Chinese Property Sector Posts Worst Earnings Since 2008; CIFI’s Dollar Bonds Down 5% after Top-Up Placement at 12% Discount

China’s property sector has produced its worst half yearly earnings season yet since 2008, as per Bloomberg’s analysis of 136 developers. Net income across these companies dropped a massive 87% in during this period to a mere RMB 17.6bn ($2.5bn). The largest developer in the country, Country Garden saw its profits drop by a record 96%. Besides, other large developers like Sino-Ocean Group reported a loss of RMB 1.09bn ($160mn) in 1H 2022 as compared to a profit of RMB 1.01bn ($150mn) during the same period last year. Logan Group saw a net loss of RMB 541mn ($78mn). HSBC analysts said, “We continue to struggle to get a true sense of the bottoms for earnings given developers’ flexibility to slow completions (as cash flows remain tight), which hurts revenue bookings, and price cuts, which hurt margins”

Separately, CIFI Holdings saw its dollar bonds drop over 2.5-3.5 points (a drop of over 5%) on Friday and its stock price tumble by 14%. This was after the Chinese developer agreed to issue 304.9m in new shares at HK$2.06/share in a top-up placement at a 12% discount to its closing price on Tuesday when trading in its shares were halted pending the announcement of its top-up placement. CIFI said that it intended to use the net proceeds for refinancing existing debt and for general corporate purposes.