Country Garden Holdings Co. and its sister company have both seen their stocks triple in value since late October, underscoring optimism about China’s top developer after a series of fundraising and as Beijing widens a property rescue campaign.
(Bloomberg) — Country Garden Holdings Co. and its sister company have both seen their stocks triple in value since late October, underscoring optimism about China’s top developer after a series of fundraising and as Beijing widens a property rescue campaign.
Country Garden Holdings has risen about 190% from a record low on Oct. 31, while Country Garden Services Holdings Co. has jumped over 200% in the same period. The twin stocks have become the biggest gainers on the Hang Seng Index since then, a remarkable turnaround after languishing as the Hong Kong benchmark’s top losers much of last year.
The stellar performance reflects a broader reassessment of the outlook of China’s real estate firms, whose shares and bonds have rallied in recent weeks amid a quickening drumbeat of policy moves aimed at easing the industry’s cash crunch. The Country Garden group has benefited more as its recent equity and debt financing has boosted confidence that it will likely enjoy a faster recovery in the sector.
The Country Garden stocks’ rally has been “more about their efforts to fix balance sheet faster” than their peers, said Daniel Fan, a credit analyst at Bloomberg Intelligence. The group should now be in a much better position to normalize its operations, he added.
Country Garden Holdings has embarked on an aggressive fundraising campaign in recent months. The developer has raised more than $1.4 billion via three additional share sales since July. It also has issued 3.5 billion yuan ($516 million) of bonds guaranteed by state-backed entities via its key onshore unit since September, in addition to securing a $280 million loan for refinancing last month.
“After addressing funding issues, it could refocus on boosting its operations, including land banking and new project launches, given supportive government measures,” Fan wrote in a recent note.
–With assistance from Yuling Yang.
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