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Greentown case unnerves property investors

  • Published 06 Oct 2011

Concerns over debt and cash flow levels among property developers are hurting stock prices.

Media reports of an investigation by the China Banking Regulatory Commission (CBRC) into Greentown China Holdings (3900:HKG), a large property developer in Zhejiang province, sent the company’s share price tumbling on concerns over its debt and cash flow levels. Greentown denied the investigation took place, and the CBRC said that, although it monitors the real estate sector closely, no specific company has been targeted. Nevertheless, the episode has thrown a spotlight on Greentown – which was running a debt-to-equity level of 162% as of its mid-year report, as well as on other highly-leveraged property companies that have relied upon financing from Trust companies – a scenario we have warned of (CC Sep 22 2011, Financial China).

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