Chinese developer Kaisa Group warned that it expected its net loss to widen for the first half, underscoring the troubles property firms face amid a sector-wide downturn despite government support.
The decline was mainly because of a decrease in revenue as a result of fewer handovers of properties and an increase in impairment provisions, the company said.
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Boom, bust and borrow: Has China’s housing market tanked?
Boom, bust and borrow: Has China’s housing market tanked?
Despite a historic rescue package of 300 billion yuan announced by Chinese authorities in May, home sales continue to weaken. Transacted home sales generated by the top 100 Chinese developers dropped to 279 billion yuan in July, a decline of 36.4 per cent compared with June and 19.7 per cent lower than a year earlier, according to China Real Estate Information Corporation.
Kaisa’s profit warning comes amid efforts by the Shenzhen-based developer to convince most of its creditors to support its restructuring. The company on Tuesday unveiled an overdue debt workout for the first time since defaulting on US$12 billion of offshore bonds in 2021 to avoid liquidation during a court hearing next month in Hong Kong.
The developer offered its creditors several payment options, including new notes denominated in US dollars and mandatory convertible bonds that can be exchanged into new shares, according to the restructuring proposal.