CNA – Top Chinese property developer Country Garden Holdings said yesterday it expected to post its first net loss since listing in 2007 due to a sluggish property market and flagged a worse-than-feared drop in core profit.
China’s top homebuilder by sales was the latest in a growing list of developers that have warned they would report a loss or drop in profit for 2022 after being hit last year by a debt crisis and COVID-19 lockdowns that delayed or halted home-building.
Country Garden said in a filing its estimated net loss would be between CNY5.5 billion to CNY7.5 billion (USD799 million to USD1.09 billion), down from a CNY26.8 billion profit in 2021.
It attributed the big loss to a drop in gross profit margin, a rise in provisions for impairments on property projects, and net foreign exchange losses it expected to report. “The board is of the view that the above factors which affected profit are mainly in non-cash nature,” said Country Garden, adding its net debt ratio had long remained low and the company maintained a good credit record.
It said core net profit was expected to be in the range of CNY1 billion to CNY3 billion, still positive but down sharply from CNY26.9 billion in 2021 and well below analysts’ forecasts for a core profit of around CNY9.3 billion, according to SmartEstimate.
Smaller developer Logan Group Co Ltd also said it expected to record a net loss of CNY7 billion to CNY9 billion for 2022.
Shares of Country Garden fell as much as 5.5 per cent in early trade but improved to trade down 1.8 per cent by noon, while Logan fell 3.2 per cent, underperforming a 0.3 per cent drop in the Hang Seng Mainland Properties Index.