China real estate stocks are facing continued pressure today due to a significant developer, Country Garden Holdings Co., painting a bleaker picture for the struggling sector. The company has announced an anticipated loss of $7.6 billion in the first half of the year. In a filing with the Hong Kong exchange on Thursday night, the country’s sixth-largest construction firm stated that it expects a net loss ranging from 45 billion to 55 billion yuan ($6.2 billion to $7.6 billion), a stark contrast to its earnings of 1.91 billion yuan during the same period in 2022. Notably, the company had only indicated a projected loss for the initial half of 2023 on July 31. Furthermore, the company’s attributable sales for the first seven months of this year plummeted by 35% to 140.8 billion yuan, marking a significant decline from its position as the country’s top sales performer over the past few years.
This setback follows the company’s failure to make coupon payments this week. Consequently, Moody’s downgraded Country Garden’s credit rating to Caa1 from B1 late Thursday, reflecting heightened concerns about refinancing risks. A Caa1 rating signifies an exceptionally high credit risk, according to the rating agency’s standards. In the meantime, Yicai has revealed that the company is making preparations for debt restructuring.
In response, Bloomberg has drawn attention to China’s securities watchdog, which has scheduled a meeting on Friday to address the real estate market. This move underscores the increasing urgency among regulatory bodies to tackle the deepening property crisis.