About Half of A-share Real Estate SOEs Expected to Lose Money

Credit: Visual China

BEIJING, July 18 (TiPost) —— 18 state-owned real estate enterprises listed on China’s stock exchanges are expected to lose money and 19 enterprises to be profitable in the first half of 2023, according to the performance forecast of 37 state-owned enterprises disclosed on Monday.

The real estate industry has been caught in a cash flow crisis since the second half of 2021. There have been collapses of some private enterprises.

There are over 60 state-owned real estate companies listed on the stock markets. Despite very few debt defaults, state-owned enterprises have been under pressure.

Since 2021, more and more state-owned enterprises struggled. Only six of these 37 SOEs lost money in the first half of 2021. And 14 enterprises lost money in the first half of 2022. The number of enterprises with losses in the first half of 2023 was three times that of the same period in 2021.

“Some time ago, financial institutions did not dare to give loans to private real estate enterprises, and now they get increasingly cautious when it comes to lending to state-owned real estate enterprises,” said a bank president.

Among state-owned enterprises in the red, there are central state-owned enterprises and local state-owned enterprises in developed regions, some of which are city investment enterprises able to carry out real estate development.

CCCC Real Estate Development and Overseas Chinese Town Holdings Company (OCT Group) are representatives of central state-owned enterprises. In the sales ranking of real estate enterprises in the first half of 2023 released by the market research organization KRC Research, the two enterprises ranked 22nd and 37th with 38.86 billion yuan and 23.64 billion yuan, respectively.

CCCC Real Estate Development and OCT Group released performance forecasts last Friday. Both enterprises turned from year-on-year gains to losses in the first half of 2023. CCCC Real Estate Development is expected to have a net loss attributable to shareholders of about 550 million yuan. In the same period from 2020 to 2022, CCCC Real Estate Development’s net profit attributable to shareholders was 125 million yuan, 162 million yuan, and 84 million yuan respectively. OCT Group expects its net loss attributable to shareholders in the first half of 2023 to be 1.2 billion to 1.7 billion yuan. In the same period from 2020 to 2022, its net profit attributable to shareholders was 2.138 billion yuan, 1.584 billion yuan, and 105 million yuan, respectively.

State-owned real estate enterprises outperformed private enterprises in the current market environments, but sales are also declining year-on-year. Among the sample real estate companies monitored by the organization, the sales amount of SOEs declined 14 percent year-on-year in 2022, enterprises of the composite-ownership system declined 25 percent, and private enterprises declined 43 percent. This trend is continuing in 2023, according to a research report published by China Merchants Securities on July 1.

China’s property market continued its downward trend in June. Prices of new commercial residential homes stopped rising in first- and second-tier cities but decreased in third-tier cities, and prices of existing homes fell in all cities, according to statistics released by the National Bureau of Statistics last Saturday.

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