KUALA LUMPUR (Aug 18): Hong Kong-listed Country Garden Holdings Co Ltd, the developer of the Forest City project, issued a profit warning to investors on Thursday (Aug 18) as it estimated that its earnings might have dropped by as much as 99% year-on-year (y-o-y) for the first half of financial year 2022 (1HFY22), amid a tough business environment in the real estate industry and the continued impact of Covid-19.

The property developer, China's largest by sales, estimated that its net profit for 1HFY22 ended June 30, 2022 to be around 200 million yuan-one billion yuan (RM131.76 million-RM658.79 million) — down between 93% and 99% from 15 billion yuan it made in the same period last year — as revenue from properties sold slumped amid the market downturn and slowdown in construction progress.

It also said gross profit margin for the real estate business was pressured by certain projects with lower gross profit. It expects higher provision of impairment for property projects, and to incur foreign exchange losses.

Core net profit is estimated to have fallen between 67% and 70% y-o-y to 4.5 billion yuan-five billion yuan for 1HFY22 from 15.2 billion yuan a year ago, the group said in its filing with the Hong Kong Stock Exchange.

"The board is of the opinion that most of the above factors affecting profits were non-cash in nature, and the operation of the group is in good condition with sufficient cash available and cash flow remains stable," it said.

Shares of Country Garden dipped HK$0.13 (seven sen) or 5.2% to close at HK$2.39, giving it a market capitalisation of HK$58.3 billion.