Assessing Country Garden (SEHK:2007) Valuation After Court‑Backed Debt Restructuring Milestone

Country Garden Holdings (SEHK:2007) just cleared a major hurdle in its turnaround, with a court sanctioned offshore debt restructuring scheme and bondholder approved changes to several onshore bonds reshaping its capital structure.

See our latest analysis for Country Garden Holdings.

Investors have welcomed this progress, with a recent 1 day share price return of 1.96 percent suggesting sentiment is improving. However, a deeply negative 3 year total shareholder return of 83.01 percent shows the turnaround story still has plenty to prove.

If this kind of restructuring driven rebound has you rethinking your watchlist, it could be a good moment to explore fast growing stocks with high insider ownership for other under the radar opportunities with stronger momentum.

Yet with revenue still shrinking, losses sizeable, and the share price below analyst targets, investors face a key question: Is Country Garden a contrarian value play, or is the market already pricing in any future recovery?

Price-to-Sales of 0.1x: Is it justified?

On a price-to-sales basis, Country Garden looks inexpensive, with the last close at HK$0.52 implying a valuation well below typical sector levels.

The price-to-sales ratio compares the company’s market value to its annual revenue, which is useful for loss making developers where earnings are not a reliable guide. For a business still generating sizeable sales but posting losses, this multiple helps investors judge whether the market is heavily discounting future recovery.

At 0.1x sales, the stock trades at roughly one third of the peer average of 0.3x and well below the Hong Kong real estate industry’s 0.7x benchmark, suggesting investors are pricing in a far weaker outlook than for most rivals. Even against an estimated fair price-to-sales ratio of 0.2x, the current level implies meaningful pessimism that could unwind if the restructuring delivers a path back to stability.

Explore the SWS fair ratio for Country Garden Holdings

Result: Price-to-Sales of 0.1x (UNDERVALUED)

However, risks remain, including ongoing revenue contraction and continued losses, which could deepen if China’s property slowdown lasts longer than investors expect.

Find out about the key risks to this Country Garden Holdings narrative.

Build Your Own Country Garden Holdings Narrative

If you would rather dive into the numbers yourself and challenge this view, you can build a personalised storyline in just a few minutes: Do it your way.

A great starting point for your Country Garden Holdings research is our analysis highlighting 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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