(Yicai) Nov. 4 -- Combined loss at more than 90 Chinese mainland-listed property developers topped CNY53.2 billion (USD7.9 billion) in the first three quarters of this year, despite some builders logging operating cash flow gains.

China Vanke posted a net loss of CNY23.9 billion in the nine months ended Sept. 30, the most among all developers, followed by Gemdale with CNY3.5 billion (USD523.9 million) and Grandjoy Holdings Group with CNY1.1 billion, according to Wind Information, citing the firms’ financial reports. In addition, the combined revenue of all mainland-listed builders plunged 25 percent year over year.

Poly Developments and Holdings Group led profitable developers, but its net profit still fell 16 percent to CNY2.3 billion, while China Merchants Shekou Industrial Zone Holdings saw its profit tumble 76 percent to CNY604 million (USD90 million). A few firms reported mostly unchanged or even improved performance, with Seazen Holdings’ profit falling just 0.9 percent to CNY965 million.

“The real estate sector is still in the late stage of a deep adjustment with risk clearance unfinished and not in a recovery phase yet,” said Liu Shui, director of enterprise research at China Index Academy. Profits among developers in the black are extremely thin and have fallen markedly from a year ago, he noted.

One major drag on profitability is that most newly launched residential projects were initiated when land costs were much higher in 2022 and 2023, so with home prices still under downward pressure, these projects face steep hurdles to turn a profit, Liu pointed out.

“Asset impairment provisions also eat heavily into developers’ profits,” Liu noted. Falling sales, coupled with administrative expenses and financing interest that cannot contract in tandem with income shrinkage, further weigh on earnings, he added.

Some developers saw improved operating cash flow in the first three quarters, with that of China Merchants Shekou soaring more than 10 times to CNY31.5 billion (USD4.7 billion) thanks to higher cash inflows from property sales alongside reduced outlays for land and construction payments.

However, the cash flow gains mostly stem from “less land purchases, fewer payments, and higher collections,” rather than a fundamental turnaround in operating conditions, Liu stressed, noting that such improvement lacks sustainability. Further contraction in land investment will cap developers’ future revenue and net profit growth, he said.

Vanke’s stock [SHE: 000002] closed down 0.3 percent at CNY3.20 (48 US cents) in Shenzhen. Grandjoy [SHE: 000031] rose 1.9 percent to CNY2.14, while Merchants Shekou [SHE: 001979] fell 3.6 percent to CNY7.68.

Shares of Poly Developments [SHA: 600048] ended 0.7 percent lower at CNY5.48 each in Shanghai today. Seazen [SHA: 601155] fell 3 percent to CNY12.12 (USD1.81), with Gemdale [SHA: 600383] remaining unchanged at CNY2.13.

Editors: Tang Shihua, Martin Kadiev