China developer Country Garden sees $1.5 billion loss for 2022 amid property market slump

Top Chinese developer Country Garden Holdings said it expected to swing to a loss for 2022 amid a sluggish property market. PHOTO: BLOOMBERG

HONG KONG – Top Chinese property developer Country Garden Holdings said on Monday it expected to swing to a net loss of up to US$1.1 billion (S$1.5 billion) for 2022 amid a sluggish property market, although core profit, excluding non-recurring items, would remain positive.

The company, which has the largest sales in the industry, said its loss was mainly due to a drop in gross profit margin, a rise in provision for impairment for property projects, and net foreign exchange losses it expected to report.

The estimated loss attributable to shareholders, ranging from 5.5 billion yuan to 7.5 billion yuan (S$1.1 billion to S$1.5 billion) for 2022, compared with a 26.8 billion yuan profit in 2021, Country Garden said in a filing to the Hong Kong bourse.

Core net profit is expected to be in the range of 1 billion yuan to 3 billion yuan, compared with 26.9 billion yuan in 2021, as provision for impairment for property projects and foreign exchange losses also hit results.

“The board is of the view that the above factors which affected profit are mainly in non-cash nature,” said Country Garden, adding that its net debt ratio had long remained at a low level and that the company maintained a good credit record.

Smaller developer Logan Group said it expected to record a net loss of 7 billion yuan to 9 billion yuan for 2022 amid project delays and a drop in income on the back of the impact of Covid-19.

Sunac Services, the property management arm of major developer Sunac China, said on Sunday it expected a net loss of up to 500 million yuan due to significant increases in the impairment provision for money due from related parties.

Shares of Country Garden dropped as much as 5.5 per cent in the morning session, while Logan eased 4.2 per cent. Sunac Services lost 3.7 per cent. Their drops compared with a 1 per cent fall in the Hang Seng Mainland Properties Index. REUTERS

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