The head of one of the biggest property developers in China was once Asia's richest woman. But her wealth has plunged by 84% since mid-2021 — and now her company's teetering on the brink of a crisis.
Kai Xiang Teo
Thu, August 10, 2023
Yang Huiyan lost 84% of her wealth — more than any billionaire since the COVID-19 pandemic — as China's property sector teeters on yet another crisis.
Wealth-X; Country Garden Danga Bay/Facebook; Shayanne Gal/Business Insider
Yang Huiyan, the chair of the property giant Country Garden, has lost about $29 billion since 2021.
Huiyan lost $490 million on Tuesday as her company missed interest payments, according to Bloomberg.
Country Garden reported that sales plummeted by 30% year-on-year in the first six months of 2023.
Yang Huiyan — once Asia's wealthiest woman — has lost more of her wealth than any billionaire since June 2021 as China's top property developer, Country Garden, grapples with a debt crisis.
Yang's net worth has plummeted by 84%, or $28.6 billion, since its peak in June 2021, Bloomberg reported. The 41-year-old's net worth is now $5.5 billion, per Bloomberg's Billionaires Index.
These losses come as Country Garden missed interest payments on two US-dollar-denominated bonds, according to various media reports, including a Reuters report on Wednesday. The company now has a 30-day grace period to avoid an official default.
The company's Hong Kong-listed stocks have plunged by 20.4% since Monday. Yang derives much of her wealth from a 52.6% stake in the company, per a Monday report by the ratings agency Moody's. She saw her wealth tank by about $490 million on Tuesday.
Before taking over as majority shareholder of the company from her father in 2007, Yang graduated from Ohio State University as part of the class of 2003 with a bachelor's degree in marketing and logistics.
But Country Garden's fortunes have waned since. The company remains China's biggest property developer in sales, but its market value has more than halved since the start of the year, according to The New York Times.
In July, the company reported sales of 128.76 billion yuan, or about $17.8 billion, in the first six months of the year, marking a 30% decrease compared to the same period last year.
Yang, who became China's richest woman at 25 after the company's IPO, lost the spot of Asia's richest woman in August 2022 to Savitri Jindal. Jindal, India's richest woman, is the chairperson emeritus of the Indian conglomerate O.P. Jindal Group, per Bloomberg.
On July 30, Yang announced that she was giving away 55% of her shares in Country Garden to a charity founded by her younger sister in a payout valued at $826 million, per Bloomberg.
Country Garden and Yang Huiyan did not respond to requests for comment from Insider.
China hailed a property developer with $64 billion in revenue as a role model. Now the country’s property crisis threatens to send it into default too
Nicholas Gordon
Thu, August 10, 2023
Qilai Shen—Bloomberg/Getty Images
Country Garden was supposed to be a survivor of China’s property crisis.
Officials hailed the company, led by chair Yang Huiyan, as a model developer. It avoided default even as competitors missed payments in late 2021 and early 2022. It delivered its audited results on time, while auditors were busy bailing on the sector. And investors were hopeful that Country Garden, which generated $64 billion in revenue last year, would benefit from Beijing’s promised support measures for the housing market.
Yet now China’s property crisis is getting so bad that even this role model is now under threat, and it doesn’t bode well for the industry.
“If Country Garden, the biggest privately owned developer in China goes down, that could trigger a crisis in confidence for the property sector,” Edward Moya, a senior market analyst for Oanda, wrote in a Tuesday note.
On Tuesday, Country Garden confirmed that it failed to make a $22.5 million interest payment on some of its dollar-denominated bonds. If it doesn’t pay within a 30-day grace period, it will be in default for the very first time.
“The developer’s struggle to address even a modest coupon payment underscores the extent of its cash crunch,” Sandra Chow, head of Asia-Pacific research at CreditSights, told the New York Times.
The bonds in question are now trading at just 8 cents to the dollar, according to the Wall Street Journal citing Tradeweb data, a sign that traders have all but priced in a default.
In a stock filing to Hong Kong’s exchange on July 31, the developer had warned of a net loss in the first half of 2023, down from a net profit of $264 million in the previous year’s period. It blamed the loss on charges incurred from writing down the value of its properties following a downward slide in home prices.
