Chinese’s Country Garden Holdings’ shares declined on Thursday in Hong Kong. This comes after the Chinese property developer warned of a big drop in first-half net profit.
Shares was down 4.4 percent to HK$2.41, taking year-to-date losses to 65 percent.
The developer stated it expected to post net profit between 200 million yuan and CNY1.00 billion ($29.5 million-$147.5 million) for the first six months. It also compared with CNY15.00 billion net profit in the year-earlier period. Core net profit is prediction at CNY4.50 billion-CNY5.00 billion, declining from CNY15.20 billion a year earlier.
Country Garden caused the expected drop in net profit to a decrease in property sales amid a market downturn and a slowdown in construction. The company also rose its impairment provision for property projects. The company also pointed it was hurt by a weaker profit margin and expected foreign-exchange losses.
“The most of these factors were noncash in nature and its operation was in good condition with sufficient cash available and cash flow remained stable.” The developer added.
Fitch Ratings this week downgraded the private developer’s credit rating to BB+ from BBB-. This reflect a weakening in Country Garden’s financial flexibility due to challenges in China’s property sector.
“The declining sales and working capital commitments weighed on the company’s cash generation.” The ratings firm concluded.
