China Real Estate Developer Guangzhou R&F Sees “Not Less Than” $1.2 Billion Loss In 2021

Struggling Chinese real estate developer Guangzhou R&F expects to report a loss of “not less than” eight billion yuan, or $1.2 billion, for the year ending 2021 amid slack demand and excess supplies that have battered the property industry in the world’s No. 2 economy.

“The expected net loss is mainly attributable to decrease in sales revenue attributable to lower contracted sales and recognition of properties sold, decline in gross profit margins, as well as the increase in impairment provision for inventory due to lower selling prices of the projects and lower contribution of other income recorded by the group for the year,” R&F said in a statement today.

R&F added: “The decline in earnings is a result of challenging operating conditions in the property sector, (the) ongoing pandemic, and economic uncertainty leading to negative market sentiment that has affected the sector. The group will continue to assess the impairment provision for inventory based on the principle of prudence, which might result in further change in the aforementioned expected net loss.”

The extent of financial difficulties at some of China’s largest real estate companies is becoming more apparent amid earnings season for listed companies. Shimao Group Holdings, another big developer from the country, said today it expected net profit to fall 62% from a year earlier in 2021 and that PricewaterhouseCoopers had resigned as its auditor.

R&F’s Hong Kong traded shares have lost 69% of their value in the past year. Co-chair Zhang Li has still managed to hold onto a fortune worth $2.5 billion on the Forbes Real-Time Billionaires List today; Li Sze Lim, the other co-chairman, is worth $1.7 billion

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@rflannerychina