventures and associates, deliveries nearly 278,000 units in the first half of this year. The builder is forecasting the total will reach nearly 700,000 for all of 2023, matching the level reached in 2022.
“The company will spare no effort to ensure delivery,” it said, adding it “will effectively ensure the operation of projects nationwide and complete the tasks of property delivery.”
(Updates with more from the filing in the sixth, ninth and 10th paragraphs.)
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