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Country Garden

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For the English folk tune, see Country Gardens.
Country Garden Holdings Company Limited
碧桂园控股有限公司
Native name
碧桂園控股有限公司
Company typePublic[1]
IndustryReal estate, education
Founded1992
FounderYang Guoqiang
Headquarters
Shunde, Guangdong
,
China
Area served
China, Malaysia,[2] Australia[3]
Key people
Chairman: Yang Huiyan (楊惠妍)[4]
Largest shareholder: Yang Huiyan
ProductsLanded & high-rise residential, commercial, leisure and hospitality developments
ServicesProperty and facilities management, hotel management, schools
RevenueDecrease US$ 63,978.9 million (2023)[1]
Decrease US$ -899.7 million (2023)[1]
Total assetsUS$ 252,923.9 million (2023)[1]
Total equityIncrease US$ 29,522.6 million (2023)[1]
Number of employees
Decrease 69,932 (2023)[1]
SubsidiariesCountry Garden Properties (Malaysia) Sdn. Bhd.,[5] Country Garden Danga Bay Sdn. Bhd.[2]
Websitewww.countrygarden.com.cn

Country Garden (Chinese: 碧桂园; pinyin: Bìguìyuán; Jyutping: bik1 gwai3 jyun4) is a property development company based in Guangdong, China, owned by Yang Guoqiang's family. It ranked 206th in Fortune Global 500 list of 2023.[1] Country Garden features a market capitalization of over US$29.84 billion as of 2018;[6] with 187 high-end township developments throughout China, Malaysia and Australia among its vast international project portfolio. The company is incorporated in the Cayman Islands.[1] Its headquarters are in the town of Beijiao (simplified Chinese: 北滘镇; traditional Chinese: 北滘鎮; pinyin: Běijiào Zhèn), in Shunde District, Foshan.[7]

In October 2023, the company announced that it was unable to fulfill its offshore debt obligations and was subsequently deemed in default on approximately US$11 billion of bonds, making it another victim of the 2020–2023 Chinese property sector crisis.[8][9]

History

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Yang Guoqiang founded Country Garden in 1992[10] in Shunde, Guangdong. He built the company from scratch, having previously worked as a farmer and on construction sites.[11] The company now has interests in property development, construction, fitting and decoration, property management, and hotel operations in a wide variety of global markets.

In 2005, Yang transferred his shares in Country Garden Holdings Company Limited to his daughter, Yang Huiyan.[12] On April 20, 2007, Country Garden was listed on the Hong Kong Stock Exchange,[13] and in October 2007, Yang Huiyan was declared the wealthiest woman in Asia by Forbes, with a net worth of US$16 billion.

In 2014, Country Garden was ranked the sixth largest property developer in China by sales revenue.[14]

On April 2, 2015, Chinese insurance giant Ping An became the second largest shareholder in Country Garden by acquiring 9.9 percent of the company for US$800 million.[15]

In February 2020, in response to the COVID-19 pandemic, the Sydney office of a Country Garden subsidiary, Risland Australia, sourced eighty-two tonnes of supplies, which were subsequently airlifted to Wuhan. This daigou operation has caused concern that those activities of Chinese companies may have contributed to shortages of personal protective equipment products in Australia.[16]

In 2023, Country Garden joined the ranks of property companies such as Evergrande Group succumbing to the 2020–2023 Chinese property sector crisis. Following a series of credit rating downgrades and delayed bond coupons due to a liquidity crisis, the company missed US$15 million in payments in October 2023, triggering cross defaults in up to $11 billion of offshore bonds. It subsequently removed PwC as its financial auditor.[9][17][18][19][20][21][22]

Management

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Yang Guoqiang (Yeung Kwok Keung, 楊國強) has been the actual controller of Country Garden since he founded the company.[23]

In February 2023, due to age reasons, Yang Guoqiang resigned as chairman of the board. Yang Guoqiang's daughter Yang Huiyan, the firm's largest shareholder, succeeded as chairman.[24][25] After the resignation, Yang Guoqiang kept the role of special adviser to the Cayman Island–registered company.[25]

