Industry insiders said that Country Garden, the Chinese property giant that suspended 11 domestic bonds on Saturday, won’t become “the second Evergrande,” stressing that the risks of Country Garden and other developers are controllable, as new policies are being introduced to boost confidence in the property industry.
On Saturday evening, Country Garden made several announcements on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, saying that its 11 domestic bonds would be suspended from the opening of the market on Monday, and the resumption time would be determined separately.
The balance of the 11 bonds was about 15.702 billion yuan ($2.18 billion), according to the announcements.
Country Garden said that it will hold a meeting of bondholders soon and will also consider debt management measures.
The real estate giant on Thursday issued a profit warning on the Hong Kong Stock Exchange and said that its first-half net loss would be 45 billion yuan to 55 billion yuan.
“The net loss is mainly due to the impact of declining sales in the real estate industry, resulting in a decrease in the gross margin of real estate business transactions and an increase in the impairment of property projects. The losses are also due to foreign exchange fluctuations,” said Country Garden in the announcements.
China’s property sales declined in the first half of 2023, with the total area sold decreasing by 5.3 percent year-on-year, according to data released by National Bureau of Statistics.
Analysts believed that Country Garden will not be “the second Evergrande.”
“The risks [for Country Garden] are controllable and optimized policies are being introduced to improve the development of the industry and boost confidence,” Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times.
“Boosting sales is the most fundamental means to solve the problem of housing enterprises and their profits,” said Yan.
Despite the downturn in the property sales market, Country Garden said that it has always been full of confidence in the prospects of China’s economy, and the real estate industry will eventually return to healthy and stable development.
A top meeting held on July 24 called for concrete efforts to prevent and defuse risks in key areas and adjust and optimize real estate policies promptly in response to the new situation, where “major changes have taken place in the relationship between supply and demand in China’s real estate market,” the Xinhua News Agency reported.
“As long as macroeconomic and real estate adjustments are in place, the resolution of problems in the real estate sector will become easier. The whole economic situation needs to recover and improve,” said Yan.
In the medium and long term, China’s real estate market is shifting from the pattern of high-speed development to stable development, industry insiders noted.
In terms of “ensuring timely delivery of pre-sale housing,” Country Garden is a model for domestic real estate enterprises, which is different from Evergrande or other housing companies, an industry source told the Global Times on Sunday on condition of anonymity.
“Country Garden’s property projects span almost every province and city in the country. The scope is too wide and the number of units that are to be delivered is huge, which exacerbates Country Garden’s financial pressure,” the source said.
Public data showed that in 2022, Country Garden delivered 700,000 housing units, accounting for 17.5 percent of the top 50 housing enterprises in terms of delivery volume.
In the first half of 2023, Country Garden delivered 278,000 units, which ranked first among all real estate enterprises, according to data from the EH Consulting. The company said in a notice that it also plans to deliver nearly 700,000 units in 2023.
(Global Times)
