summary

Country Garden did not pay interest as scheduled this time. We believe it is seeking more policy support. Looking at the company's cash, we believe the company is capable of paying interest and debts due this year. However, in a situation where sales are deteriorating and sales are deteriorating, we speculate that the company may face more and more pressure after cash flow. Combined with market news, we speculate that the company is seeking policy support to gain more short-term liquidity to overcome the current market downturn.

According to market sources, Country Garden is preparing for debt restructuring. Organisers revealed that Country Garden is already preparing for debt restructuring and has hired CICC as a financial advisor. It is expected that related procedures will be initiated in the near future. Considering the size of Country Garden, we believe that the government may take steps to cooperate with banks and other creditors to maintain the normal operation of the company. On 8/14, it was reported that Country Garden proposed that the domestic bonds of 3.9 billion yuan due on 9/2 be extended for 36 months and paid in installments.

Country Garden's debt risk shows that the real estate sector's risk is still lingering, and there is an urgent need for more policy support. Country Garden is a relatively high-quality private enterprise in the industry. The debt is manageable and there are many financing methods, yet under the downturn in the real estate market, it still faces the pressure of capital chain breakdown. It can be predicted that after this incident, it will be more difficult for private real estate developers to sell, and there is an urgent need for more policy support. The decline in real estate downsizing is still a risk that needs to be prevented in the medium term.