Country Garden’s Fengming Haishang residential development in Shanghai, China, on July 12, 2022.
Country Garden Holdings—controlled by billionaire Yang Huiyan and her family—said Thursday it expects first-half profits to tumble as much as 70%, adding to signs of the deepening crisis in China’s property market.
Core net profit in the six months ended June 30 may fall to between 4.5 billion yuan ($661 million) to 5 billion yuan, compared with 15.2 billion yuan a year ago, the country’s largest home builder said in a regulatory filing on Thursday.
Country Garden blamed the profit slump to the tough business environment faced by the real estate industry as China continues to impose Covid-19 pandemic restrictions to achieve its zero-Covid policy. As a result of prevailing pandemic restrictions, sales and construction progress at the company’s projects have been slow, the company said.
Amid a worsening property downturn, Country Garden said it has been prudent in increasing provisions for the impairment of value at some of its projects. Despite the challenging business environment, the company said, “The group is in good condition with sufficient cash available and cash flow remains stable.”
Debt woes at some of the country’s major developers including Evergrande, Kaisa and Sunac has led to a suspension of construction of pre-sold homes across more than 90 Chinese cities. Fearing that their homes may never be completed, many homebuyers have been boycotting their mortgage payments—which has put as much as 2.4 trillion yuan of bank loans at risk, according to S&P Global Ratings.
The crisis has dragged shares of Chinese property developers lower in the past year, with Country Garden shares slumping more than 70%. The stock’s decline has pushed Yang’s net worth down to $9.7 billion from its all-time peak last year at $29.6 billion, Forbes data show. Bulk of Yang’s wealth comes from the majority stake transferred to her in 2007 by her father Yeung Kwok Yeung, cofounder of the company that has expanded rapidly in the past decades amid China’s housing boom.