Country Garden (OTCPK:CTRYF) is a large Chinese property developer listed on Hong Kong Stock Exchange. The company operates in a very cyclical sector and has a highly leveraged balance sheet. Country Garden's rapid expansion in recent years is mostly debt fueled. The company's earnings quality is poor and there are signs of financial shenanigans. Our analysis also casts doubts on the competitive advantages the company proclaims. Country Garden's true leverage is much higher than the conventional credit metrics indicate. At 5-6% yield to maturity, we find the company's bonds are extremely expensive. Its equity is similarly overvalued.
Part I - Speculative Customer Base
China has a housing bubble of gigantic size and it is bursting. Like it...
|FREE||SA PRO MEMBERS|
|IDEA GENERATOR||X||Exclusive access to 10 PRO ideas every day|
|INVESTING IDEAS LIBRARY||X||Exclusive access to PRO library of more than 15,000 ideas|
|SECTOR EXPERT NETWORK||X||Exclusive access to all sector experts for direct consultation|
|PERFORMANCE TRACKING||X||Track performance of all PRO stock ideas|
|PROFESSIONAL TOOLS||X||Professional Idea Filters to zero-in based on industry, market cap and more|