Country Garden’s sales slump worsens in January adding to woes

(Bloomberg) — Country Garden Holdings Co.’s sales slump dragged on in January, as new residential transactions countrywide resumed falling on weak sentiment.

Contracted sales dropped 59% from a year earlier to 2.26 billion yuan ($309 million), following a 51% year-on-year decline in December, according to Bloomberg calculations based on corporate filings.

Country Garden’s slide in home sales substantially surpasses the 3.2% posted by the 100 biggest real estate companies tracked by China Real Estate Information Corp. The market is dented by weak domestic demand and a worsening job market.

Despite government support, many buyers prefer second-hand homes due to concerns that developers will still struggle to finish construction on presold projects.

That’s adding to the woes of Country Garden, which is counting on a turnaround in sales to reassure debt holders and fight off liquidation. The developer has yet to secure support from a key bondholder group over restructuring terms unveiled in early January, while it reached an understanding with a coordination committee comprising seven banks.

Country Garden said last month that it expects to reach an agreement with creditors on its debt plan by the end of February. A Hong Kong court delayed a hearing on a liquidation petition to May.

The company’s contracted sales this year could fall to levels seen in 2012 and 2013, Bloomberg Intelligence analysts Daniel Fan and Hui Yen Tay wrote in a recent note. While it made a “huge impairment provision” when posting a record loss of 178 billion yuan in 2023, further impairment is possible as it has only written down about 10.9% of its inventory, they said.

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