Real Estate Enterprises Rush For Annual Performance "Gold Nine Silver Ten" Price War Starts Again

Since August, local regulation has been tightened frequently, new regulations on financing and capital supervision of real estate enterprises are brewing, and the real estate market has felt the autumn in advance.

This makes this year's property market "gold nine silver ten" war becomes extremely urgent. On the evening of September 6, Evergrande issued an urgent document to sell 600 projects nationwide with a "70% discount", which was the first shot of promotion.

In the first half of this year, due to the impact of the epidemic, most of the real estate enterprises have reduced their income and delayed their start-up. Meanwhile, they are facing the pressure of the new "three red lines". The awareness and motivation of real estate enterprises to promote sales have never been greater than before. It is expected that other real estate enterprises will follow up Evergrande soon.

From the financial point of view, the growth rate of net profit of most real estate enterprises declined in the first half of the year, and the gross profit rate and net interest rate decreased. Sales promotion will further erode the profits of real estate enterprises and pull down the gross profit rate and other indicators.

In 2018, Vanke called out "live" and now it has become a reality. For many real estate enterprises, the primary goal is to survive, followed by development.

Restricted by "three red lines"

The first eight months of the property market are mixed.

Industry fundamentals declined sharply at the beginning of the year. With the orderly promotion of resumption of production and work, sales ushered in continuous repair.

In August last year, the sales of the leading real estate enterprises have reached a level. At the performance meeting in August, the management of country garden said that the performance of country garden in August would surpass that of last year.

In August, the sales of the top 100 companies further strengthened. From the perspective of equity, the top 100 achieved equity sales of 795.7 billion yuan in August, a year-on-year increase of 26%, 2.1 percentage points higher than the previous value. From January to August, the total sales amount of equity caliber reached 5307.9 billion yuan, with a year-on-year growth rate of about 3%. From January to August, the sales amount of equity of the top 100 companies turned positive for the first time in the same year, and was positive for four consecutive months on a year-on-year basis and reached a new high.

But the change in wind direction also occurred in August. The first is the tightening of regulatory policies in some cities. Hangzhou, Dongguan, Wuxi and other places continue to upgrade their restrictions on purchase. Shenzhen claims to learn from Singapore, and the keynote of "no speculation in housing" has been re emphasized.

In September, the policy is still strict, the Ministry of housing and urban rural development further clarify the main responsibility of the city and the provincial supervision and guidance responsibility; the CBRC has stated that it is necessary to prevent the real estate market from over financialization.

Secondly, in history, the real estate financial policy for the first time in the real estate financing index adjustment, specific to each real estate enterprise. On August 20, the Ministry of housing and urban rural development and the central bank convened a meeting of 12 real estate enterprises to convey the relevant matters of the new regulations on financing and capital supervision, namely the "three red lines". After that, real estate enterprises including Vanke, Evergrande and rongchuang said that they would cooperate with the implementation of the new regulations and implement relevant indicators.

Securities Dealers pointed out that the impact of the "three red lines" financing and capital supervision regulations can be compared with the new regulations on asset management in 2018.

According to Guotai Junan Securities report, the red line of supervision is to supervise the on balance sheet values of the statement caliber. If the red line can not meet the standard, full caliber debt management should be carried out, and the pressure will increase sharply. The non consolidated items may be included in the supervision. Considering that the real estate enterprises have always added leverage off the balance sheet in recent years, it does not rule out that it will have a great impact on the development and even survival of some real estate enterprises.

Evergrande is one of a group of real estate enterprises with greater pressure. As of the interim report, Evergrande, rongchuang, Taihe, Fuli and Greenland have all crossed the "three red lines". The asset liability ratio after deducting advance accounts receivable exceeds 70%, the net debt ratio exceeds 100%, and the cash short debt ratio is less than twice.

In addition, the net debt ratios of sunshine city and jiazhaoye were also high, exceeding 100%.

In order to reduce liabilities and recover funds, Evergrande took the lead in the market. On the evening of September 6, Evergrande launched a 30% discount promotion. At the same time, Xu Jiayin, chairman of the board of directors of Evergrande group, has also put forward specific targets, with a total sales of 200 billion yuan in September and October and 100 billion yuan in a single month, which will surpass the monthly sales of Evergrande itself and all real estate enterprises in the whole industry. It is not a simple and easy number to achieve.