Business strategy

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Residential buildings constructed by Country Garden in Guangdong Province, mainland China

Country Garden focuses on erecting residential properties in third- and fourth-tier cities in mainland China.[26]

Rapid project development model

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Country Garden follows a rapid build-and-sell model called the "456" project development model, by which they aim to complete a project within four months from land acquisition to launch; five months to collect payments from buyers; and six months to recover all costs associated with the investment. Their average time from land acquisition to launch is 5.2 months, making them one of the fastest builders in China.[26][27]

Employee risk and profit sharing scheme

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Country Garden implemented a profit-sharing model, whereby 20 percent of a project's net profit is awarded to general project managers and regional presidents if they meet targets. However, if there is a net loss, 20 percent of the loss is assumed by the managers until cash flow is corrected. This scheme has been successful in motivating employees and increasing sales.[27]

Concentric Sharing

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In 2014, Country Garden introduced the "Concentric Sharing" plan, which requires top leadership to invest their own money in projects. The plan involves creating a project company comprising all project members and senior management, which includes company directors, vice presidents, regional presidents, and project managers.[27]

Notable international developments

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Country Garden Danga Bay

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Country Garden's first venture outside of China is the Country Garden Danga Bay (CGDB) coastal development in Johor Bahru, Iskandar Malaysia, with a sales figure of US$1.57 billion (MYR5.0 billion) on the day of its official launch.[28] Similarly, its second Malaysian project in Semenyih, Selangor, termed Country Garden Diamond City, had 70 percent of its total units for Phase 1 sold in early June 2014.[28]

Forest City

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Main article: Forest City, Johor
Forest City Phoenix International Marina Hotel

Forest City was planned as an integrated residential development, built on reclaimed land within the locale of Iskandar Puteri in Johor, Malaysia, in close proximity to the border with Singapore.[29]

Forest City is a joint venture between Esplanade Danga 88, an affiliate of state government subsidiary Kumpulan Prasarana Rakyat Johor (KPRJ), through a joint venture, Country Garden Holding Ltd (CGPV), with CGPV holding 60 percent of shares and KPRJ the other 40 percent.[30]

The project encountered but managed to overcome initial environmental and political controversies. However, following the 2018 change in Malaysian government, COVID-19 pandemic and 2020–2023 Chinese property sector crisis, sales, construction progress and occupancy rates entered a steep decline. In September 2023, The Wall Street Journal published a report indicating that the occupancy rate of apartments within Forest City is notably low, with only approximately 9,000 residents inhabiting a development designed to accommodate up to 700,000 individuals. Furthermore, the commercial segments of the project have yet to show any indications of commencing operations, underscoring the overbuilding problem facing the project and Chinese property development companies.[31]

Risland Australia

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Risland Australia,[16] Country Garden's overseas venture in Sydney, garnered strong sales, with 296 apartments at its Ryde Garden development sold within six hours in late June 2014, generating US$169 million (AUD180 million) in the process.[32]

In 2023 following Country Garden's bond default, the uncompleted project was sold to Frasers Property. At the point of sale, the 4,500-5,000 lot project remained largely unsold and lacked sewer and other infrastructure.[33]

Financial summary

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Financial summary ended on 31 December[34] (million RMB ≈ 0.14 million USD)
Year 2018 2019 2020 2021 2022 2023
H1[35] H2
Revenue 379,079 485,908 462,856 523,064 430,371 226,309
Profit/(loss) 48,542 61,202 54,118 40,982 (2,962) (51,461)

Liquidity crisis (2020-2024)

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There have been rumors about the financial health of Country Garden since the start of 2020–2023 Chinese property sector crisis.[36] The valuation of its equities had witnessed a steep decline. In January 2023 the stock price had been HK$3.24 (equivalent to 41 U.S. cents). As the end of July 2023 approached, the company's share value had ebbed significantly, bottoming out at HK$1.58.[36]

On August 7, 2023, Country Garden had two bond coupons denominated in U.S. dollars (approximately $22.5 million) that had expired and had not yet been paid.[37][38][39][40]

