With this the company has saved itself from bankruptcy for now.
How Risky is Country Garden?
According to the communist 3 red line policy, as of end 2022, Country Garden is one of the lowest risk private developer (this according to the communist)
The Communist Ain't Joking!, Supposedly ranked 8th in safety
For China lovers and communist believers, this is one of the real estate developer to buy if you are interested in the industry
China's Economic Plan for the Real Estate
The government has planned for real estate to form a smaller segment of the economy. As of now, it contributes about 30% of the GDP. Therefore, as investors, do not expect the real estate market to grow; instead expect developers to breakeven with slightly positive profits as they seek to clear their landbank. For Country Garden, this means clearing its existing unsold units at breakeven levels. Revenue will not be in the heydays of a few hundred billions but only 10% of it (which mean profits of a billion RMB or two).
Country Garden has a net book value of about RMB$240 billion (after accounting for 1H2023 results). Using the experience of evergrande, it can be expected that losses are expected for the next full financial year too. Therefore, it would be wise to impair half of Country Garden's book value for losses and difficulty in realisation its land bank.
At RMB$120 billion, it means Country Garden is worth HKD$125 billion if it pulls through this crisis. At current value of HKD$20 billion, it is a 6 times bagger where share price can go to HKD$4.50-$4.60 once it is out of the woods
The post is not to encourage the purchase of the share price but merely a thought of the value of the developer should it be able to totally save itself from creditors.
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