By Ambar Warrick 

-- Country Garden Holdings Co Ltd (HK:2007), one of the largest property developers in China, logged a nearly 96% decline in earnings for the first half of the year, amid a worsening property crisis.

Net profit attributable to shareholders for the six months to June 30 fell to 612 million yuan ($88.5 million) from nearly 15 billion yuan ($2.17 billion) a year earlier, the property developer said in a statement on Tuesday. The figure is in line with a profit warning issued by Country Garden earlier this month. 

The firm’s revenue also fell 31% to 162.36 billion yuan. Country Garden cited a “myriad” of challenges from the property sector, amid sluggish demand and a drop in real estate prices. 

A slew of COVID-19 lockdowns in China exacerbated an ongoing slowdown in the property sector, denting real estate prices across the country, and making consumers grow more hesitant toward investing. 

The downturn has weighed heavily on property developers which depend on fast-moving sales to maintain their cash flows. Given that Country Garden’s biggest source of income is from property sales, the firm was adversely affected by a slowdown. 

Still, the firm said it remains in a favorable cash position, and did not have any upcoming foreign debt repayments this year. 

China’s property woes came to a head in 2021 after China Evergrande Group (HK:3333) - then the country’s second-largest real estate firm - defaulted on a series of bond payments. This saw most other players in the sector, including Country Garden, lose their investment-grade status. 

Country Garden’s weak earnings follow similar showings from several peers last week. A sharp drop in real estate prices has also seen several mortgage holders boycott repayments, exacerbating an ongoing cash crunch in the sector. 

China Overseas (HK:0688), Redco Properties Group Ltd (HK:1622), and Poly Property Group Co Ltd (HK:0119) all logged double-digit declines in revenue and profit in the first half of the year.

Country Garden’s shares have lost nearly 70% of their value in the past 12 months. They were trading down 0.8% on Tuesday. 

Worsening conditions in the real estate sector have spurred stimulus measures by the Chinese Government to support growth. But they have done little to stall a sharp drop in stock valuations this year.