As of August 8, 2023, according to statements from investors based in Hong Kong, the company defaulted on the cumulative amount of US$45 million with regarding interest disbursements linked to two offshore U.S. dollar bonds. The company enjoyed a leeway of 30 days to effect the payments. Should it not meet these financial obligations within the aforementioned time limit, it would default on the stipulations contained in the bond agreements.[36]

On 10 August 2023, Country Garden warned of a large net loss for the first six months of 2023 due to impairment on property projects and declining profit margins; the loss was expected to be in the range of CN¥ 45 billion(US$6.25 billion) to CN¥ 55 billion, after a net profit of around CN¥ 1.91 billion in the same period in 2022.[41] The company's shares fell up to 14.4 percent to a record low on the day following the profit warning,[41] closing below HK$ 1 for the first time.[42] The same day, Country Garden appointed China International Capital Corporation (CICC), as its financial advisor to handle the restructuring of its public market debt, with preliminary decisions expected to be made in the near term.[43]

On August 12, 2023, Country Garden Real Estate Group announced the suspension of trading for eleven onshore bonds on the Shenzhen Stock Exchange and Shanghai Stock Exchange starting August 14, following its controlling shareholders' disclosure of a significant first-half loss. This decision affects multiple yuan-denominated corporate bonds issued in 2021 and 2022, with discussions about restructuring due to liquidity challenges. The company's bonds have faced a sharp decline in value since August 2023, prompting discussions with bondholders about repayment arrangements and potential solutions to address financial difficulties.[44][43]

On September 5, 2023, the company paid offshore U.S. dollar bond interest within the grace period.[45]

In October 2023, the company's Australian branch, Risland Australia, sold the 366 hectare (904 acre) Windermere project in Victoria state to Frasers Property and also announced plans to sell its $2 billion Wilton Greens estate in Wollondilly Shire south-west of Sydney, after it began defaulting on offshore debts for the first time.[46][47]

In October 2023, the company failed to pay US$15 million in U.S. dollar-denominated bond, triggering cross defaults in up to $11 billion of offshore bonds.[48][49][50]

Despite initially missing an interest payment worth approximately 66 million yuan on onshore bonds in May 2024, Country Garden was able to pay within the grace period.[51]

Controversies

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In June 2018, Country Garden halted all projects in China for security inspections following an accident at its construction site in the eastern province of Anhui that killed six people.[52]

In Aug 2018, Malaysia's Prime Minister Mahathir Mohamad reportedly said he intends to ban foreigners from buying homes being built by Country Garden in the southern tip of the country.[53]

In October 2019, Country Garden, via Walker Corporation, was given the approval to develop stage one of South East Wilton in Sydney Australia.[54] This is controversial because the eastern side of the site will cut Koala corridors along Allens Creek. The Greater Macarthur area, of which South East Wilton is the most southern section, is home to the largest recovering Koala colony in New South Wales.[55]

