Digital Assets in Capital Markets

Advanced course on digital assets - assets created using a blockchain/DLT network - designed for finance professionals.

IBF-STS
8 CACS CPD Hours

29 September 2022 (Thursday) | 9am-5pm

Chinese property developers Zhenro Properties and Central China Real Estate (CCRE) issued a profit warning on Monday. Zhenro in its exchange filing said that it expects to report a loss of RMB 2.5-3.0bn ($368-442mn) for the six months ending 30 June 2022. This compares with a profit of RMB 1.17bn ($172mn) for 1H 2021. CCRE too expects to report a loss of RMB 5-6bn ($737-884mn) for 1H 2022 vs. a profit of RMB 729mn ($107mn) for 1H 2021. The reasons for the profit warning were largely similar for both developers and included:
  • A decline in demand for real estate in the mainland due to the pandemic
  • Decline in gross margins on the back of lower selling prices
  • Decrease in fair value of investment properties on the back of declining demand for commercial property
While Zhenro also cited tightening financial conditions and exchange losses, CCRE further attributed the expected loss to lower “carry forward income during the year as the COVID-19 epidemic caused delays in construction progress” and higher inventory impairment. Both developers added that they expect to publish 1H results by the end of August. Zhenro’s bonds are currently trading at 4-5 cents while CCRE’s are slightly higher but still deep in distress at 25-30 cents on the dollar.
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