CHINA JINMAO Profit Warning: Shareholders' attributable net profit for the first half of the year is expected to decrease by approximately 80% YoY.

The overall environment of the real estate industry also affects luxury home developers.

On the evening of Friday, August 11th, China Jinmao Holdings Group Limited ("the Company") listed on the Hong Kong Stock Exchange issued a profit warning announcement, expecting that the attributable net profit of the Company's owners for the first six months of this year ending on June 30th will decrease by approximately 80% compared to the same period last year.

The announcement stated that the year-on-year decrease in the attributable net profit of the aforementioned shareholders is mainly due to the downturn in the real estate industry. During the period, the gross profit margin of the company's partial property development projects decreased, as did the amount of land development revenue, resulting in a decrease in gross profit. Additionally, the one-time income generated from mergers and acquisitions and other matters decreased compared to the same period last year.

The announcement reminded that the aforementioned forecasted decrease is based on a preliminary assessment of unaudited management accounts within the company. The company is currently organizing its mid-year performance as of June 30th, and the details of the mid-year performance will be released by the end of this month.

Last year, the number of loss-making enterprises in the Chinese real estate industry increased significantly, and the revenue of most enterprises declined. Even the leading real estate companies found it difficult to thrive on their own.

After the release of the annual reports of A-share listed companies last year, data provided by E-House China R&D Institute for 50 sample companies showed that the median revenue of real estate companies last year was approximately RMB 75.594 billion, with 76% of the companies experiencing varying degrees of revenue decline compared to the previous year, i.e., 2021. The number of companies with a net loss attributable to owners increased from 6 in 2021 to 19. The average gross profit margin was 17.87%, a decrease of about 7 percentage points compared to the previous year.

China Jinmao's annual report released at the end of March showed that the company's urban operation and property development business revenue last year was approximately RMB 74.7083 billion, accounting for 90% of the total revenue, a decrease of 10% compared to 2021, mainly due to a decrease in sales properties settled. The total contracted sales for the year were approximately RMB 155 billion.

Earlier this week, China Jinmao announced that the cumulative contracted sales amount from January to July this year totaled RMB 92.32 billion. The contracted sales in the first seven months of this year accounted for nearly 60% of the total sales for the entire previous year.

Recently, the loss situation of some real estate companies has attracted much attention.

The day before China Jinmao's announcement, on Thursday of this week, Country Garden also issued a profit warning on the Hong Kong Stock Exchange, expecting a net loss of approximately RMB 45 billion to RMB 55 billion for the first half of this year, compared to a net profit of approximately RMB 1.91 billion in the same period last year.

Country Garden stated that the expected net loss is mainly due to the impact of the downturn in the real estate industry, resulting in a decrease in the gross profit margin of the real estate business and an increase in the impairment of property projects, as well as expected net exchange losses caused by foreign exchange fluctuations.

Country Garden disclosed that from January to July this year, the realized equity sales amount was RMB 140.8 billion, a year-on-year decrease of 35%, and a decrease of 61% compared to 2021. The equity sales amount in July was RMB 12.1 billion, the fourth consecutive month of month-on-month decline, with a year-on-year decrease of 60% and a decrease of 78% compared to 2021. China Evergrande Group stated that since 2021, the industry has entered an unprecedented difficult period, with multiple adverse factors overlapping, leading to severe difficulties and challenges in industry sales and public market financing. The company has taken four major "self-rescue measures," including making every effort to ensure the safety of cash flow and maximizing expenditure reduction. It also announced the establishment of a special working group led by the Chairman of the Board of Directors.