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Sunday, September 25, 2022

Real estate firms report profits despite negative cash flows

By Viet Dung

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HCMC – Many listed property companies have released their first-half financial reports that showed they made profits despite their negative cash flows.

The sharp spike in inventories, accounts receivable and short-term debt choked off cash flows at several property firms in January-June, but their financial statements showed they obtained high profits.

According to these reports, the number of firms seeing negative cash flows was higher than that of companies reporting positive cash flows.

Phat Dat Real Estate Development Corporation reported a negative cash flow of VND2.51 trillion, followed by Dat Xanh with a negative cash flow of VND1.8 trillion, Khang Dien at VND1.47 trillion, Tan Tao at VND1.11 trillion and Kinh Bac at VND913 billion. These firms posted a year-on-year increase in profit, but their cash flows were negative due to inventories and accounts receivable.

DIC Group reported a negative cash flow for three consecutive years. In the first half of the year, the firm made VND142.6 billion in after-tax profit, but reported a negative operating cash flow of over VND1.9 trillion. Its cash flow was minus VND245 billion in 2019, VND504 billion in 2020 and VND1.99 trillion in 2021.

Some firms have dealt with negative cash flows by selling off assets, taking back their investments in other projects and selling debt instruments to get cash for operations, while many others have managed to get loans.

The duration of a property project, including the construction, completion and handover processes, is 14-20 months. If financial statements are made during the period, listed companies must factor in inventories and accounts receivable in their revenue.

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