Chinese developer halts projects after deaths at its building sites

Bloomberg

Back in April, giant Chinese developer Country Garden Holdings Co. ordered its thousands of staff to move faster in getting projects to market. The human and financial cost of the emphasis on speed is now coming into focus, after deadly accidents at its building sites caused the stock to crash.
Country Garden shares plunged 17 percent, lopping off $6 billion in market value, after a July 27 announcement that it was temporarily halting all 2,200 projects nationwide for safety checks prompted by a six-fatality accident in Anhui province. Another person died at a Shanghai site in June.
The rare missive to employees in April illustrated the pressures on an industry racing to finish residential projects just as the government is busy clamping down on rampant price gains. But the go-fast approach has now earned the developer a sharp rebuke from Shanghai authorities, scorn on social media and even admonitions from analysts. “These accidents have damaged its reputation significantly,” CGS-CIMB Securities Ltd. analysts led by Raymond Cheng wrote in a note published this week, citing four incidents in recent weeks. “Local managers are under huge pressure to meet sales targets.” The analysts kept their “reduce” rating on the stock. In a statement to Bloomberg News, the company pledged enhanced safety and vowed to get rid of external construction teams that fail to meet safety standards.
However, it said its targets for new building starts and project completions are unchanged. Some analysts stand by their bullish outlook. Goldman Sachs Group reiterated a buy rating on Country Garden, predicting it will overcome its near-term challenges and continue to grow rapidly.