Zhang Dawei, chief analyst of Zhongyuan Real estate, believes that Evergrande, as a leading real estate enterprise in the industry, has been in the habit of discount and promotion for many years. From 20% to 70%, every node has a conventional discount, but the actual price has not changed much, so it is more appropriate to define it as a promotion discount. The follow-up effect depends on the price fluctuation of today's individual projects, especially the projects in the first and second tier cities.

From the current market point of view, promotion is to activate the market and eliminate inventory. There is no price for quantity phenomenon, and most of the price fluctuations are not large.

In the first half of this year, the impact of the epidemic led to a decrease in the income of various real estate enterprises, and the construction was delayed, and the pressure of the new regulations of "three red lines" was faced. -Photo by Gan Jun

"Gold nine silver ten" under great pressure

Evergrande's promotion opened the prelude of "gold, nine silver and ten" in the property market.

Zhongyuan Real Estate pointed out that the "golden nine silver ten" in 2020 can be said to be the most critical one in history. In the first half of the year, the epidemic affected the funds of real estate enterprises. Since August, the rumors of "three red lines" and requirements for reducing debts have made developers pay more attention to their debt ratio. To reduce the debt ratio, it is necessary to de stock and withdraw cash.

Zhongyuan Real Estate expects that various marketing activities of real estate enterprises will blow out in September and October, and the number of real estate enterprises following the promotion of Evergrande will increase significantly.

In fact, in the second half of the year, the sales pressure of real estate enterprises is large. Affected by the epidemic situation in the first half of the year, almost two months of sales were missed. Most of the real estate enterprises achieved less than half of the annual target completion rate, and the available goods were concentrated in the second half of the year, especially in the fourth quarter.

Xia Haijun, President of Evergrande, revealed that this year's internal goal is to sprint sales of 800 billion yuan. Therefore, more goods will be arranged in the second half of the year. About 90 million square meters of saleable goods will be launched into the market, and the target of payment collection is 380 billion yuan.

Zhang Yadong, chairman of the board of directors of Greentown China, said that green city still had more than 270 billion yuan worth of goods in the second half of the year. According to the conversion rate of nearly 70%, there would be about 190 billion contract sales amount.

Jiazhaoye, which has set a target of 100 billion yuan this year, will also speed up the supply of goods in the second half of the year. The overall available resources are 120 billion yuan and the saleable area is 6.6 million square meters.

Hejing Taifu, which also has a target of 100 billion yuan, according to the plan, the resources available for sale in the second half of the year are about 130 billion yuan. If it wants to complete the sales of 100 billion yuan, it needs to reach the elimination rate of 51%.

Regardless of the size of real estate enterprises, the phenomenon of such a huge and concentrated supply of goods for sale may be comparable in the fourth quarter of 2008 and 2018 in history.

Hua'an Securities said that the overall thrust of mainstream real estate enterprises remained high in the third quarter. In the fourth quarter, it was not ruled out that the sales targets set at the beginning of the year would be impacted by price for volume, and the sales volume in the second half of the year was expected to continue to increase steadily.

Donghai securities, on the other hand, believes that at present, the property market is under attack, and it is expected that the push of real estate enterprises will be further strengthened, and the policy supervision of hot cities will continue to increase. The demand side is expected to tend to be rational after the high level in recent months. At present, there is a certain pressure on the overall market to remove, and the overall real estate heat may decline.

Some secondary markets have seen substantial price cuts. Recently, Hefei high tech Zone has launched a low price housing, with a drop of 5000 yuan / m2, with a maximum drop of 660000 yuan; the unit price of a second ring road project in Zhengzhou has dropped from 15500 yuan / m2 to 11000 yuan / m2.

Even so, the sales target set by real estate enterprises at the beginning of the year may not be fully realized. According to the 21st century economic report, Vanke set a target of 720 billion yuan at the beginning of the year, but now it has been reduced to less than 700 billion yuan.

For the company, the negative impact of promotion will appear in the next year or two, that is, the decline of gross profit rate, net interest rate and other indicators. At the mid-term performance meeting of Vanke at the end of August, Mr. Zhu Xu, general secretary of Vanke, said that the decline of gross profit rate will be a long-term trend of the industry.