Country Garden Stock Resumes Trading After Nine-Month Halt
Monday, Jan 20, 2025 8:55 pm ET
2min read After a nine-month hiatus, Country Garden Holdings Co Ltd (02007.HK) shares resumed trading on Tuesday, following the company's delayed publication of its 2023 full-year and 2024 interim financial reports. The Hong Kong Stock Exchange suspended the stock from trading on April 2, 2024, pending the release of these overdue financial statements.
Country Garden, once China's top property developer, has been grappling with financial difficulties and a liquidation lawsuit filed by a creditor in a Hong Kong court. The company defaulted on $11 billion of offshore bonds in late 2023, exacerbating its debt crisis. In an effort to restructure its debt and avoid liquidation, Country Garden has proposed a plan to cut its offshore debt worth $16.4 billion by 70% and has reached an "understanding" with a lender group.
The Hong Kong High Court adjourned the hearing of the liquidation petition until May 26, 2025, giving the company more time to finalize its debt restructuring plan. Country Garden's lawyer told the court on Monday that the company expects to reach terms with creditors next month regarding the restructuring of its offshore debt.
Country Garden's shares were set to open at HK$0.500, compared with the last trading price of HK$0.485 before the suspension. The company's stock price has been volatile in recent months, reflecting the uncertainty surrounding its financial situation and the ongoing property sector downturn in China.
The property sector downturn has significantly impacted Country Garden's financial performance, with the company reporting consecutive losses since the second half of 2022. In the six months ended June 2023, Country Garden recorded a net loss of 48.9 billion yuan ($6.67 billion), deepening from a 6.7 billion yuan net loss in the second half of 2022. The firm's 2022 full-year net loss was 6.1 billion yuan, compared to a 26.8 billion yuan net profit in 2021.
Country Garden's annual sales by value dropped more than 70% last year, sending its national ranking down to No. 16 from No. 7 in 2023, according to a survey by real estate researcher CRIC. The company still has 200,000 apartments yet to complete construction, with 3,059 projects under development across the country as of June 2024.
Country Garden's financial struggles and the property sector downturn have raised concerns about the company's ability to repay its debts and continue operating. However, the company's efforts to restructure its debt and the resumption of its shares trading indicate that it is taking steps to address its financial issues and avoid liquidation.
Investors should closely monitor Country Garden's financial performance and the progress of its debt restructuring plan. The company's ability to successfully navigate the property sector downturn and restructure its debt will be crucial in determining its long-term prospects.
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