KWG Group (1813) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 was RMB5,234.0 million, down 29.8% year-over-year, with declines across property development, investment, and hotel operations.

• Gross profit dropped 77.9% to RMB97.8 million, with gross margin falling to 1.9% from 5.9% a year earlier.

• Net loss for the period was RMB8,133.0 million, an improvement from RMB9,928.9 million loss in the prior year period.

• The Group faces significant liquidity challenges, with net current liabilities of RMB36,783.4 million and ongoing defaults on USD-denominated senior notes and other borrowings.

• The Group continues to focus on core regions and first- and second-tier cities, with 149 major projects across 42 cities and a land bank of 12.46 million sq.m.

Financial highlights

• Property development revenue fell 33.1% to RMB4,421.2 million; property investment revenue decreased 1.7% to RMB447.4 million; hotel operation revenue declined 7.5% to RMB365.4 million.

• Cost of sales decreased 26.7% to RMB5,136.1 million, reflecting lower land and construction costs.

• Other income and gains dropped 42.1% to RMB510.0 million, mainly from project management services and gain on disposal of subsidiaries.

• Finance costs rose to RMB1,910.5 million from RMB1,334.7 million, as more borrowings were not capitalized.

• Other operating expenses rose to RMB3,917.5 million, mainly due to impairment losses on properties.

• Share of losses of joint ventures was RMB923.8 million, significantly lower than RMB4,658.0 million last year.

• Cash and bank balances stood at RMB1,515.7 million as of 30 June 2024, with restricted cash of RMB823.0 million.

• No interim dividend was declared.

Outlook and guidance

• The Group is restructuring offshore debts and has engaged advisors to address liquidity issues.

• Focus remains on sales, cash collection, and completion of key projects, with efforts to accelerate en-bloc sales and optimize capital structure.

• The Group expects hotel and rental income to improve in the second half as economic stimulus policies take effect.

• Priorities remain on project delivery and safeguarding customer interests.