Country Garden, one of China’s largest real estate developers, is currently facing significant financial difficulties and market scrutiny. The company’s stock price hit a record low on August 11, plummeting by 14.42%. It closed at HK$0.98 per share, falling below HK$1 per share and becoming a “penny stock” for the first time.
In response to the worsening situation, Country Garden issued a letter of apology from the management, signed by the Chairman of the Board of Directors, Yang Huiyan, and President Mo Bin. The letter acknowledged that the company had issued a profit warning and inside information announcement the day before, stating that it is expected to incur significant losses in the first half of 2023 due to the adverse sales and refinancing environment. It also admitted to facing liquidity pressure.
The letter of apology expressed sincere apologies to customers, investors, and partners, and requested their understanding and support during this difficult time. It emphasized the company’s commitment to turning the crisis into an opportunity for growth and vitality. Country Garden urged stakeholders to give the company some time and assured them that it will take practical actions to fulfill its mission.
The decline in Country Garden’s stock price has raised concerns in the market. On August 11, the Hang Seng Index fell 0.81%, the State Enterprise Index fell 1.31%, and the Hang Seng Technology Index fell 2.42%. Country Garden’s stock price fell by 5.77% to HK$0.98 per share, resulting in a total market value of 27.1 billion Hong Kong dollars. This represents a 63.3% decrease since the beginning of the year.
Interestingly, despite the fall in the stock price, many of Country Garden’s domestic bonds saw an increase in value during the same period. This has led to speculation that the company is preparing for debt restructuring with the help of financial consultant CICC. However, there has been no official response from Country Garden regarding these rumors.
In their apology letter, Yang Huiyan and Mo Bin emphasized that Country Garden has grown from a small township enterprise to a Fortune 500 company since its establishment in 1992. They acknowledged the challenges faced by the real estate industry in recent years and the major test of survival it is currently undergoing. The management expressed guilt for the company’s unsatisfactory performance and promised to learn from the lessons.
The letter of apology outlined four self-help measures that Country Garden has implemented to address its financial difficulties. These include efforts to ensure cash flow safety, minimize expenditures, receive strong support from the controlling shareholder, and prioritize delivery and credit. The company aims to navigate through the current predicament and protect the rights of its customers, investors, and partners.
Despite the significant challenges it is currently facing, Country Garden remains optimistic about the future of the real estate industry. They believe that it will eventually return to a track of healthy and stable development after the current period of profound adjustments. The management expressed gratitude to stakeholders for their trust and support and promised to forge a healthier Country Garden through practical actions.
Given the severity of the situation, it remains to be seen how Country Garden will overcome its financial troubles and regain market confidence. Stakeholders will be closely monitoring the company’s progress and its ability to execute its self-help measures effectively.