China developer Country Garden sees 2022 loss amid property market slump

HONG KONG (Reuters) -Top Chinese property developer Country Garden Holdings said on Monday it expected to swing to a net loss of up to $1.1 billion for 2022 amid a sluggish property market, though core profit, excluding nonrecurring 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 ($799 million to $1.09 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 its net debt ratio had long remained at a low level and the company maintained a good credit record.

Smaller developer Logan Group Co Ltd also 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% in the morning session, while Logan eased 4.2%. Sunac Services lost 3.7%. Their drops compared with a 1% fall in the Mainland Properties Index.

($1 = 6.8808 renminbi)