Country Garden’s Sales Drop Most In Years Amid Wind-Up Fears

Country Garden Holdings Co. posted its biggest sales decline in at least seven years, adding to the woes of the Chinese property developer that is now facing a lawsuit seeking its liquidation.

Contracted sales for February plunged 85% from the same period a year earlier, widening from a 75% slide in January, corporate filings show. Transactions shrank 32% from the previous month.

The sales drought will exacerbate the cash crunch for Country Garden, whose crisis entered a new chapter after a Hong Kong court last month received a creditor’s petition to wind up the Guangdong-based company. Homebuyers in China are avoiding defaulted developers on concerns about their ability to complete housing projects.

Country Garden was once China’s biggest developer. Another former industry giant, China Evergrande Group, was ordered to liquidate in January, marking the largest collapse in the three-year sector downturn.

China’s housing market remains in a deep slump, even as authorities step up efforts to support the industry. The value of new-home sales from the 100 biggest real estate companies slid 60% last month from a year earlier, expanding from a 34.2% decline in January, China Real Estate Information Corp. figures showed last week.

Country Garden has been utilizing the regulator’s latest property funding program. More than 210 of its residential works were included in a financing “white list” as of Sunday, a jump from about 30 a month ago.

Chairman Yang Huiyan said Country Garden will rely on its own resources to deliver already-sold housing projects, according to a post on the company’s WeChat account. It expects to deliver 480,000 units this year, after completing 600,000 units for homebuyers across 249 cities in 2023.

Yang added that the founders and shareholders of the company never have thought of “lying flat.”

The winding-up petition will probably inject a sense of urgency into Country Garden, whose liquidity crisis shook Chinese financial markets in recent months, to expedite progress on delivering a debt restructuring plan to creditors. – Bloomberg

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