The property management subsidiary of the indebted China developer Country Garden, the so-called Country Garden Services, recorded a profit of around 292 million yuan (40 million dollars, 37 million euros), which means a decrease of 85% with Over the previous year.
In the income statement that it sent today to the Hong Kong Stock Exchange – where it is listed -, the company also noted that its turnover grew by 3% year-on-year to approximately 42,512 million yuan (5,881 million dollars, 5,429 million euros).
Despite the collapse in profits, which were even below what analysts expected, the company announced a payment of about 0.29 yuan (0.04 dollars, 0.037 euros) per share for the sum of an ordinary dividend and a special one “as a sign of appreciation to all shareholders for their continued support and trust in the company.”
This, according to Bloomberg, will mean that the president of Country Garden and former leader of the table of richest women in China, Yang Huiyan, will receive about 22 million dollars, while a family foundation to which she transferred more than half of her Participation in July will pocket another $27.5 million.
The parent company, which was China’s number one developer between 2017 and 2022, is expected to present its 2023 results tomorrow. Country Garden defaulted on its offshore bonds in October and is negotiating a restructuring n of its debt, although some local media pointed out this month that the company had defaulted for the first time with its Chinese bondholders (‘onshore’), to whom until now it had respected all their payments, denominated in yuan.
Liquidation demand
At the end of February, a Country Garden creditor presented a liquidation petition before the Hong Kong Justice, opening a process whose first hearing is set for May 17, although the developer assured that the amount owed to the plaintiff (about $204 million) It is “a very small proportion” of its offshore liabilities and will not affect its operations or restructuring negotiations.
A month earlier, the Hong Kong Justice had ordered the liquidation of another of the big names in the Chinese real estate crisis, Evergrande, in favor of its foreign creditors, a ruling that opened a long and uncertain process due to the doubt of whether it will be recognized in the Mainland China, where most of its assets are, as the former British colony’s judicial system is separate from China’s by virtue of its semi-autonomous status.
The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers that had accumulated a high level of debt, among which Evergrande stood out, with a pass price of 330 billion of dollars.
In recent months, given the situation, the Government announced various support measures, with state banks also opening multimillion-dollar lines of credit to various promoters, to which the completion of projects sold off-plan was marked as a priority, an issue that Beijing is concerned about its implications for social stability, since housing is one of the main investment vehicles for Chinese families.
However, the market is not responding: Commercial sales measured by floor area plummeted 24.3% in 2022 and another 8.5% in 2023, while new home prices fell in December at their fastest pace in almost nine years. . .
In the case of Country Garden, the company recently revealed that its sales recorded a year-on-year drop of 85% in February, the largest decline in at least five years and a figure that places the sales volume at one tenth of the registered monthly average. . in the last four exercises.
