By Clare Jim
HONG KONG (Reuters) – Country garden (HK:), China's top developer and now facing a foreclosure lawsuit, is expected to report heavy losses when it publishes long-awaited results on Tuesday, analysts say, as the long-term problem of the property sector is difficult to sell.
The State Department has delayed the publication of its full year 2023 and interim financial statements for 2024 after defaulting on $11 billion of offshore bonds due in late 2023. As a result, its Hong Kong shares have been suspended from trading since April 2, 2024.
The accounts will be released later on Tuesday against a backdrop of property sales in China falling nearly 50% over the past three years as the industry recovers from an unprecedented debt crisis that began in 2021.
The release of outdated financial results will put the developer on course to seek resumption of trading on the Hong Kong Stock Exchange, possibly as soon as Wednesday.
The publication of expected results and the launch of share trading are linked to Country Garden's efforts to end a petition filed by a creditor in a Hong Kong court over the non-payment of a $205 million loan.
The Guangdong province-based state-owned company said last week it had proposed a debt restructuring that would reduce its $16.4 billion debt by 70%, and that it had reached an “understanding” with a group of creditors.
The next foreclosure hearing will be held on Jan. 20.
EXPANSION OF LOSSES
Country Garden's expected loss follows two quarterly losses since the second half of 2022.
It posted a loss of 48.9 billion yuan ($6.67 billion) in the six months ended June 2023, up from a loss of 6.7 billion yuan in the second half of 2022. 26.8 billion yuan in revenue by 2021.
The annual sales of the country's Garden fell by more than 70% last year, sending its country ranking to No. 16 from No. 7 in 2023, according to a survey by real estate researcher CRIC, a sharp decline for the former Chinese company . senior developer with sales.
“The results will show losses for sure, the question is how big they will be,” he said Raymond (NS:) Cheng, head of China research at CGS International. “It's going to book big deals after it's lost.”
Cheng said the market will scrutinize Country Garden's debt levels in its financial statements, as well as its assets and cash flows because sales and property values both fell sharply during that period.
($1 = 7.3303 renminbi)