Housing Companies Reshuffle

In 1996, Yihe real estate developed the first high-end project "Yihe mountain villa" in Guangzhou to become a synonym for luxury houses.

For the 15 consecutive year, he entered the list of top 100 housing companies, but now he is deeply involved in the liquidity crisis, involving 9 default debts and 8 lawsuits.

Yihe is not a case. This year, a number of old housing enterprises have exploded, including silver billion, upper group, Guangdong Thai holding company, Sansheng Hongye, etc. these 20 years old old housing companies have been eliminated and some are on the brink of collapse in this downward cycle.

The days of big head housing companies are not so good. Vanke shouted "live" last year, and now it has become the reality of many housing companies. They have tightened their belts, readjust their regional organizational structure, reduce their salaries and lay off workers, and shrink their "slim" survival.

Through the golden age and the silver age, real estate mergers and acquisitions, the big shuffle is coming. For small and medium-sized Housing enterprises, hundreds of billions of dollars are the threshold. Just when a new round of regulation comes, some housing companies will have to stay outside the threshold of 100 billion.

The tightening of the financing side has never been as severe as this year. - Song Wenhui photo

Frequent liquidity risk

In November 14th, because of the undisclosed information, Yihe real estate and its chairman He Jianliang were issued a warning letter by the SFC, which involved 9 default debts, totaling 1 billion 800 million yuan and 50 million US dollars.

According to the joint rating report, in September 11, 2019, according to the announcement of Yihe real estate, due to the deterioration of liquidity, the company failed to pay the interest and principal of the bonds "17 Yihe 01" and "17 Yihe 04" on time.

Wind information showed that "17 Yihe 01" was sold back in August 4, 2019, with a balance of 304 million yuan, and "17 Yihe 04" bonds sold back in September, with a balance of 760 million yuan.

Looking at Kai Xin Bao data, Yihe group was listed as a dishonest executor 4 times in May and September this year. Like Wang Sicong, He Jianliang has been included in the restricted high consumption list.

"The real estate industry is very much influenced by policies, and it will be very difficult to get through 2018 safely." He Jianliang once told the media at the end of 2018 that it was a prophecy.

In 2019, it was more difficult for many housing companies.

"Strive to achieve more than 100 billion sales revenue by 2020." This is the goal set by Silver billion group in 1994.

However, for many years, the 100 million Chinese housing companies have been unable to wait until 2020. In June 14th, because it could not get rid of the liquidity crisis, Silver billion applied for bankruptcy reorganization in Ningbo intermediate people's Court of Zhejiang province.

The upper group set up in 1993 is 20th anniversary, but has no intention of celebrating this year.

In September 6th, the upper group was taken to court by its second largest shareholder. The total amount of investment made to the upper group is about 150 million yuan payable and outstanding payments, breach of the agreement damages, and related interest, costs and other assistance.

In the first half of the year, the company's performance fell from surplus to 199 million yuan for the first time.

Guangdong Tai shares, which were founded earlier than Vanke, are also facing liquidity crisis and selling assets to save themselves. In June, the company sold five projects to Shimao, with a total consideration of about 6 billion 400 million yuan.

In this year's old housing industry, the most dramatic thing is the three industries. Employee debt collection, the 63 year old chairman Chen Jianming tears on the scene, showing the company's distress and survival difficulties.

When Vanke shouted to "live", many hundreds of billions of threshold housing prices have been "unable to live" situation.

Under the ebb tide, even if the old housing enterprises who have crossed many real estate cycles, if they do not have a scale and profit margin, they will be faced with the fate of being shuffled.

"Over the past 2 years, a large number of Housing enterprises have been overburdened for speeding up development, which has brought huge risks. In particular, some enterprises in order to easier financing, buy property sales list, fake top 100, recently appeared a lot of such enterprises' capital chain risk. Central Plains real estate chief analyst Zhang Dawei said.

"Transformation is the commonality of these housing enterprises", Zhang Dawei said at the same time, with the increase of real estate market transformation enterprises, the number of small and medium enterprises leaving the real estate market in the near future will probably be close to 2014. In that year, 2000 housing enterprises went bankrupt.

Song Huiyong, a real estate veteran in Shanghai, believes that the crisis of small and medium-sized Housing enterprises is mainly a matter of their own business, and there is no lack of fundamental understanding and determination for the central market regulation.