See also

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References

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  1. ^ a b c d e f g h "Country Garden Holdings". Fortune. Retrieved 15 August 2023.
  2. ^ a b "Country Garden Danga Bay Johor Bahru Iskandar Malaysia". Archived from the original on 2020-06-28. Retrieved 2015-04-01.
  3. ^ "Ryde Garden".
  4. ^ "董事名單與其角色和職能" (PDF). Retrieved 11 August 2023.
  5. ^ "COUNTRY GARDEN PROPERTIES - Five Stars Property Developer in Kajang & Rawang". www.countrygarden.com.my. Archived from the original on 21 June 2013. Retrieved 14 January 2022.
  6. ^ "Country Garden Holdings on the Fortune Global 500". Archived from the original on 2019-10-10. Retrieved 2019-02-14.
  7. ^ "OFFICE". Country Garden. Archived from the original on 2021-02-13. Retrieved 2021-02-05. Headquarters Address: Country Garden Center，1 Country Garden Road， Beijiao Town, Shunde District, Foshan, Guangdong 528312 PRC
  8. ^ https://asia.nikkei.com/Business/Markets/China-debt-crunch/China-s-Country-Garden-says-cannot-meet-external-debt-obligations
  9. ^ a b Ma, Dorothy (25 October 2023). "China Developer Country Garden Deemed in Default on Dollar Bond for First Time". Bloomberg.
  10. ^ "China's richest woman's wealth rose by $2bn in four days". The Independent. Retrieved 2018-07-30.
  11. ^ hermes (2015-12-18). "Rags-to-riches story behind founder". The Straits Times. Retrieved 2018-07-30.
  12. ^ "China's richest person is 26-year old woman: Forbes". Reuters. 2007-10-08. Retrieved 2023-08-21.
  13. ^ Qian, Li (April 20, 2007). "Woman tops rich list after IPO". China Daily.
  14. ^ Cole, Micheal (6 January 2015). "Find Out Which Developer Led China's Top 10 for 2014". MINGTIANDI.
  15. ^ Frangos, Alex (2 April 2015). "Ping An Plants Cash in Country Garden". The Wall Street Journal. Archived from the original on 2019-10-10. Retrieved 2020-09-27.
  16. ^ a b McClymont, Kate (27 March 2020). "Second developer flew 82 tonnes of medical supplies to China". The Sydney Morning Herald. Retrieved 27 March 2020.
  17. ^ Glickman, Ben. "碧桂园被剔出香港恒生指数". 华尔街日报中文网 (in Chinese (China)). Retrieved 2023-08-20.
  18. ^ "背负"恒大级"万亿负债的巨人碧桂园 会否"倒在黎明前"". BBC News 中文 (in Simplified Chinese). Retrieved 2023-08-20.
  19. ^ Bloomberg News (1 Aug 2023). "Chinese Developer Country Garden Slides as Funding Woes Worsen". Bloomberg. Retrieved 9 Aug 2023.
  20. ^ Jim, Claire (8 Aug 2023). "Country Garden misses bond payments as China property fears flare". Reuters. Retrieved 9 Aug 2023.
  21. ^ Bloomberg Markets (25 Oct 2023). "Country Garden Missed Payment Declared 'An Event of Default'". Bloomberg.
  22. ^ "China's Country Garden removes PwC as auditor". Yahoo Finance. 2024-09-05. Retrieved 2024-09-05.
  23. ^ He, Laura (2023-03-02). "One of China's richest women takes over for her father at real estate developer Country Garden | CNN Business". CNN. Retrieved 2023-09-02.
  24. ^ "董事名單與其角色和職能" (PDF). 2023-08-11.
  25. ^ a b Mak, Elise (2023-03-01). "Country Garden founder Yeung resigns, succeeded by daughter Yang Huiyan". South China Morning Post. Archived from the original on 2023-03-30. Retrieved 2023-08-11.
  26. ^ a b Man, Samson (2019-12-03). "Country Garden (2007 HK) President Talk" (PDF). East Money. Archived (PDF) from the original on 2023-09-05. Retrieved 2023-09-05.
  27. ^ a b c E-House (2019-09-30). "Country Garden's People-centered Growth Strategy" (PDF). The Wharton School of the University of Pennsylvania. Archived (PDF) from the original on 2023-09-05. Retrieved 2023-09-01.
  28. ^ a b Kaur, Sharen (June 17, 2014). "China developer upbeat on property sales here". The New Straits Times. Archived from the original on 2020-10-28. Retrieved 2023-09-01.
