Country Garden continues its outstanding performance

Posted on 05 Sep 2019
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Revenue and net profit improved by 53.2% and 41.3% respectively

(From left) Country Garden Holdings Company Ltd chief financial officer and vice president Wu Bijun, president and executive director Mo Bin and executive vice president Cheng Guangyu at the announcement of the company’s financial results for the first half of 2019 in Hong Kong.

(From left) Country Garden Holdings Company Ltd chief financial officer and vice president Wu Bijun, president and executive director Mo Bin and executive vice president Cheng Guangyu at the announcement of the company’s financial results for the first half of 2019 in Hong Kong.

CHINA’s top property developer Country Garden continued its sterling performance with improved financial results in the first half of 2019.

The conglomerate announced that as of June 30, 2019, it recorded contracted sales of 281.95 bil yuan (RM165.54 bil), an increase of 47.6% compared to the second half of 2018.

“During the last six months, the company continued to lead the industry in terms of sales, with revenue, gross profit, net profit and other indicators having increased significantly when compared with the same period last year, while net debt ratio remains comfortably well below the norm for the industry,” said Country Garden.

During the reporting period, the group achieved revenue of 202.01bil yuan, up 53.2% year-on-year. Gross profit totalled 54.86bil yuan, up 56.9% year on year, with settlement gross profit margin standing at 27.2%, an increase of 0.7 percentage points over the same period last year.

Net profit came in at 23.06bil yuan for the half year, an increase of 41.3% year on year. In addition, the net profit as well as net profit from primary market activities attributable to shareholders reached 15.64bil yuan and 15.98bil yuan respectively, up 20.8% and 23.4%.

This is Country Garden's first results report since the Chinese property developer made the biggest jump to 177th place from the 353rd spot, an improvement of 176 rungs, in the Fortune Global 500 list last month.

All these indicators demonstrate that the leading property developer continues to maintain steady growth during the period. Its contracted gross floor area currently stands at 31.29 million sq m, continuing to take the lead across the industry. This is a continued testament to the fast improvements in Country Garden’s strength and size.

In Malaysia, the property developer has four existing and on-going projects, namely the US$100bil (RM417.77bil) Forest City and RM18bil Country Garden Danga Bay, both in Johor Baru, Johor as well as the RM1.8bil Country Garden Diamond City in Semenyih, Selangor.

A fourth project was recently unveiled, the Lake City @ KL North, which it is developing with Perdana ParkCity Sdn Bhd.

A fourth project was recently unveiled, the Lake City @ KL North, which it is developing with Perdana ParkCity Sdn Bhd.

Lake City @ KL North is expected to boost the property market around Kepong, Selayang, Sentul and Jalan Kuching. The mixed development project is set to follow the HOPSCA concept that refers to the “Hotel, Office, Park, Shopping Mall, Connectivity and Apartments” community.

“The HOPSCA concept, while relatively new in Malaysia, is getting the attention of urban planners as it can accommodate the rapid growth of a city’s urban population and provide for a more organised use of land space.

“Sitting on 80 acres of prime land, Lake City @ KL North will be able to increase economic activity to create new jobs, ease sustainability and transportation issues, establish landmarks for the city, and create synergistic communities,” said Country Garden Malaysia regional president, Jason Fu.

Country Garden first appeared on the scene in 2013 with their Country Garden Danga Bay project which consists of a shopping mall, retail lots and over 8,000 units of high-rise residences. The developer also offered the very first Spanish-style inspired villa township with more than 450 Spanish-style units sprawled across 257 acres in their Country Garden Diamond City.

But the eye-popping project that fires the imagination is the creation of four islands between Johor and Singapore. Sprawled over 1,386ha, Forest City is a joint development between Hong Kong-listed Country Garden Holdings and Johor’s Esplanade Danga 88 Sdn Bhd, via joint venture vehicle Country Garden Pacificview Sdn Bhd (CGPV).

With Forest City, their dazzling pace of simultaneously reclaiming and building 26,000 apartment units in four years is testimonial to their reputation as China’s top property developer. Little wonder that the company's board of directors also declared an interim dividend of 0.2287 yuan per share, an increase of 23.5% from a year earlier.

During the period, Country Garden's financial leverage remained at one of the lowest levels among peers within the industry, with a net lending ratio of 58.5%, lower than the redline of 70% for 12th year in a row.

Country Garden has become one of the few developers in the industry that achieved both scale growth and debt control. Despite China’s systematic control over capital, the company has for over three years remained cash flow positive.

As of the end of June 2019, the company had a cash balance of 222.84bil yuan, accounting for 12.8% of total assets. In addition, the developer has a bank credit line of about 313.3bil yuan in reserve. The abundance of operating capital and a good credit status continue to support the steady development of the group.

On June 17, Country Garden was selected as one of the constituents of Hang Seng China Enterprise Index in Hong Kong. The firm is already included in Hang Seng China 25 Index, Hang Seng Composite Index and Hang Seng Mainland 100, demonstrating that the firm's growth in corporate size, strong profitability and promising growth potential have been recognized by institutional investors.

Country Garden is rated 'BBB-' by Fitch, 'BB+' by S&P and 'Ba1' by Moody's (stable outlook), all of which serves as strong evidence that the three international authoritative credit rating agencies have confidence in the company's future.

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