Country Garden releases 2022 interim report: sales continue to outperform while cash flow remains steady

Chinese property developer Country Garden (02007.HK) released its interim results for 2022 on August 30, 2022. Against the backdrop of profound changes in China's real estate sector and a cooling market, the developer continued leading the industry by showing resilience in its performance as a result of an improved balance sheet and abundant cash flow.

According to the report, Country Garden achieved contracted sales of approx.185.1 billion yuan (approx. US$25.9 billion) and contracted sales volume of approx. 23.48 million square meters during the first half of 2022, ranking the company first in the industry. Total payment collection reached 170.3 billion yuan (approx. US$23.8 billion), with a collection rate about 92%, having exceeded 90% for seven years in a row.

During the reporting period, Country Garden posted operating revenue of 162.36 billion yuan, gross profit of 17.21 billion yuan and core net profit of 4.91 billion yuan, which indicates a positive earnings despite the market slump and the ongoing Covid-19 pandemic, demonstrating the company's outstanding resilience.

Country Garden president Mo Bin said that in the first half of 2022, the firm further optimized its debt structure by using operating cash flow to pay back some high-cost, short-term financing, with a focus on ensuring a balance between cash flow, the balance sheet and profit.

At the end of the first half, Country Garden's net operating cash flow stood at 5.25 billion yuan with total loans outstanding having dropped to 293.68 billion yuan, down 7.6 percent from the end of last year. The gearing ratio was 48.1% at the end of the reporting period, having been maintained at less than 60% for several years. The rate is significantly lower than the country's gearing ratio threshold of less than 100% and well within the lower range for the industry. At the end of the reporting period, the company's available cash amounted to 147.98 billion yuan. Cash flow to short-term debt ratio stood at about 2x, with no burden on short-term debt repayment.

Country Garden has ensured timely delivery of projects while maintaining a sound financial position. According to available statistics, in the first half of this year, the developer completed the construction of and made available to the market more than 250,000 units (in 1,070 lots) in 214 cities throughout China, fully in line with what had been promised and far exceeding that of its peers. Management confirms that the firm plans to deliver 500,000 units during the second half of this year, roughly double that of the first half.