Country Garden, Guangzhou R & F among Chinese property developers revealing slimmed debt levels for 2020 in annual result filings

Name: China's ‘terraced’ buildings maintain reputation for unorthodox architecture
Uploaded: 2021-03-25T23:00:10.000Z
Duration: 3 min 14 s
Description: China's ‘terraced’ buildings maintain reputation for unorthodox architecture

Country Garden says it cut debt by 43.1 billion yuan (US$6.6 billion) to 326.5 billion yuan last year

Aim to reduce net gearing ratio to below 100 per cent this year, clear all three red lines in 2022, Guangzhou R & F’s chairman says

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A Country Garden project site in Kunming, in China’s Yunnan province. The company hopes to lower its debt to below 300 billion yuan this year, its president and executive director says. Photo: Reuters

Sandy Li

Published: 7:00am, 26 Mar 2021Updated: 7:00am, 26 Mar 2021

Major Chinese property developers have slimmed down their debt levels by spending less on land acquisition and speeding up sales to meet government limits on borrowing, according to annual result filings.

Country Garden Holdings, China’s second-largest developer by sales, had cut debt by 43.1 billion yuan (US$6.6 billion) to 326.5 billion yuan last year, according to its annual results filing with the Hong Kong stock exchange on Thursday.

“Our financial position is healthy and we hope to lower our debt to below 300 billion yuan this year,” said Mo Bin, the company’s president and executive director. Country Garden said its net profit dropped 11.4 per cent last year to 35 billion yuan, while its revenue dropped 4.7 per cent to 46.3 billion yuan.

Chinese property developers, who have used debt and loans to finance their massive projects, are being pushed to clean up their books under a government campaign to keep corporate debt levels in check to prevent any financial shocks. Chinese financial regulators have drawn up three so-called red lines, which cap their debt-to-asset ratio at 70 per cent, their net debt-to-equity ratio at 100 per cent and their short-term borrowings from exceeding their cash reserves.

Guangzhou R & F said on Thursday that it had reduced its total debt by 37.4 billion yuan to 159.73 billion yuan last year. It reported a 9.3 per cent drop in its net profit for 2020 to 9.2 billion yuan, while its revenue fell 5.4 per cent to 85.9 billion yuan.

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China's ‘terraced’ buildings maintain reputation for unorthodox architecture

“We aim to reduce our net gearing ratio to below 100 per cent in 2021, and to clear all three red lines in 2022,” said Li Sze Lim, its chairman. The company had placed a significant emphasis on strengthening its balance sheet and improving long-term financial flexibility, he added.