Zhenro Properties signaled a profit warning in an HKEX filing on March 8. Zhenro said that it expects profits to fall “not more than 70%” for the year ending December 2021. It cited three reasons for the dip:
- Decrease in the gross profit margin and the increase in impairment provision for inventory due to lower selling prices of projects
- Decrease in the fair value of investment properties due to the decline in demand for commercial property
- Lower than expected revenue recognition
Zhenro also announced its contracted sales in February was at RMB 3.53bn ($560mn). This compares to RMB 13.407bn (2.1bn) during February 2021, a 74% drop.
Zhenro’s dollar bonds were flat, trading at distressed levels of 10-12 cents on the dollar.