The whole industry is losing weight.

Small and medium enterprises are facing a liquidity crisis, and the housing prices of their heads are also bad. They frequently come out with news of organizational restructuring, wage cuts and layoffs.

As an industry "big brother" Vanke, not only adjusted the regional rank structure, from the original V sequence to the 1-50 digit sequence, but also adjusted the salary structure.

Vanke in the salary adjustment, the basic salary ratio will be reduced, improve performance ratio. There are people in the industry who said, "although many of the reductions have been put into performance, the actual performance wage is not optimistic.

Some people think, "Vanke's sales are not bad, and Wang Shi said Vanke's annual report is very good, there is no pay cut."

Vanke responded that the salary of most people was unchanged before and after adjustment, and there was no general or general promotion. The adjustment is aimed at matching the responsibilities change of personnel positions promptly, having the upper and lower, no longer the seniority, and the organization more flexible.

Sales champion Biguiyuan has been restructuring many times this year.

In June, Biguiyuan carried out the "big change" to the Beijing area, merging the original 5 regions into a new Beijing region and the northeastern part of Beijing.

In November, on the basis of the adjustment of headquarters structure, Biguiyuan reconstructed the marketing system.

The "Shuang Bin" combination of sunshine city was excavated from Biguiyuan, and the regional companies in the big bay area were adjusted in August. The Dongguan Shenzhen area merged with the eastern Guangdong regional company to integrate into Shenzhen regional company.

Zhongliang real estate has carried out a "major operation" for the 12 major regions. The contraction has been merged into six regions, namely, the southern, northern, western, Shandong, Jiangsu and Zhejiang regions.

"Now the scale of business is being compressed, and enterprises should slow down a bit." Financial commentator Yan Yuejin said that after the compression of the scale, some businesses were overstaffed or even deficit. It is necessary to integrate the organizational structure to ensure liquidity safety and ensure the smooth operation of the personnel system and item company.

Wang Xiaoqiang, an analyst with Zhuge's data research center, said that with the tightening of housing financing, most enterprises began to control costs to ensure cash flow.

In addition to downsizing the organization structure and optimizing the sale of assets like OCT, the assets are optimized and adjusted. According to incomplete statistics of twenty-first Century economic report, in the 6-7 months and two months of this year, overseas Chinese town sold at least 7 companies involving Chengdu, Xi'an and other places.

Wang Xiaoqiang said that under the background of tighter policy and capital, housing companies have difficulty in financing, slow repayment and pressure to achieve high performance.

Unprecedented "tight money"

Zhang Dawei and others believe that the reason why housing prices are not good this year is mainly due to tightened policy. Real estate regulation and control has always been there, and the developers are early awakening, but the tightening of the financing side has never been as severe as this year.

The strict control of the financing side is unprecedented. According to Zhongyuan Real estate data, since 2019, there have been more than 25 policies aimed at the real estate capital chain.

In November 5th, the S & P report pointed out that "financing constraints constrained developers to expand their fist". Chinese real estate developers are shifting gears to accept the fact that the financing environment has never been tightened.

Chinese regulators are closely monitoring the financing channels of real estate developers.

In addition to restrictions imposed on domestic bond market financing last year, real estate related regulation has been extended to offshore bond markets, trust financing and commercial bank loans.

Policy continues to "patch" the control of real estate financing. S & P said developers, especially those with more aggressive expansion and shorter operating records, usually rely on non-standard financing channels such as trust loans, entrusted loans and financial products. However, the recent implementation of the real estate financing restrictions means that these new channels of financing are basically blocked.

"If you want to gain or maintain market share, Chinese real estate developers may need to re focus on product differentiation, cost management and operational efficiency." Liao Meishan, a global rating analyst at S & P, said. "They no longer have the ammunition solely relying on debt to scale up expansion."

To add insult to injury, the 2015-2016 year is the easing period of Housing enterprises issuing bonds. Housing enterprises issued a large number of bonds in 2015.

The first burst of Silver billion last night on Christmas Eve was its corporate bond issued in 2015.

According to the research data, according to the maturity of the bonds of the housing enterprises, the issuance of corporate bonds and medium-term notes in 2015 is relatively large. Most of the enterprises have a maturity of 3-7 years. In the second half of this year, the maturity bond of Housing enterprises is 170 billion 600 million yuan, and the total amount of maturity bonds is also at a high level.

