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Business Times
4 days ago
- Business
- Business Times
Country Garden's May sales drop 28% with no revival in sight
[BEIJING] Country Garden Holdings' sales slide intensified in May, with the developer faring worse than the broader China housing sector. The Foshan-based company, once China's largest property firm, reported monthly sales that dropped 28 per cent from a year earlier to about 3.1 billion yuan (S$555.03 million), Bloomberg calculations based on filings from Friday show. The decline was from an already low base, and was much steeper than the 8.6 per cent drop in new home sales posted by the country's top 100 developers. Falling consumer prices in China are eroding corporate profits and employee income, leading to suppressed demand for home purchases, just as the effects of a stimulus blitz last September start to wear off. Buyers remain concerned about developers' ability to finish projects on time, leading new-home sales to drop since March after a brief period of stabilising. Country Garden has been counting on a turnaround in sales as the 33–year-old developer continues lengthy restructuring talks more than a year after defaulting on its debt. Yet its efforts to win backing for a US$14.1 billion offshore restructuring are running into resistance after a key group of banks said failure to accept some of their demands would be a 'deal breaker,' according to a court hearing last month. The builder needs support from three-quarters of debt holders in two individual groups – bank lenders and bondholders. It has said that it has backing from holders of 70 per cent of bonds, but even if it gets more from that class, it still needs bank creditors to get on board to pass the plan through a 'scheme of arrangement' procedure. It has been given a few months' reprieve from its liquidation petition hearing, with the next one set for Aug 11. The builder said it has seen stabilisation signs in a number of cities, according to a statement citing a May management meeting. But analysts remain concerned. Country Garden's contracted sales could face 'a protracted contraction on waning buyer sentiment in China's low-tier cities,' Bloomberg Intelligence analysts Kristy Hung and Monica Si wrote in a May report. BLOOMBERG
Business Times
29-04-2025
- Business
- Business Times
China Vanke's quarterly loss widens to 6.25 billion yuan after overhaul
[NEW YORK] China Vanke's first-quarter loss widened, underscoring the property developer's challenges even after the government in its hometown of Shenzhen stepped in to take control of operations. The company reported a net loss of 6.25 billion yuan (S$1.1 billion) in the three months ended in March, steepening from a 362 million yuan loss a year earlier, according to a Hong Kong exchange filing on Tuesday (Apr 29). The loss stemmed mainly from declines in home settlements and gross margins, Vanke said in the filing. Margins dropped to 6.1 per cent from about 10 per cent last year, according to Bloomberg calculations on reported figures. As part of a government-led overhaul in January, Vanke's two top executives stepped down and an official from Shenzhen Metro Group, its largest state shareholder, took over as chair. The loss followed significant write-offs in the final quarter last year. Bloomberg Intelligence (BI) said Vanke's contracted sales risk dropping 30 per cent this year due to weakening buyer confidence and a shrinking supply pipeline, according to a note earlier this month. 'This could result in a 74 billion yuan shortfall in its sales proceeds this year versus last year,' Kristy Hung, a property analyst at BI, wrote in the note. 'A deepening cash crunch raises the stakes in any rescue.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Other key figures: Revenue declined 38 per cent to 38 billion yuan Total cash slipped to 75.5 billion yuan from 88.2 billion yuan at end-2024 Vanke's sold but unbuilt inventory was worth about 219 billion yuan at the end of March Liquidity support Shenzhen Metro plans to lend Vanke 3.3 billion yuan to help it repay bonds in the open market. The loan, with a three-year term, charges a floating rate that stands at 2.34 per cent as at Tuesday. The developer also plans to sell some treasury shares to replenish liquidity. Vanke has 26.3 billion yuan of onshore and offshore bonds maturing this year, Bloomberg-compiled data showed. 'This year should remain tough for Vanke's earnings due to subdued profitability of presold projects in prior years and increased asset impairments,' said Jeff Zhang, an analyst at Morningstar. 'However, we expect a bottom-line turnaround in 2026 as the gross margins of projects acquired since 2022 have improved materially.' BLOOMBERG
