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Real Estate Companies Face Lower Profits and Higher Inventory

Huanqiu reported that, in the first six months of 2014, half of the real estate companies saw their profits decline. 

Among the real estate companies listed on the stock exchanges of Shanghai, Shenzhen, and Hong Kong, as of August 31, 156 of them had released their reports for the first half of 2014. Although 135 of them reported gains, half of the 156 companies reported that their profits had declined. 
As their sales decreased, their inventories have been on the rise. As reported on August 31, the inventory levels for Beijing, Shanghai, Guangzhou and Shenzhen had risen by 30 percent, 25 percent, 42 percent and 25 percent respectively for the first half of 2014. It will take 18, 11, 13 and 20 months to deplete these inventories. 
Cash flow has also suffered. Of the 146 real estate companies listed with the Shanghai Stock Exchange, 107 had a negative operational cash flow. Poly Real Estate Group Company Limited, a large state-owned real estate company funded by the People’s Liberation Army, reported a negative cash flow of 14.28 billion yuan (US$2.33 billion), a decline of 250 percent. 
Source: Huanqiu, September 10, 2014