China South City (1668) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 dropped 51.7% year-over-year to HK$1,215.3 million, with net loss attributable to owners at HK$4,311.1 million and basic loss per share at HK37.68 cents.

• The Group defaulted on maturing debts, triggering widespread debt defaults and cross-defaults, and is actively pursuing debt restructuring with both onshore and offshore creditors.

• Liquidity remains under pressure, with cash and bank balances at HK$896 million as of 30 June 2024, including restricted cash of HK$859.3 million.

• Management is focusing on merchant recruitment, project delivery, industrial upgrading, and cost-saving measures to stabilize operations.

• Major projects in Zhengzhou and Nanchang were delivered, and bulk asset sales progressed, including government repurchase of over a thousand residential units in Zhengzhou.

Financial highlights

• Revenue decreased 51.7% year-over-year to HK$1,215.3 million; property sales down 63.6%, leasing income down 25.1%.

• Net loss attributable to owners was HK$4,311.1 million (1H FY2023/24: loss of HK$621.2 million); loss per share HK37.68 cents.

• Gross profit margin increased to 28.5% (1H FY2023/24: 17.8%) due to higher recurring income.

• Finance costs rose 107.2% to HK$746.4 million due to reduced interest capitalization.

• Cash and bank balances at 30 June 2024 were HK$896.0 million, with restricted cash at HK$859.3 million.

Outlook and guidance

• The Group will continue to optimize its debt structure, accelerate asset sales, and maintain prudent financial management.

• Focus remains on merchant recruitment, cost control, and exploring new business models for sustainable growth.

• Plans to reduce inventory and maintain robust cash flow.

• No interim dividend declared for the period.