Greenland Group, parent of Atlantic Yards/Pacific Park developer, plummets to #205 on Fortune Global 500, as profits evaporate & debts mount. Systemic issues?

Fortune magazine on 8/2/23 released its 2023 Global 500 list, with Greenland Holding Group, parent of the main Atlantic Yards/Pacific Park developer Greenland USA, plummeting to #205, after rising to #125 in 2022 from #142 in 2021.

That reverses an ascent that came part of the way to meeting the company's stated (in 2014) ambition to reach the top 100 by 2020.

Screenshot from Fortune

Dropping revenue, plunging profits

The well-known Fortune Global 500 ranking relies solely on revenue in the past fiscal year. Greenland had $64 billion in revenue, a 23.3% decline from $84.5 billion in the previous year.

Though not part of the ranking, it's worth noting that Greenland's profits plunged 84.3%, to $150 million from $958 million. Some other developers are in the red. 

Greenland's employee count dropped 12.3%, from 79,999 to 70,177. In 2021, the number of employee exceeded 86,000. 

All this suggests Greenland would be cautious toward making new investments, such as for the deck needed to complete Atlantic Yards/Pacific Park towers, as well as wary of paying the $2,000/month fines, due after a May 2025 deadline, for the 876 (or 877) affordable units due by then.

The lesser-known Forbes Global 2000, which this year downgraded Greenland to #831, from #415, bases its assessment on four broad metrics: a composite score assessing sales (revenue), profits, assets, and market value. 

Neither takes notice of Greenland's significant debts, which have caused its credit rating to plunge.  

Stock price down

Also, its stock price remains down, nearly 45% in five years as shown in the Google Finance screenshot below, though not at the cellar level reached last November.

Google Finance

Note that, at 3.07 yuan, Greenland is about halfway between the one-year low of 2.55 and 3.68. Also note the stratospheric price/earnings ratio of 198., but 

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Looking at the profit ratios, in 2021 and 2022, Greenland's profit was 3.75%  and 1.1% of revenues; now it's .2%. In 2021 and 2022, profit was 1% and .4% of assets, respectively; this year it's .1%. In 2021 and 2022, profit was 16.7% and 6.8% of stockholder equity; this year it's 1.1%.

Screenshot from Fortune

A fellow firm in trouble

It's worth noting that another major real estate developer, Country Garden, is in deep financial trouble Country Garden is currently #206 in the Fortune Global 500, just behind Greenland, at #205. 

That ranking counts revenues; Country Garden, though, lost money last year, while Greenland was barely profitable. Country Garden is ranked #783 on the Forbes Global 2000, which involves broader metrics, while Greenland is #832.

Two days ago, in an article focused on Country Garden, the New York Times wrote Why This Company’s Financial Crisis Threatens China’s Economy.

Once China’s biggest real estate developer, Country Garden has billions in losses and faces $200 billion in arrears. From the Times:

Now, experts fear that Country Garden’s troubles will spill over into the broader financial markets, thwarting any possible recovery of the real estate industry and spreading the damage through the economy.

That, obviously, could affect Greenland and other peer companies.

Country Garden, like other real estate developers, expanded fast, borrowing money, "operating on the assumption that as long as it continued to expand, it could keep repaying its debt," the Times wrote. Now the bills are coming due.

Greenland historical data

Screenshot from Fortune