Chinese developers results reflect challenging environment

    Moody's Investors Service said that rated Chinese developers' 2014 weakened financial results reflect the challenging operating environment and aggressive debt-funded growth, but regulatory loosening and more cautious business expansion will ease challenges going forward and stabilise developers' financial results in 2015.
  "The financial performance of our rated Chinese property developers weakened in 2014 as debt levels grew faster than sales and revenue," said Simon Wong, a Moody's Vice President and Senior Credit Officer/Manager.
  "We expect 2015 to remain challenging, but less so than 2014, because the Chinese government will likely continue to loosen policies which should support property demand." he added.
  Aggregate contracted sales and revenue growth across the rated portfolio slowed to 17% and 19%, respectively, in 2014 from 32% and 35% in 2013.
  "The slowdown reflected weaker-than-expected buyer sentiment and contracted sales cash collections, against a backdrop of persistently high housing inventories across the sector," said Dylan Yeo, a Moody's Analyst and co-author of the report.
  The challenging operating environment is reflected in Moody's negative outlook for the Chinese property sector, which has been in place since May 2014.