Country Garden Services Rises as Some Ratios Look Promising

By P.R. Venkat

Shares of Country Garden Services Holdings rose sharply Tuesday after its first-half results showed improvements in some key performance ratios, even as real-estate-linked companies in China face a cash crunch and liquidity challenges.

The stock rose as much as 9.2% to 9.39 Hong Kong dollars (US$1.20) after the company said its gearing ratio as of end-June was maintained at a net cash position. Shares were recently 7.1% higher at HK$9.21.

Although net profit for the China-based residential property-management service provider fell 8.7% from a year earlier to 2.35 billion yuan (US$322.3 million) due to high service costs, revenue increased 3.4% to CNY20.73 billion.

"The group is in a good financial position and its working capital during the period was financed by internal funds generated from operations, bank loans and paid-in capital from shareholders," the company said.

Many companies in China's real-estate sector face liquidity problems, compounded by rising finance costs amid a weak domestic economy.

Country Garden Services also said it intends to conduct an on-market share buyback, indicating that the current share price doesn't reflect the company's intrinsic value.

"The board also believes that the group is in a stable financial position and is able to maintain sufficient financial resources to meet the needs of its continuous business growth while carrying out the share repurchase," it said.

As of June, the company's total bank deposits and cash were about CNY12.71 billion, up from CNY11.38 billion as of December.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

August 29, 2023 03:05 ET (07:05 GMT)

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