Bellwether Country Garden Headlines Weak 1H Developer Results, Reiterate Preference for SOEs

Four China developers under coverage—Country Garden, China Jinmao, China Resources Land, and Agile—released first-half results at the end of the reporting period. The results takeaways support our continued preference for state-owned enterprise, or SOE developers. Bellwether Country Garden headlines the challenge to private developers, weighed by the weak property market, in which Country Garden’s first-half earnings are severely affected by the slowdown in project deliveries and continued margin disappointment. The weakness in its results were similarly observed in private developer Agile’s first-half result. On the flip side, the results of SOE developers, China Jinmao and China Resources Land, or CRL, are still showing steady results. This is consistent with China Overseas Land & Investment, or COLI, which reported first-half results earlier.