  29. ^ Bloomberg News (23 June 2017). "The $100 Billion City Next to Singapore Has a Big China Problem". Bloomberg. Archived from the original on 2020-10-26. Retrieved 2020-06-12.
  30. ^ "Forest City, Country Garden Pacificview". 13 April 2017. Archived from the original on 9 June 2020. Retrieved 9 June 2020.
  31. ^ Solomon, Foliz (2023-09-08). "What This $100 Billion Ghost City Says About China's Real-Estate Crisis". The Wall Street Journal. Retrieved 2023-10-03.
  32. ^ Anderson, Anna; Toby, Johnstone (2017-10-16). "$300m worth of new units sell in a day". Domain. Retrieved 2017-10-16.
  33. ^ Cole, Michael. "Country Garden Sells Melbourne Project To Frasers After Bond Default". Mingtiandi.
  34. ^ "2022 Annual Report" (PDF). Country Gurden Holdings Company Limited.
  35. ^ "INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023" (PDF). COUNTRY GARDEN HOLDINGS.
  36. ^ a b c Wang, Jing; Wang, Juanjuan; Zhang, Yukun (2023-08-09). "In Depth: Country Garden's Troubles Mount as It Misses Offshore Bond Interest Payment". Caixin Global. Archived from the original on 2023-08-08. Retrieved 2023-08-10.
  37. ^ Glickman, Ben. "碧桂园被剔出香港恒生指数". 华尔街日报中文网 (in Chinese (China)). Retrieved 2023-08-20.
  38. ^ "背负"恒大级"万亿负债的巨人碧桂园 会否"倒在黎明前"". BBC News 中文 (in Simplified Chinese). Retrieved 2023-08-20.
  39. ^ Bloomberg News (1 Aug 2023). "Chinese Developer Country Garden Slides as Funding Woes Worsen". Bloomberg. Retrieved 9 Aug 2023.
  40. ^ Jim, Claire (8 Aug 2023). "Country Garden misses bond payments as China property fears flare". Reuters. Retrieved 9 Aug 2023.
  41. ^ a b Martin, Choi; Yulu, Ao (2023-08-10). "Country Garden warns of large first-half loss amid real estate sector pressures". South China Morning Post. Retrieved 2023-08-11.
  42. ^ "2007: Country Garden Holdings Co Ltd Stock Price Quote - Hong Kong - Bloomberg Markets". Bloomberg.com. Retrieved 2023-08-12.
  43. ^ a b Wang, Juanjuan. "展期重组在即 碧桂园11只公司债进入停牌". Caixin (in Chinese). Archived from the original on 2023-08-30. Retrieved 2023-08-13.
  44. ^ Bloomberg (2023-08-13). "Country Garden to suspend trading of at least 10 onshore bonds". South China Morning Post. Retrieved 2023-08-13.
  45. ^ Bloomberg News (2023-09-05). "Country Garden Pays Dollar Bond Interest Within Grace Period". Bloomberg. Retrieved 2023-09-05.
  46. ^ Schlesinger, Larry (2023-10-19). "Defaulting Country Garden sells huge Melbourne estate to Frasers". Australian Financial Review. Retrieved 2023-10-24.
  47. ^ Cole, Michael (2023-10-23). "COUNTRY GARDEN SELLS MELBOURNE PROJECT TO FRASERS AFTER BOND DEFAULT". Mingtiandi. Retrieved 2023-10-24.
  48. ^ Bloomberg Markets (25 Oct 2023). "Country Garden Missed Payment Declared 'An Event of Default'". Bloomberg.
  49. ^ Jim, Clare (17 Oct 2023). "Country Garden on brink of default as payment deadline nears". Reuters.
  50. ^ Ma, Dorothy (25 October 2023). "China Developer Country Garden Deemed in Default on Dollar Bond for First Time". Bloomberg.
  51. ^ Gordon, Nicholas (13 May 2024). "Beijing narrowly escapes having to cover the debts of developer Country Garden as it scrounges up a $9 million interest payment". Fortune.
  52. ^ "China's Country Garden resumes work on most projects after accident: analysts". RETUERS. Reuters. 2018-07-31. Archived from the original on 2019-10-10. Retrieved 2020-09-27.
  53. ^ "A 'painful lesson' for Chinese developer Country Garden". CNBC. 2018-08-28. Archived from the original on 2019-12-11. Retrieved 2020-09-27.
  54. ^ Su-Lin Tan (11 December 2019). "Walker Corporation and Risland team up to build South East Wilton". Australian Financial Review. Archived from the original on 2020-07-28. Retrieved 27 September 2020.
  55. ^ "We must protect them!". Total Environment Centre. Archived from the original on 2020-07-13. Retrieved 27 September 2020.
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