Profit warning causes Country Garden shares to plummet, hitting all-time low

Shares of beleaguered Chinese real estate company Country Garden Holdings slumped to an all-time low on Friday as the company issued a profit warning a day earlier.

The stock fell to an intraday low of 90 Hong Kong cents, extending the company’s losing streak after eight sessions of losses in the past nine days. This included a 14.3% plunge on August 8.

The sell-off in Country Garden shares also spilled over to the wider property sector.

The broader Hang Seng Mainland Property Index was 1.49% lower in afternoon trade on Thursday. Shares of counterpart Longfor Group were down 1.9%, while China Resources Land saw its shares slide about 1%.

In a filing to the Hong Kong exchange, Country Garden Holdings announced that it expects to report a record net loss of about 45 billion yuan to 55 billion yuan (or about $6.24 billion to $7.63 billion) for the six months ended June. This is a stark contrast to the 1.91 billion yuan profit reported for the same period last year.

According to the filing, the company attributes the loss to a decrease in gross profit margin of the real estate business and an increase in impairment of property projects due to the decline in sales in the real estate industry. Additionally, expected foreign exchange losses have also contributed to the drop in net income.

Furthermore, the company estimates that attributable sales from January to July will be 140.8 billion yuan ($19.51 billion), a year-on-year decrease of 35% and a 61% drop compared to the same period in 2021.

Earlier this week, Country Garden faced a sell-off after reports surfaced that the company had missed two bond coupon payments totaling $22 million over the weekend.

An investor relations representative for Country Garden did not deny the reports but did not provide clarification on the company’s payment plans.

— CNBC’s Evelyn Cheng contributed to this report