Buyback on track despite fall in earnings

Country Garden Services (6098) saw its first-half net profit drop by 8.7 percent year-on-year to 2.35 billion yuan (HK$2.53 billion) but reaffirmed its plan to buy back up to 10 percent of its shares.

Core net profit, which excluded borrowing costs of convertible bonds, share-based payment expenses and fair value changes in assets, fell by 9.5 percent to 2.62 billion yuan, according to a filing yesterday. But revenue rose 3.4 percent to 20.7 billion yuan, of which sales of property management services increased by 11 percent to 12.2 billion yuan.

Its cash and cash equivalents stood at 12.5 billion yuan by June and it does not have plans to raise funds, the property services firm said. And it expects to generate no less than 2.19 billion yuan in net cash from operations in the second half of the year.

The company also confirmed its intention to repurchase shares "trading at a price level that does not fully reflect its intrinsic value."

Meanwhile, sister company Country Garden (2007) has proposed a grace period of 40 calendar days for a maturing 3.9-billion yuan bond as it seeks to win creditor support to stretch payment into 2026.

Most mainland developers' stocks rose yesterday on reports Beijing is to cut rates on the majority of the outstanding mortgages.

Country Garden jumped 12.4 percent and Country Garden Services 9.9 percent. But China Evergrande (3333) plunged by 14.3 percent.

Also yesterday, China Jinmao (0817) posted an 83.2-percent slump in interim net profit to 432.9 million yuan and slashed the dividend to 1.5 HK cents.