The US$100 billion (RM414.5 billion) Forest City project had targeted buyers from China for its mixed-residential development, as well as investors from Indonesia, Thailand and Dubai. — Reuters pic

KUALA LUMPUR, Oct 4 — The shares of China’s biggest developer Country Garden Holdings Co continues to drop to 46 per cent since January despite more than US$125 million (RM 518.13 million) spent to buy back the shares, Bloomberg reported today.

Ranked as one of the worst performers on Hong Kong’s equity benchmark, the stock of Country Garden — which is behind the Forest City project in southern Johor — has fallen despite the developer reporting its fastest first-half earnings growth in nine years, according to Hong Kong-based director of asset management at Ample Capital Ltd Alex Wong.

Wong said there are no plans to buy even if the shares drop further.

Today, Country Garden shares slipped 1.9 perc ent as Hong Kong’s Hang Seng Index sank 1.7 per cent.

“You can argue that the valuation is very cheap, but you have to assume the company will continue to be able to deliver those kinds of sales,” Wong was quoted by the financial news site.

“It will be very difficult to repeat the miracle every year. I don’t think buybacks would mean much — people aren’t buying the story.”

Globally, the Hang Seng index is one of the year’s worst performers due to sentiments of a slowing Chinese economy and deepening US trade tensions.

“Right now the Chinese money is drying up,” Wong said, adding that concerns of leverage and sustainability tainting the sector.

In 2017, Country Garden surged over 240 per cent of sales while a series of buybacks in September last year had helped speed up the gains.

However, the rapid expansion translated to more debt, with roughly 19 per cent was due for refinancing this half, and another 29 per cent next year.

The report stated the developer is also losing one of its funding sources and the authorities are mulling to ban the practice of selling apartments before it is completed.

The developer said this month it plans to spend HK$3 billion (RM1.6 billion) more on buybacks.

The US$100 billion (RM414.5 billion) Forest City project had targeted buyers from China for its mixed-residential development, as well as investors from Indonesia, Thailand and Dubai.

However, Prime Minister Tun Dr Mahathir Mohamad had said foreigners would not be allowed to buy the property or granted visas to live there.