(Yicai) Sept. 1 -- Sino-Ocean Group Holding said its loss swelled to CNY18.4 billion (USD2.5 billion) in the first half, outstripping the loss the Chinese developer reported for the whole of last year, as a result of the downturn in China’s real estate market.

The weak market resulted in lower revenue and a narrower gross profit margin in the six months ended June 30, the Shanghai-based company said in a financial report released on Aug. 30. It also led to an increase in impairment provisions for projects and weaker performance at joint ventures and units, it added.

Sino-Ocean fell into the red last year for the first time since listing in Hong Kong in late 2020. It had an annual net loss of CNY15.9 billion after a first-half loss of CNY1.09 billion

Affected by many negative factors, including the macro environment and financial difficulties, Sino-Ocean had net asset impairment losses of CNY11.3 billion in the first six months of this year versus CNY5.2 billion a year earlier, it noted.

Revenue dropped 11 percent to CNY20.8 billion, with its property development business contributing about 83 percent. Its gross loss stood at CNY125 million (USD17.2 million), with a negative gross profit margin of about 1 percent, down from an 18 percent margin a year ago.

China is likely to issue policies in the second half to stimulate the real estate market, and Sino-Ocean will continue to actively manage its debts and focus on ensuring the delivery of property projects and improving its net gearing ratio, the company said. 

Sino-Ocean had CNY7.7 billion in cash at the end of June, of which restricted bank deposits accounted for CNY4.5 billion, it said. The principal amount of its borrowing stood at CNY91 billion, with short-term loans reaching CNY44.6 billion. Its net gearing ratio was around 326 percent, compared to 183 percent at the end of last year. 

Sino-Ocean is also promoting the rollover of its bonds, extending the principal payment date of its 18 Sino-Ocean 01 bond from Aug. 2 by 12 months, it said yesterday.

Since the second half of 2021, Chinese developers have suffered declining sales and negative net cash flows, with cash flow fully utilized, Sino-Ocean said on Aug. 30.

Shares of Sino-Ocean [HKG: 3377] closed down 1.4 percent at 37 Hong Kong cents (5 US cents) in Hong Kong yesterday. The Hong Kong Stock Exchange suspended trading today to prepare for the approaching Super Typhoon Saola.

Editor: Martin Kadiev