Property developers keep steady, manageable debt levels

The average debt level of major property developers in China remained stable and within a reasonable range last year, a report showed.

The average asset-liability ratio of China’s major real estate companies listed on the Shanghai and Shenzhen stock exchanges reached 68.8 percent in 2019, down 0.2 percentage points year-on-year, while the data of companies listed in the Hong Kong bourse increased to 75.5 percent, up 0.3 percentage points over 2018, according to a recent report by the China Index Academy.

Leading property companies also tightened cash flow controls over the last two years, which helped the average net increase in cash and cash equivalents of Hong Kong-listed and Shanghai or Shenzhen-listed real estate companies grow 13.8 percent and 16.8 percent in 2019, respectively.

The real estate sector showed positive performance in the capital market last year, with increase in both the value of real estate stocks and shareholders’ return.

Top companies have learned to attract investment and increase their market value through methods such as mergers and acquisitions, spin-off listings, stock repurchases and refinancing, the report showed.

It suggested investors pay attention to property developers leading in business performance, and that have ideal regional distribution, stable finance and a strong ability to develop diversified business.

Due to the increase of operation cost and the government’s efforts to stabilize home prices, the growth of net profit of listed real estate companies lagged behind that of revenue.