The second half of 2020, the first half of 2021, the debt pressure of Housing enterprises will further increase, and the maturity bonds will exceed 300 billion yuan, when housing enterprises will face greater debt repayment and financing pressure.

From the central government to the Banking Regulatory Commission, it has repeatedly stressed the need to guard against financial risks in real estate. In August this year, 32 city banks real estate business welcomed special inspections. The number of banks in each city should be no less than 3, and the illegal appropriation of funds into the real estate industry will be thoroughly investigated, including development loans, individual loans, housing leasing and other businesses.

At the same time, the central government has set the tone for the first time, and will not make real estate as a short-term stimulus to the economy.

Yan Yuejin said that this round of capital chain tightening is longer than expected. Some high bar enterprises, especially those with very strong expansion over the past two years, will face liquidity risk. Under the pressure of funds, we even rush to sell projects and get into a more awkward situation.

Song Huiyong also said, "all previous policies are loose and tight, and now there is little possibility of relaxation. The market adjustment cycle is correspondingly lengthened."

Entering the era of big shuffle

Housing enterprises radically plus leverage, and sped up to expand rapidly, for the "100 billion, two hundred billion" admission ticket.

Yan Yuejin said that with more and more enterprises entering the ranks of 100 billion, while some enterprises are sprinting trillion scale, 100 billion is considered to be an important indicator of the definition of large enterprises.

"Behind billions of dollars is bank credit and low interest costs." Song Huiyong said.

The industry has shifted from the incremental era to the stock age. Under the competition of big fish and small fish, every "small fish" wants to eat itself as "big fish" as soon as possible, and it is difficult to strike hundreds of millions of people.

"The pie in the sales market has been fixed." Xia Haijun, vice president and chief executive of Hengda University, said in the interim results conference that the annual sales of new houses will be maintained at around 15 trillion yuan, and there will be no big breakthrough.

In 2006, China's top ten developers accounted for about 4.7% of the market share. By the end of 2018, the top ten developers accounted for 26%, of which the top three giants accounted for 12.6%.

Xia Haijun believes that the future market space is not caused by the continuous expansion of the real estate incremental market, but the merger and acquisition of small and medium-sized enterprises, so as to achieve the expansion of large enterprises. Five years later, China's top ten developers will probably account for 40% of all sales. The top three developers are about 20%, or 3 trillion yuan.

He also said that at that time, if China's leading enterprises were to show their faces in the top three ranking, the sales scale should reach about 1 trillion yuan.

Sun Hongbin, chairman of China's board of directors, also expressed similar views in his recent speech. He believed that the top five of the industry could account for 30% of the market in the next five years.

In November 21st, Guotai Junan research report pointed out that since 2009, the market concentration of the real estate industry has been increasing year by year. In the second half of 2017, when the regulatory policy tightened and the industry fundamentals descended, the industry concentration degree was greatly improved. At present, the industry CR10 has reached 27.4%.

During the severe policy period, small and medium-sized Housing enterprises will accelerate the clearance, and will continue to create room for the sales share promotion of leading housing enterprises.

Economist Ma Guangyuan's judgment is more brutal. He said that China's real estate will return to the three "20%": the future market only 20% of developers can survive, 80% will die, China's developers are too many, 80% dead, no shortage of houses; only 20% of the city, only 20% of the real estate.

"It's back to the three 10%," Huang Lichong, founder of the strategic alliance management group, is more pessimistic. "Now many developers end up developing projects. Only 10% will continue to develop projects. Only 10% of the houses are in balance of supply and demand, others are serious oversupply, only 10% of the property is worth buying, and others will lose money."

And he said it will appear in the next three years.

"If we look at the trend, we will see it in the future, and we will know it abroad, but China's urbanization is less than 60%. The high level of real estate will allow for a longer period." Zhang Dawei is optimistic that the development of real estate will not be cut off by Cliff style.

Song Huiyong warned that in the context of continued tightening of financing, large companies will also have some risks.

"It depends on the discretion of the decision-making level. It's harder to handle. There's something about gambling. " He further added that "if we dare to raise funds, we will be able to say that the market is turning cold." if we dare not raise capital, we will be conservative if we encounter the market warming.

In short, developers are fighting in a fog, looking for directions.