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Time Running Out for China Developers to Come Clean on Debt

  • Reporting season to show impact of industry’s liquidity crisis
  • Lack of visibility complicates developers’ accounting
A construction site in Haiyan, Zhejiang Province, China.

A construction site in Haiyan, Zhejiang Province, China.

Photographer: Qilai Shen/Bloomberg
Updated on

China’s listed property firms have just over two weeks left to agree with auditors on how much debt they are liable for and whether there’s sufficient cash to pay for it.

The annual reporting season -- which ends March 31 -- will produce the first fully audited statements since the industry’s liquidity crisis spread. Previously hidden debts are likely to appear on balance sheets, pushing up measures of leverage, according to analysts at CCB International Securities Ltd. Restrictions on the use of home presale proceeds may reduce freely available cash, while impairments are a risk, the analysts said. Shareholder payouts will be slashed to the lowest level since 2013, Citigroup Inc.’s team estimates