With stable operation, smooth financing, and good credit, the management of Country Garden is confident in its future development

　　On March 13, Country Garden (02007.HK) issued a performance forecast stating that it is expected that the year ending December 31, 2022 may record core net profit attributable to shareholders of the company after excluding the effects of changes in fair value and net exchange gains and losses. Approximately RMB 1 billion to RMB 3 billion, and the expected loss attributable to shareholders ranges from approximately RMB 5.5 billion to RMB 7.5 billion.

　　According to Country Garden, there are three main reasons for the decline in net profit data: due to the overall poor management of the real estate industry and the impact of the epidemic, the gross profit margin of the development business has declined; in the face of the uncertainty of market changes, a large amount of inventory has been carried out. Impairment provision; Affected by the appreciation of the US dollar, the company will form a large exchange loss in 2022, causing the net profit attributable to the parent to turn negative for the first time since the company went public, but the company's core net profit remains positive.

The company's board of directors believes that the above-mentioned factors affecting profitability are mostly non-cash in nature, and they are still full of confidence in the company's future development.

　　After the start of construction during the Spring Festival, real estate companies have intensively issued profit warnings for 2022.

According to preliminary statistics, as of March 8, 73 real estate companies have issued profit warnings or performance reports for 2022, of which 43 real estate companies have forecast losses, and the loss may exceed 170 billion yuan; among 34 central enterprises, state-owned enterprises and mixed-ownership enterprises, 17 companies forecast that the net profit of equity ownership in 2022 will be a loss (calculated according to the upper limit of the forecasted net profit, the same below); among the 39 private enterprises, 25 companies forecast that the net profit of equity ownership in 2022 will be a loss, of which Blu-ray Development and Rongsheng Development will lose up to About 20 billion.

The core reasons for the pre-loss include the decrease in the carry-forward profit of sales items caused by the change in the settlement structure of the real estate business, and the provision for asset impairment.

　　In the continuous cold winter of the property market, it is difficult for Country Garden, the industry leader, to stand alone. The profit performance is also greatly affected, but the overall performance remains stable.

According to preliminary statistics, in 2022, the equity contract sales amount will be approximately 357.47 billion yuan, and the cumulative equity contract sales area will be 44.51 million square meters, a year-on-year decline rate that is better than the overall decline rate of the TOP100 real estate companies.

In addition, according to third-party statistics, Country Garden continued to rank first in the industry with full-scale sales of 464.3 billion yuan last year, reflecting the resilience of this leading real estate company.

　　Country Garden said that although the market situation is extremely difficult, the company insists on being responsible to customers and the society. In this downturn cycle, the company takes cash flow as the core management goal, and ensures that there are sufficient resources to promote housing development based on "minimum cost and maximum value". Perfect delivery and timely payment of all debts.

Last year, Country Garden ensured the delivery of a large number of products on time and with high quality, and fully fulfilled its commitment to the owners. It delivered a total of nearly 700,000 houses throughout the year, ranking first in the industry and significantly ahead of its peers.

　　At the same time, last year, thanks to the company's full self-rescue and the strong support of regulatory authorities and financial institutions for high-quality private housing enterprises, Country Garden's bonds due within the year have all been repaid on schedule, and there has been no default or delay in payment of principal and interest, maintaining a good performance credit history.

So far, the company's cash flow has remained stable and its financing channels have remained open.

　　According to the announcement information, the company’s directors, supervisors and senior executives purchased corporate bonds for a cumulative amount of 59.99 million yuan, and the company’s controlling shareholders purchased bonds for a total of 325.12 million yuan. The company’s controlling shareholder also provided the company with an interest-free unsecured loan of 5.055 billion Hong Kong dollars. To support the business development of the company.

Since the company went public in 2007, major shareholders have supported the company by more than 30 billion Hong Kong dollars through increased holdings of the company's stock, scrip dividends, and interest-free loans, and have never reduced their holdings of the company's stock during this period.

　　Analysts believe that since November last year, with the successive introduction of the "16 Financial Measures" series of financing policies to support real estate companies, the financing environment for real estate companies has undergone significant changes.

In the second half of 2022, Country Garden has successively obtained credit enhancement guarantees and successfully issued two phases of 2.5 billion medium-term notes, and issued 1 billion yuan of corporate bonds through the central-local cooperation credit enhancement model, and obtained more than 300 billion yuan of intent from ten banks including Industrial and Commercial Bank of China comprehensive credit support.

In January of this year, Country Garden received another RMB term loan financing support of up to US$50 million equivalent, and was approved to issue 20 billion yuan medium-term notes on shelf registration.

　　Since last year, high-level officials have repeatedly emphasized support for local governments to improve real estate policies based on local realities, effectively prevent and defuse the risks of high-quality leading real estate companies, improve asset and liability conditions, and support rigid and improved housing needs. Loan limit and price limit policy to boost consumer confidence.

With the introduction of a series of supportive policies such as the "Financial 16 Measures" and the comprehensive optimization of epidemic prevention and control measures, the government has promoted economic recovery and released market demand. Enter the new development cycle of the industry.

　　According to the monitoring data of the China Index Research Institute, the decline in the total sales of TOP100 real estate companies in the first two months of 2023 has narrowed significantly year-on-year, and the real estate market is showing signs of recovery.

Country Garden's equity contract sales in the first two months were 24.85 billion yuan, and the monthly sales showed a steady growth trend.

　　Mo Bin, President of Country Garden, said at the group's 2023 annual meeting that more positive policy signals for the property market are continuing to be released, and the market will definitely recover, but the recovery process will definitely diverge.

The management is full of confidence in the development of the Group, and proposes that this year it will not pursue scale one-sidedly, but should truly take the road of quality development, and combine the technology construction system to continuously improve the comprehensive competitiveness of the whole cycle.

At the same time, the company's decision-makers also emphasized that they should seize the opportunity of market restoration. The future layout must follow the market orientation, and we must gather strength to focus on and deepen cultivation in markets with more potential.