China’s Country Garden faces sales slump as financial turmoil continues

Country Garden Holdings Co., one of China's major property developers, continues to struggle with financial challenges as its home sales took a heavy hit last month, according to corporate filings.

A report by Bloomberg News noted that the contracted sales for March plummeted by 83 per cent, amounting to 4.3 billion yuan ($590 million), indicating the continuation of a downward trend from the previous month.

This decline follows an 85 per cent annual slide in February.

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The persistent sales downturn has intensified the financial strain on Country Garden, which is currently facing several other challenges.

The company recently shocked investors by announcing that it had failed meet the deadline for releasing annual results due to insufficient information.

Consequently, trading of its stock has been suspended in Hong Kong.

Moreover, earlier this year, the company encountered a creditor's petition seeking to wind it up following its default on dollar debt.

The challenges faced by Country Garden are indicative of broader issues that have been ongoing within China's property sector.

March witnessed a continued steep decline in home sales compared to the previous year, according to private data.

Additionally, property investment fell sharply by 9 per cent in the first two months of the year, exceeding expectations.

Homebuyers are increasingly cautious of investing in projects led by developers facing financial difficulties, including Country Garden

To ease its financial strain, Country Garden has turned to the regulator's latest property funding program.

The company disclosed that 272 residential projects have been enlisted by local authorities for financing support as of March 15.

This move is crucial for Country Garden as it seeks to mitigate the impact of the ongoing sales drought on its operational cash flow.

Apart from Country Garden, China Evergrande Group, the company's closest rival, was instructed to liquidate in January.

Similarly, China Vanke Co., another property giant in the industry, has witnessed a sales slump that continues to worsen as it looks to avoid default.

The prevailing uncertainties in the property sector underscore the need for strategic measures to navigate through the turbulent times.

(With inputs from Bloomberg)