According to Liberty Times, leading property developer Garden Holdings Co is no exception to China’s growing real estate crisis.
The company said its profit in the first six months of the year fell 96% year-on-year. This is the company’s most significant drop since its shares went public in 2007.
Bloomberg cited a filing by the Foshan-based company reporting that in the first six months of this year, Garden Holdings’ unaudited net profit rose to 612 million yuan ($88 million). Also, its core net profit dropped 68%.
Country Garden’s Shares decreased by 3.9% on August 30 afternoon in Hong Kong trading. This will extend this year’s decline to 64%.
Besides, most of Country Garden’s offshore bonds are below 50 cents on the dollar.
Unlike other property developers, Country Garden focuses on a lower market segment, so this developer is more vulnerable.
Country Garden’s customers are primarily low-income people, such as migrant workers. These are the house buyers most affected by the economic downturn in China.
Bloomberg quoted Kristy Hung, BI real estate analyst, as saying, “Country Garden’s 96% drop in 1H EPS [Earnings Per Share] to 0.03 yuan a share significantly weakens its earnings outlook and could be a stumbling block to the developer’s fundraising via equity and debt. Its focus on low-tier cities might extend its gross-margin slump.”