CHINA’S COUNTRY GARDEN SAYS US$100BIL MALAYSIA PROJECT ON TRACK – EVEN AS ANOTHER PROPERTY GIANT EVERGRANDE PLUNGES 80% AS HONG KONG TRADING RESUMES
FILE PHOTO: Prospective buyers look at a model of the development at the Country Gardens' Forest City showroom in Johor Bahru, Malaysia February 21, 2017. REUTERS/Edgar Su/File Photo
China’s Country Garden says US$100bil Malaysia project on track
KUALA LUMPUR: Embattled Chinese developer Country Garden said on Monday its $100-billion project in Malaysia was proceeding as planned and it had sufficient assets, despite concerns over its financial strength.
The comment by China’s largest private developer came after it missed two dollar coupon payments this month totaling $22.5 million, fuelling fears that the country’s property debt crisis could hamper a broader economic recovery and spill overseas.
“Our company’s projects in Malaysia are operating normally and the sales performance is strong,” the developer’s Singapore and Malaysia unit said in a statement, adding that its overall operation in the region was “safe and stable.”
“Various debt management measures are considered to actively resolve the pressure of periodic liquidity, to ensure the company’s long-term future development,” it added, without elaborating.
Country Garden is building its largest overseas development, the massive Forest City project, across four reclaimed islands in the southern Malaysian state of Johor bordering the wealthy city state of Singapore.
Beset by challenges since its 2006 launch, the project, now home to about 9,000 people, saw demand fall sharply following China’s move to stem capital outflows and the COVID-19 pandemic.
Malaysians have also expressed concern at the prospect of a housing glut and environmental damage from a huge land reclamation effort.
The project aims to house 700,000 people by 2035 in a development that includes office towers, malls and schools, besides residential buildings.
The company statement comes after Malaysian Prime Minister Anwar Ibrahim said the project would be designated a “special financial zone” to attract investment, and help cut the cost of doing business there.
Among the new incentives offered are a special income tax rate of 15% for skilled workers and multiple entry visas, Anwar said in a statement on Friday.
RHB analyst Loong Kok Wen said the new designation would attract companies and residents from Singapore, where costs are considerably higher.
“This move should help to revitalise the Forest City township, which has received lots of negative publicity over the last few years,” the analyst said.
Malaysia’s incentives should be “very positive” for Country Garden, said Steven Leung, Hong Kong-based director of UOB Kay Hian.
The Chinese developer said the incentives from Anwar’s government showed its confidence in the project, which was now in a second phase of development focused on exploring more investment opportunities.
Shares of Country Garden were up more than 8% on Monday.
Forest City is a joint venture with Esplanade Danga 88, a private Malaysian company backed by the Johor government and the sultan of the state. – Reuters
China’s Evergrande plunges 80% as Hong Kong trading resumes
The sell-off slashed its market value from a peak of over US$50 billion in 2017 to less than US$600 million.
HONG KONG: Shares in troubled Chinese property giant Evergrande plummeted nearly 80% in Hong Kong on Monday after the end of a 17-month trading suspension.
The resumption of trading came after the company said in a filing on Friday that it had met guidelines set out by the bourse, including belatedly publishing its financial results and complying with other listing rules.
Once China’s largest real estate firm, Evergrande defaulted in 2021 and is saddled with more than US$300 billion in liabilities, becoming a symbol of the nationwide property crisis that many fear could spill over globally.
Its shares plunged as much as 87% during morning trading, slashing its market value from a peak of more than US$50 billion in 2017 to less than US$600 million.
It finished the day down 79.4%.
The company on Sunday reported fresh losses for the first half of the year amounting to 33 billion yuan (US$4.53 billion) – an improvement on the 66.4 billion yuan in losses reported in the same period last year.
But its cash assets fell from US$2 billion last year to US$556 million, reflecting its dwindling liquidity.
China’s property market “cooled down significantly” in the first six months of the year and saw new defaults in the sector, “further exacerbating the volatility in the market”, Evergrande said.
“Based on the principles of respecting international restructuring practices and treating the rights and claims of all creditors in a fair and equitable manner, the Company steadily pushed forward the work related to the restructuring of its offshore debts,” the firm added.
In March 2022, the Hong Kong stock exchange suspended trading in Evergrande shares after it failed to publish its 2021 financial results.
Its earnings for 2021 and 2022 were published last month, showing a net loss of more than US$113 billion over the two-year period.
The company risked being delisted if its shares were suspended from trading for 18 months, according to Hong Kong stock exchange rules.
Creditor meetings delayed
Evergrande was supposed to hold creditor meetings on Monday on its offshore debt restructuring proposal, but it announced in the afternoon the meetings were delayed – just hours before they were set to take place.
The postponement of roughly one month will allow creditors to “consider, understand and evaluate” the plan, the company said in an exchange filing.
The meetings will take place between Sept 25 and 26, which the developer said was “in line” with the timetable creditors expected.
Evergrande’s plan offers creditors a choice to swap their debt into new notes issued by the company and equities in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.
Earlier this month, the company filed for bankruptcy protection in the United States, a measure to safeguard its US assets during its restructuring.
It is also fending off winding-up petitions in Hong Kong courts, with one case adjourning its hearing to October.
China’s real-estate sector has proven to be a stumbling block as the world’s second-largest economy tries to break out of a post-Covid slump.
Fellow Chinese property developer Country Garden now risks defaulting on its bond payments next month, with the company saying there are “major uncertainties in the redemption of corporate bonds”.
REUTERS/ AFP
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