Country Garden Services Faces Lacking Confidence in Capital Market as Holdings Reduced
Country Garden Services, a leading material company in the industry, is experiencing a significant loss of confidence in the capital market. The company, which once had a market value of 100 billion yuan, has seen its stock price plummet in recent years along with many other property stocks.
At the beginning of its listing in 2018, Country Garden Services had a market value of 50 billion Hong Kong dollars, which soared to over 270 billion Hong Kong dollars by mid-2021. However, the stock price has been on a continuous decline since then. On July 24, the stock price of Country Garden Services plunged, falling 15.52% to 7.62 Hong Kong dollars per share. By the end of the day, it had fallen 17.85% to HK$7.41 per share, resulting in a total market value of only HK$24.995 billion.
This decline in market value has pushed Country Garden Services behind other companies such as China Resources Vientiane Life, Wanwu Cloud, and China Overseas Property. The management of the company believes that its valuation has been severely underestimated. Li Changjiang, the executive director and president of Country Garden Services, expressed that property companies like theirs, which operate in a standardized manner and have outstanding performance, are undervalued. He remains confident that excellent material companies will eventually regain their value.
However, despite conveying confidence, Li Changjiang has been reducing his holdings of Country Garden Services at a low level. He recently reduced his holdings by cashing out a total of 28.2473 million Hong Kong dollars, marking the largest reduction in history. The reduction in holdings has added further uncertainty to the market sentiment, especially with the upcoming release of the company’s half-year results.
To defend market value, some material companies have resorted to protective actions such as buybacks and increased holdings. However, Country Garden Services has not taken such measures recently, which has raised concerns about its stability.
The market’s liquidity concerns about private companies have also had an impact on Country Garden Services. JPMorgan Chase downgraded the company to “underweight” and slashed its target price, citing ongoing liquidity concerns.
Overall, the reduction in holdings by Li Changjiang and the continuous decline of the stock price have cast a thunderbolt on the already lacking confidence in the capital market. Country Garden Services is currently facing challenges in restoring investors’ trust and demonstrating full confidence in its future growth.