Property firms need 149 years to liquidate inventories

By Duc Minh   November 5, 2023 | 08:31 pm PT
Property firms need 149 years to liquidate inventories
Apartment blocks in the west of Hanoi. Photo by VnExpress/Ngoc Thanh
Companies lack capital flows and have huge inventories, including a property firm which has piled up 54,334 days’ worth, according to the government’s Private Economic Development Research Board.

Its analysis of financial statements of 1,579 listed companies in 10 industries showed revenues decreased from mid-2022 through the second quarter of this year for all of them, with the steepest found in the real estate and construction industries.

For the first half of the year, eight had lower revenues year-on-year. It grew only for the IT industry and remained unchanged for the consumer goods and services industry.

Listed companies had cash flow problems with declining orders and difficulty in raising money in the capital market by issuing bonds and shares and from banks.

Property and construction firms saw the number of days of inventories and receivables (the average time to collect a debt after a sale) surge multiple times.

The board’s analysis showed the average number of days to collect receivables for construction companies in the first quarter was 1,165, 2.5 times the number in the same period last year, while they had 4,527 days’ worth of inventories, 6.8 times up, both indicative of lack of cash flows.

Real estate developers’ average inventory was 5,662 days, with one having 54,334 days’ worth, meaning it would take the firm 149 years to sell all its products.

Companies complained that bank loan interest rates might have decreased but are still high compared to other countries, and banks consider their ability to repay and not just collateral.

The board called for prioritizing exporters and small and medium-sized enterprises for low interest rates.

It added it is necessary to promote public investment with a focus on major infrastructure and social housing projects.

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