By Ambar Warrick
Investing.com– Chinese real estate firm Country Garden Holdings Company Ltd (HK:2007) said on Monday that it expects to log a loss in 2022, capping off a difficult year for the property sector as an extended cash crunch was worsened by disruptions stemming from the COVID-19 pandemic.
The firm, which is listed on the Hong Kong stock exchange, said it expects a net loss attributable to shareholders of between 5.5 billion yuan and 7.5 billion yuan ($1= 6.9063 yuan) for the year to December 31, 2022, down from a profit attributable of 26.8 billion yuan a year ago.
The swing to a loss comes as Country Garden logged worsening margins on real estate sales, as well as increased provisions for impairment in property projects over the past year, amid a continued downturn in China’s real estate market.
The space makes up for around a quarter of China’s GDP, and has faced a persistent cash shortage over the past two years, which, coupled with a string of COVID-related lockdowns, disrupted construction activity.
Recent government data also showed that the sector was among the biggest drags on China’s economy through 2022.
This saw the government roll out a string of spending measures to support the sector. China also recently loosened laws allowing onshore share issuances by real estate companies, a trend it had banned for over a decade.
Government support, coupled with the lifting of anti-COVID measures earlier this year, is expected to help spur a recovery in the real estate sector this year. But the government warned of persistent risks, and said it will promote a more stable development in the sector this year.
Country Garden, which is one of the biggest issuers of offshore debt among Chinese real estate companies, said that its operations remained stable despite a weak environment, and that it was still committed to completing its deliveries.
The firm also said it has a comprehensive credit line of over 300 billion yuan.
The property giant recently saw major changes in its top executives, after its founder Yeung Kwok-keung resigned as Chairman. Yeung was succeeded by his 41-year-old daughter Yang Huiyan.