In its filing, Country Garden said it would “actively seek guidance and support from the government and regulatory authorities.”
The very next day, however, the developer abruptly canceled a $300 million share sale, citing a failure to come to a “final agreement.”
Investors now fear that Country Garden could be the next major developer to fall in China’s already yearslong property crisis. Shares in the developer are down by over 60% since the start of January.
Country Garden vs. Evergrande
Founded in 1992, Country Garden stood in contrast to China Evergrande Group, the massive property developer whose default in 2021 arguably marked the start of China’s property crisis.
Evergrande, at one point China’s largest developer, loaded up on debt to fuel its rapid expansion. The company splurged on big, expensive projects, like Ocean Flower Island, a $35 billion set of artificial islands similar to Dubai’s Palm Jumeirah.
Yet new rules on how much debt developers could hold sent Evergrande into a liquidity crisis, and the company defaulted on its foreign-held debt in December 2021. Other developers, like Kaisa Group and Shimao Group Holdings, also defaulted on their payments.
Last month, Evergrande finally revealed that it has lost a combined $81 billion in 2021 and 2022. The developer also reported $340 billion in liabilities, including $85 billion in more short-term borrowings.
Unlike Evergrande, investors saw Country Garden as far more financially prudent. The developer didn’t borrow as heavily as its peers, and focused on building affordable homes in China’s less prominent and less developed cities. The developer had $199 billion in liabilities at the end of 2022, according to Bloomberg.
Still, Country Garden could not escape the overall slowdown in China’s property sector, and the developer was forced to report a $900 million loss for 2022 after revenue slumped by a fifth.
Yet the hopes of Country Garden’s investors had initially been buoyed by official promises of support for the property sector late last year. The sector received access to billions of dollars in loans from Chinese state-owned banks, as part of a broader scheme to provide liquidity to developers.
Now, more than halfway through 2023, the story is far different. Home prices are falling again: An official index of home prices in 70 cities reported a 2.2% year-on-year decline last month, and investment bank Goldman Sachs is warning of “persistent weakness” in the real estate sector.
Country Garden’s decision to focus on China’s poorer areas may also be backfiring, since home price declines have been steeper in less developed cities.
Wealthier cities are also considering easing restrictions on property purchases, threatening to soak up demand from low tier cities, which account for 70% of national new home sales volume, analysts at Nomura noted in a report last week.
This story was originally featured on Fortune.com
Yang Huiyan, the chair of the property giant Country Garden, has lost about $29 billion since 2021.
Huiyan lost $490 million on Tuesday as her company missed interest payments, according to Bloomberg.
Country Garden reported that sales plummeted by 30% year-on-year in the first six months of 2023.
Yang Huiyan — once Asia's wealthiest woman — has lost more of her wealth than any billionaire since June 2021 as China's top property developer, Country Garden, grapples with a debt crisis.
Yang's net worth has plummeted by 84%, or $28.6 billion, since its peak in June 2021, Bloomberg reported. The 41-year-old's net worth is now $5.5 billion, per Bloomberg's Billionaires Index.
These losses come as Country Garden missed interest payments on two US-dollar-denominated bonds, according to various media reports, including a Reuters report on Wednesday. The company now has a 30-day grace period to avoid an official default.
The company's Hong Kong-listed stocks have plunged by 20.4% since Monday. Yang derives much of her wealth from a 52.6% stake in the company, per a Monday report by the ratings agency Moody's. She saw her wealth tank by about $490 million on Tuesday.
Before taking over as majority shareholder of the company from her father in 2007, Yang graduated from Ohio State University as part of the class of 2003 with a bachelor's degree in marketing and logistics.
But Country Garden's fortunes have waned since. The company remains China's biggest property developer in sales, but its market value has more than halved since the start of the year, according to The New York Times.
In July, the company reported sales of 128.76 billion yuan, or about $17.8 billion, in the first six months of the year, marking a 30% decrease compared to the same period last year.
Yang, who became China's richest woman at 25 after the company's IPO, lost the spot of Asia's richest woman in August 2022 to Savitri Jindal. Jindal, India's richest woman, is the chairperson emeritus of the Indian conglomerate O.P. Jindal Group, per Bloomberg.
On July 30, Yang announced that she was giving away 55% of her shares in Country Garden to a charity founded by her younger sister in a payout valued at $826 million, per Bloomberg.
