JP Morgan "Concerns Over Liquidity Crisis at Zhong Country Garden... Target Price Downgraded"

Target Price Forecasted at 0.9 Hong Kong Dollars
Investment Rating Downgraded to Underweight
"Liquidity Crisis to Persist Without Additional Support from China"

As the liquidity crisis spreading through China's real estate market shows little sign of easing, there is a forecast that the stock price of Country Garden, China's largest real estate company, will fall by 35%.

[Image source=Yonhap News]

According to Bloomberg on the 24th, JP Morgan recently predicted that Country Garden's target stock price could drop to 0.9 Hong Kong dollars (approximately 148 won). This represents a 35% decline compared to the closing price of 1.38 Hong Kong dollars on the 21st. The investment rating for Country Garden was also downgraded to underweight due to declining sales and the risk of default.

JP Morgan pointed out the recent chain default crisis spreading in China's real estate industry and warned, "Unless the Chinese government provides more policy support, liquidity concerns for Country Garden will persist."

Country Garden became the largest real estate company in China after Evergrande Group defaulted in 2021. After achieving contract sales of 550 billion yuan (approximately 104.5 trillion won) in 2017, Country Garden has maintained its leading position in China's real estate industry and has been regarded as having a solid financial structure.

However, as the Chinese government tightened regulations on developers to stabilize the real estate market, Country Garden also fell into financial difficulties. Moreover, due to COVID-19, the volume of completed properties decreased, preventing the recovery of funds and causing a significant drop in sales.

As a result, Country Garden's stock price has fallen by 65.59% over the past year. With the stock price plummeting, the asset value of Yang Huiyan, Chairwoman of Country Garden, reportedly dropped from $27.8 billion (approximately 36.4 trillion won) in 2021 to $4.91 billion last November. Chairwoman Yang holds 70% of the company's shares.

Earlier, in August last year, global credit rating agency Fitch downgraded Country Garden's credit rating to junk status (non-investment grade) 'BB+' citing the downturn in China's real estate market and other reasons.

This content was produced with the assistance of AI translation services.