Key Words Of 2020 Interim Report Of Real Estate Enterprises: Reducing Debt, Taking Land Cautiously And Selling As King

"In the future, we will continue to reduce debt, because we have to do some debt reduction before the rating can be upgraded..." At the mid-term performance meeting on August 24, Li Silian, chairman of Fuli real estate, said. In the first half of this year, Fuli's equity sales volume was 51.06 billion yuan, down 15.21% year-on-year, and only 33.6% of the annual target was achieved. Over the same period, Fuli's net debt ratio reached 177%.

Recently, real estate enterprises enter the release season of China Daily. Affected by the epidemic, the sales performance of many real estate enterprises in the first half of the year was lower than expected, and some enterprises showed a decline in sales and profits. However, since entering the second quarter, the market has accelerated to recover, and the impact of the epidemic has gradually disappeared.

However, compared with previous years, the attitude of real estate enterprises towards the market appears to be more "modest and cautious", which is mainly due to the recent attitude of the regulatory authorities.

    On August 20, the Ministry of housing and urban rural development and the people's Bank of China held a forum on key real estate enterprises in Beijing, emphasizing the implementation of prudent management system of real estate finance and enhancing the marketization, regularization and transparency of financing of real estate enterprises. The central bank, the Ministry of housing and urban rural development, together with relevant departments, formed the fund monitoring and financing management of key real estate enterprises on the basis of extensive consultation in the early stage Rules.

Before that, in order to control the growth of interest bearing debt of real estate enterprises, the regulatory authorities issued new regulations and set up "three red lines" for management. Various signs show that the "strong supervision" of financing for the purpose of controlling leverage is becoming the norm.

This also brings a new test to the housing enterprises that have just recovered from the epidemic and are trying to further expand their scale. How do enterprises view the new financing rules? What strategies will be adopted in the second half of the year? Many of the answers are hidden in the Chinese newspapers and in the statements.

The rate of payment collection increased significantly

The impact of the epidemic on the real estate industry is mainly reflected in the sales link.

Among the top real estate enterprises, in the first half of this year, country garden realized an equity sales amount of 266.95 billion yuan, a year-on-year decrease of 5.32%; the net profit was about 21.93 billion yuan, a year-on-year decrease of 5.2%. Over the same period, rongchuang completed a contract sales amount of 195.27 billion yuan, a year-on-year decrease of 8.8%, and a net profit increase of about 6.5%. Poly realized a sales amount of 224.54 billion yuan, a year-on-year decrease of 11.1%, and a slight increase in net profit.

In contrast, some of the "second tier" real estate companies have achieved performance growth. For example, Zhonghai achieved a contract sales of 172.01 billion yuan, an increase of 4.2%; Longhu achieved a contract sales of 111.1 billion yuan, a year-on-year increase of 5.2%; Shimao completed a contract sales of 110.48 billion yuan, a year-on-year increase of 10%.

In the past three years, there has been a rare "bull market" in the real estate market, and many real estate enterprises have achieved a substantial increase in sales scale. Among them, the compound growth rate of large and medium-sized real estate enterprises is generally in the level of 30% - 50%.

Since the beginning of this year, the epidemic has once made sales of many real estate enterprises frustrated, and only gradually recovered in the second quarter. "Basically, there is no sales for a month and a half." Zhang Zhichao, chief executive officer of China Shipping real estate, said that this also led to a delay in the supply of goods. In June, when the epidemic situation was gradually under control, China Shipping concentrated its supply and sales, and achieved a record sales scale of 57.56 billion yuan in that month.

But not all real estate companies can stabilize sales. In this round of epidemic, no matter large-scale real estate enterprises or small and medium-sized enterprises, there are members who are hard to escape.

In the first half of this year, Greenland realized 133.029 billion yuan of real estate contract sales, a year-on-year decrease of 20.7%, and a year-on-year decrease of 30.7%. Over the same period, the operating income of Beichen real estate was 3.348 billion yuan, down 60.83% year on year, and the company's profit decreased by more than 80%.

It is worth noting that in recent years, with the continuous emphasis on the collection of funds, the rate of payment collection of real estate enterprises is generally better. In the first half of the year, country garden and Greenland's return rate reached an astonishing 95%. This also ensures that the sales of enterprises affected by the situation, sales cash flow will not shrink too much.