Country Garden and Yang Huiyan did not respond to requests for comment from Insider.
China hailed a property developer with $64 billion in revenue as a role model. Now the country’s property crisis threatens to send it into default too
Nicholas Gordon
Thu, August 10, 2023
Qilai Shen—Bloomberg/Getty Images
Country Garden was supposed to be a survivor of China’s property crisis.
Officials hailed the company, led by chair Yang Huiyan, as a model developer. It avoided default even as competitors missed payments in late 2021 and early 2022. It delivered its audited results on time, while auditors were busy bailing on the sector. And investors were hopeful that Country Garden, which generated $64 billion in revenue last year, would benefit from Beijing’s promised support measures for the housing market.
Yet now China’s property crisis is getting so bad that even this role model is now under threat, and it doesn’t bode well for the industry.
“If Country Garden, the biggest privately owned developer in China goes down, that could trigger a crisis in confidence for the property sector,” Edward Moya, a senior market analyst for Oanda, wrote in a Tuesday note.
On Tuesday, Country Garden confirmed that it failed to make a $22.5 million interest payment on some of its dollar-denominated bonds. If it doesn’t pay within a 30-day grace period, it will be in default for the very first time.
“The developer’s struggle to address even a modest coupon payment underscores the extent of its cash crunch,” Sandra Chow, head of Asia-Pacific research at CreditSights, told the New York Times.
The bonds in question are now trading at just 8 cents to the dollar, according to the Wall Street Journal citing Tradeweb data, a sign that traders have all but priced in a default.
In a stock filing to Hong Kong’s exchange on July 31, the developer had warned of a net loss in the first half of 2023, down from a net profit of $264 million in the previous year’s period. It blamed the loss on charges incurred from writing down the value of its properties following a downward slide in home prices.
In its filing, Country Garden said it would “actively seek guidance and support from the government and regulatory authorities.”
The very next day, however, the developer abruptly canceled a $300 million share sale, citing a failure to come to a “final agreement.”
Investors now fear that Country Garden could be the next major developer to fall in China’s already yearslong property crisis. Shares in the developer are down by over 60% since the start of January.
Country Garden vs. Evergrande
Founded in 1992, Country Garden stood in contrast to China Evergrande Group, the massive property developer whose default in 2021 arguably marked the start of China’s property crisis.
Evergrande, at one point China’s largest developer, loaded up on debt to fuel its rapid expansion. The company splurged on big, expensive projects, like Ocean Flower Island, a $35 billion set of artificial islands similar to Dubai’s Palm Jumeirah.
Yet new rules on how much debt developers could hold sent Evergrande into a liquidity crisis, and the company defaulted on its foreign-held debt in December 2021. Other developers, like Kaisa Group and Shimao Group Holdings, also defaulted on their payments.
Last month, Evergrande finally revealed that it has lost a combined $81 billion in 2021 and 2022. The developer also reported $340 billion in liabilities, including $85 billion in more short-term borrowings.
Unlike Evergrande, investors saw Country Garden as far more financially prudent. The developer didn’t borrow as heavily as its peers, and focused on building affordable homes in China’s less prominent and less developed cities. The developer had $199 billion in liabilities at the end of 2022, according to Bloomberg.
Still, Country Garden could not escape the overall slowdown in China’s property sector, and the developer was forced to report a $900 million loss for 2022 after revenue slumped by a fifth.
Yet the hopes of Country Garden’s investors had initially been buoyed by official promises of support for the property sector late last year. The sector received access to billions of dollars in loans from Chinese state-owned banks, as part of a broader scheme to provide liquidity to developers.
Now, more than halfway through 2023, the story is far different. Home prices are falling again: An official index of home prices in 70 cities reported a 2.2% year-on-year decline last month, and investment bank Goldman Sachs is warning of “persistent weakness” in the real estate sector.
Country Garden’s decision to focus on China’s poorer areas may also be backfiring, since home price declines have been steeper in less developed cities.
Wealthier cities are also considering easing restrictions on property purchases, threatening to soak up demand from low tier cities, which account for 70% of national new home sales volume, analysts at Nomura noted in a report last week.
This story was originally featured on Fortune.com
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