Kingboard faces Country Garden hit

Kingboard Holdings (0148) warned that its net profit last year would slump as much as 45 percent, partly due to the provisions related to its exposure to the embattled Country Garden (2007).

The Hong Kong-based chemicals and laminates producer said its net profit is expected to be not less than HK$2.02 billion for last year, a decrease of not more than 45 percent from one year ago.

Kingboard attributed the profit fall to the allowance for credit loss of a loan in the debt-laden Country Garden.

Last year, the Foshan-based developer sold HK$270 million in new shares to Kingboard for a loan repayment which exceeded HK$318.7 million. Kingboard was offered a subscription price of HK$0.77 per share, or a 15.4 percent discount on the previous day's closing price of HK$0.91.

Yesterday, Country Garden fell to HK$0.69 and Kingboard also dipped 4 percent to HK$15.56.

Kingboard also cited the provision for impairment loss related to the unsold residential properties in Eastern China held by the company, as the mainland residents' housing sentiment remained weak last year.

Amid a sluggish property market, the unit selling prices of the laminates products and chemicals products also dropped, another reason which Kingboard blamed for the narrower profit.