By July 19, Jinmao had received more than 100 billion yuan. In the first half of the year, the company achieved 102.87 billion yuan of contract sales (a year-on-year increase of 31%), and the sales and payment collection both exceeded 100 billion yuan.

Although affected by the epidemic, the confidence of real estate enterprises has also begun to recover since the market gradually recovered in the second quarter. Due to the tightening of financing policies, most enterprises believe in the belief that "sales are the king" and will not adjust the annual sales targets.

Zhang Zhichao said that in the second half of the year, China shipping will actively focus on supply and sales. As a key supply stage, the supply in the second half of the year will account for 61%. "In the second half of the year, as long as there is no major recurrence of the epidemic and major economic situation, the company is still relatively confident to achieve the annual target of HK $400 billion."

Fuli, which only achieved 33.6% of the annual target, also said that "the sales target of around 152 billion will remain unchanged.". To achieve this goal, Fuli will launch 16 new projects and about 230 billion yuan of available resources.

On February 16, 2020, a real estate construction site on Kangxin Road, Fengtai District, Beijing has not been resumed. People's vision

"It's painful to take the wrong land"

In fact, real estate enterprises to strengthen sales and payment collection, in addition to the consideration of ensuring cash flow, but also the purpose of reducing debt.

For the new financing management policy, real estate enterprises in the public interpretation, it is called a norm. "The main purpose of this measure is to stabilize the leverage of developers, control the debt will not grow too fast, so as to stabilize the house price. We believe that this measure is a measure to regulate the behavior of the industry and force the industry into a healthy state. " Longhu group executive director and chief financial officer Zhao Yi said.

In the past year or more, many real estate enterprises have realized the reduction of debt ratio through debt replacement. In the semi annual report, the debt ratio of many enterprises is lower than that of the same period last year. However, with the "three red lines" as the standard, the policy of "strong supervision" on financing still makes enterprises realize a reality: if they want to continue to achieve development through capital leverage, they must first control the existing debt level.

According to the financial data of 2019, Tianfeng securities classifies 50 real estate enterprises with high sales volume according to the three standards of "excluding advance accounts receivable asset liability ratio of 70%", "net debt ratio of 100%", and "currency short debt ratio of 1". Among them, there are 14 real estate enterprises stepping on the "three red lines" at the same time, 10 real estate enterprises stepping on two red lines, 14 real estate enterprises stepping on one red line, and only 12 real estate enterprises not treading on the line.

"In the next nine months, we may handle between 25 billion and 30 billion debts at home and abroad. More than half of them will have some restructuring arrangements, and the rest will be offset by capital and sales," Li said Yajule also claimed that the debt ratio should be controlled at a reasonable level of about 70%. Even China shipping and Longhu, which have low debt ratios, also stressed that they will continue to control the scale of their liabilities.

Since this year, with the pilot of the long-term mechanism continues to advance, the real estate enterprises are generally aware of the reality of the normalization of the real estate market regulation. How to achieve the moderate growth of scale and profit under the premise of ensuring safety has become the main topic of enterprises. For the real estate enterprises which have achieved rapid growth through high leverage, this issue is particularly serious.

"To optimize the structure of assets and liabilities, we need to balance the triangular relationship among scale, profit and liabilities, which is a very important topic." Midea real estate executive director and chief financial officer lingo said at the performance meeting. From 2015 to 2018, Midea real estate sales compound growth rate was 73.8%, and entered the 100 billion camp in 2019. After the completion of scale development, Midea real estate positioned its business strategy as "strategic consolidation year".

Among them, Midea's land acquisition strategy has become more cautious. The company will still take land according to 1 / 3 of the sales return, but try to avoid selling at high points.

This strategy is not hard to understand. The severe financing environment and fierce market competition make the funds of real estate enterprises more and more "precious". Therefore, the importance of front-end investment is greatly improved.

Recently, Fang Mingfu, CO president of Jinke Co., Ltd., said in an interview with 21st century economic report that as the fault tolerance space of the market has been greatly reduced, the investment capacity of the front-end is often the key factor determining the success or failure of a project. "In the past, there were some places that were not refined and some mistakes were made that could be digested through the market, but now there is no space."

At the performance meeting, Chen Zhuolin, chairman and President of the board of directors of Yajule, expressed the same view, "we can't take land indiscriminately now. In the second half of the year, we will have better opportunities to arrange for mergers and acquisitions or other industries. If there is no good land or good project in the second half of the year, we will take the land next year, because it is very painful to get the wrong land. "