Country Garden Holdings, one of China’s largest real estate developers and whose portfolio includes Funyard Hotels & Resorts with almost 70 hotels, reported a major loss in its first-half earnings that puts the company's future in jeopardy.
In its half-year 2023 earnings results, Country Garden reported a loss of almost 51.5 billion yuan ($7.1 billion) in the first six months of the year. Executives at the company said in the results that they were concerned the company would not be able to continue.
For the same period in 2022, the Guangdong-based firm made a profit of approximately $260 million. Since 2017, Country Garden was included in Fortune Magazine’s Fortune Global 500 list. In 2022, the company was listed as 138th.
Similar to Country Garden's dire earnings report, its peer China Evergrande Group reported in early August a loss of approximately 33 billion yuan in the first half of the year. China Evergrande was another Fortune 500 company.
According to the BBC, China Evergrande shares lost 80% of their value on Aug. 29 when they were traded on the Hong Kong Stock Exchange for the first time in almost 18 months.
The BBC said Country Garden had issued previous guidance suggesting losses for the first six months of the year could total between 45 billion yuan and 55 billion yuan.
Earlier this month, Reuters reported “China's giant property sector has seen a string of debt defaults by cash-squeezed developers since late 2021.”
In Country Garden’s latest earnings report — translated online by Google — its executives stated “as of June 30, 2023, the Group had borrowings in the forms of senior notes, convertible bonds, corporate bonds and bank and other borrowings amounting to approximately 257.9 billion yuan, in aggregate, of which approximately 15 billion yuan is repayable within 12 months.”
The company said it is working with stakeholders to extend maturity dates.
Country Garden added it had “successfully refinanced its syndicated loans due within 12 months from 30 June, 2023, of approximately 6.14 billion yuan in total with a new term of 30 months,” but acknowledged “all of the above events and conditions indicated the existence of material uncertainties which may cast significant doubt on the group’s ability to continue as a going concern.”
“All these shortcomings have led to the most severe difficulty that the company has ever faced since its establishment. [Country Garden Holdings] felt deeply remorseful for the unsatisfactory performance. However, while reflecting on its faults, the company should not lose sight of the path ahead. The company should continue to shoulder its corporate social responsibility.”
Funyard operates hotels under 17 domestic and international brands, including Anantara, Accor’s Jo&Joe and Home2 Suites by Hilton. It also has independent hotels under its umbrella.
In June 2021, Thai hotel firm Minor International signed a joint-venture agreement with Funyard to develop and operate seven Minor brands in China, including Avani, NH Collection, NH Hotels and Tivoli Hotels & Resorts.
Country Garden’s year-on-year share value has fallen by approximately 60%, and from Nov. 14, 2022, its most recent high, by approximately 80% up to Aug. 30’s trading close.