Shares of Country Garden Services Holdings surged after the company released its first-half results, showing improvements in key performance indicators. This comes at a time when many real estate companies in China are grappling with a cash crunch and liquidity challenges.
The stock saw a significant increase of 9.2%, reaching HK$9.39 (US$1.20) as investors responded positively to the announcement. Notably, the company’s gearing ratio remained at a net cash position, further boosting investor confidence. Currently, the shares are trading 7.1% higher at HK$9.21.
While the net profit of this China-based residential property-management service provider dropped by 8.7% to 2.35 billion yuan (US$322.3 million) compared to the previous year, the revenue grew by 3.4% to CNY20.73 billion. This decline in net profit was mainly attributed to high service costs.
Despite these challenges, Country Garden Services stated that it remains in a robust financial position. The company’s working capital during the period was financed by internal funds generated from operations, bank loans, and paid-in capital from shareholders.
It is important to note that many real estate companies in China are currently facing liquidity problems due to rising finance costs and a weak domestic economy. However, Country Garden Services expressed confidence in its ability to maintain sufficient financial resources for continuous business growth.
Moreover, Country Garden Services plans to conduct an on-market share buyback, signaling that the current share price does not accurately reflect the intrinsic value of the company. The board believes this move will further enhance shareholder value.
As of June, the company’s total bank deposits and cash stood at approximately CNY12.71 billion, an increase from CNY11.38 billion in December.
In conclusion, Country Garden Services has demonstrated resilience in the face of challenges in China’s real estate sector. The company’s strong financial position, coupled with its commitment to enhancing shareholder value, positions it for continued growth and success.