In news on Hong Kong stocks, the woes of Country Garden Holdings Co. (HK:2007) are getting deeper as the beleaguered Chinese property developer reported a massive slump in its February sales. The company’s contracted sales (preliminary) fell 85% year-over-year to RMB3.72 billion. The decline was wider than the 75% drop registered in January and was the largest in at least seven years. The news shook investor confidence, dragging down Country Garden shares by 7.3% to a new all-time low of HK$0.55 this morning.
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Country Garden witnessed a 32% decline in transactions as compared to January. The falling sales will further worsen Country Garden’s liquidity challenges while it faces a winding down petition from a creditor. The liquidation petition could act as a catalyst for Country Garden as management may consider other alternatives to deliver a debt restructuring plan to its creditors.
More About Country Garden’s Current Position
Country Garden, once China’s largest property developer, has seen its losses surmount as home buyers are shunning developers with liquidity issues. Country Garden was one of the first home builders to hit the panic button during the COVID-19 pandemic. The company faced a huge liquidity crisis as inventory piled up and home buying fell to historic lows owing to macro headwinds.
While challenges remain, Chairman Yang Huiyan stated that Country Garden will continue to use its existing finances to deliver the already-sold housing projects. The company plans to deliver 480,000 units in 2024, lower than the 600,000 units completed in 2023.
China’s housing market sees no respite despite the government’s measures to boost the industry. The Chinese economy is witnessing one of the slowest recoveries in the post-COVID era, impacting every sector’s revival in the mainland. As per stats from the China Real Estate Information Corp., the value of new home sales from the 100 biggest real estate companies plunged 60% in February compared to last year, worse than January’s fall of 34.2%.
Owing to the slew of challenges, Country Garden’s share price has lost over 75% of its value in the past year.
