On the evening of October 29, Cinda real estate released its third quarterly report. In the first three quarters of this year, Xinda Real estate equity sales contract value reached 15.98 billion yuan, a year-on-year decrease of 33%. The companys cash flow, net profit and other indicators have declined significantly. In terms of indicators reflecting future development, land acquisition, new construction and completion indicators also declined.
This phenomenon has been reflected in this years semi annual report. The company has said that in response to market risks, it will increase sales efforts, accelerate sales receipts, and strive to improve the markets ability to respond. But for Cinda real estate, which is not good at developing and operating capacity, the effect is not good.
2015-2017 is the rising cycle of this round of real estate market. Many real estate enterprises seize urban land and consolidate land reserves. During this time, the unknown Xinda Real estate has repeatedly snatched food from the mouth of a tiger and snatched high price land from a large number of alligators. According to incomplete statistics, in the past three years, Xinda Real estate has won eight land kings in Shanghai, Guangzhou, Shenzhen, Hangzhou and Hefei, with a total land price of more than 43 billion, so Xinda Real estate is also known as land King harvester.
After 2018, the price limit, sales limit and other real estate market control policies continue to put pressure, and many Diwang projects are faced with difficulties in market entry and sales. Xinda Real Estate once used some financial means to relieve the financial pressure on the balance sheet brought by high prices, but the sequelae of Diwang is still emerging.
As of the third quarter of this year, two of the five Diwang projects in Xinda Real estate have not yet generated sales results. In another project, sales were relatively slow due to high pricing.
All kinds of signs show that the king of the earth halo is becoming a heavy burden for Xinda Real estate.
Radicalism and financial planning
The time goes back to the afternoon of May 27, 2016, when the Olympic Sports unit plot in Binjiang District of Hangzhou was officially sold, starting at 6.286 billion yuan. The plot attracted 17 bidders to sign up, most of them are first-line real estate enterprises. Cinda real estate and Vanke formed a consortium to participate in the bidding.
The competition on the spot is fierce. The land price has jumped to 9.5 billion just after the fourth round of licensing. Since then, China Merchants - New City consortium, Longhu and Rongxin have been competing for the price of nearly 12 billion yuan. At this time, the Vanke Cinda consortium, which has been waiting for a long time, suddenly made a move and kept increasing its price. Finally, the Vanke Xinda joint venture won the plot with a total price of 12.318 billion yuan and a floor price of 21575.78 yuan / square meter, creating the national total price land king in 2016.
At this time, Xinda Real estate has long been famous all over the world. During the year from June 2015 to June 2016, Xinda Real Estate won seven land kings in the form of a single or joint venture, and all of them were counter attacks of tiger mouth seizing food. Among them, the total price of four plots is more than 4 billion, and the unit price of three plots is more than 30000 yuan / m2. In December 2017, Xinda Real Estate won the land king of Baohe in Hefei with a total price of 4.3 billion yuan.
Xinda Real estate was listed on the back door in 2009. At first, it was very low-key, and the projects were mainly concentrated in the second and third tier cities. This is the first time that Xinda Real estate has appeared in the spotlight. But until 2017, the contract sales of Xinda Real estate was only 22.471 billion yuan, which could not match the first-line real estate enterprises in both scale and influence.
It is generally believed that the rise of Cinda depends on the strong resources of its parent company. The actual controller of Cinda real estate is China Cinda Asset Management Co., Ltd., which is one of the four largest asset management companies (also known as AMC).
A research report issued by Shanghai Yiju Real Estate Research Institute once pointed out that the real estate related non-performing assets, due to the high value of collateral and great potential for appreciation, are AMCs profit-making tools, mainly including land, construction in progress, uncompleted buildings, investment properties, etc. Four AMCs have quietly infiltrated the real estate industry, and may become the largest landlord in the real estate industry in the future.
However, the agency also pointed out that compared with traditional real estate enterprises, AMCs real estate subsidiaries have double advantages of capital and resources, but the ability to handle the real estate market is weak, which is a big hard injury to the cyclical and highly volatile real estate development industry.
Therefore, cooperative development with traditional real estate enterprises has become the main choice of such enterprises. Cinda real estate is no exception.
Among the 8 king of the land projects acquired by Xinda Real estate, 6 have introduced partners. Cooperative development can not only make up for the lack of Xindas real estate development capacity, reduce the financial burden, but also help to operate some financial means, so as to reduce the pressure on the balance sheet.
For example, Cinda real estate gave up the control rights of three Diwang so that these three projects became significant equity investment projects, without having to be incorporated into the financial statements.
In fact, the capital pressure brought by other Diwang is not small, but in recent years, the financial statements of Xinda Real estate have been relatively stable, and the influence trace of Diwang seems not obvious.
But he also said that this kind of operation can only bring about a static financial balance. In order to maintain a good financial status in the expansion, the existing projects must be operated quickly to realize development, sales and bring in the payment.
Emergence of sequela
But the shadow of the king of the earth is gradually emerging. The 21st century economic report combed the projects under Xinda Real Estate and found that in recent years, non Diwang projects contributed most of the sales and receipts, and the operation of Diwang projects was in good or bad condition, and the pressure brought by some projects is still there.
As of the third quarter of this year, among the five Diwang projects incorporated into the financial statements of Xinda Real estate, the sales of Hangzhou Nanxing Diwang and Hefei Binhu Diwang are relatively good.
Recently, the Diwang of Baohe, Hefei, started to be sold in the second half of that year. The case is called Emerald skyline. Due to the high cost of land, the average selling price of the project is more than 20000 yuan / square meter, which is significantly higher than the prices of similar products and second-hand houses around. According to the public information, for the part of the project that has been launched, the removal rate is about 50%, and about half of the volume has not yet started.
Shanghai Gucun Diwang was acquired in June 2016, which is an independent trading platform for Xinda. In 2017 and 2018, the two plots started successively. By the third quarter of 2019, the project is still under construction, and no sales performance has been generated so far. The total investment of the project is about 9 billion yuan, and the accumulated investment is less than 1.5 billion yuan.
Yan Yuejin, a financial commentator, told the 21st century economic report that large-scale development at the same time would bring considerable financial pressure to enterprises. If there is a lack of sufficient financial strength, it is usually difficult for enterprises to take account of it, which makes some projects develop slowly.
At the same time, he said that there would be another problem in centralized access to the Diwang project, that is, long development cycle and large scale of funds. If the unit price is king of land, it will usually be sold in the form of luxury houses, and its removal speed is slower than that of ordinary projects. Historical experience shows that although the Diwang project can also be decoupled, the cycle is long and the cost of capital is not low, so real estate enterprises usually avoid taking Diwang intensively.
In 2018, the sales volume of Xinda Real Estate exceeded 30 billion for the first time, achieving a breakthrough in scale. But scale pressure and Diwangs sequelae appear at the same time. Even if a large number of projects are for cooperative development, the capital chain is still tight.
In 2018, the operating cash flow of Xinda Real estate was 7.06 billion yuan, down 51% year-on-year, due to the expansion of the companys scale, the increase of project payment and land payment. Due to the good sales of non consolidated items, the companys investment cash flow reached 4.47 billion in that year. However, the financing cash flow was poor, which was negative 8.43 billion, due to the increase in repayment of loan from related parties of cooperative projects.
In 2019, the regulation and control of the real estate market continue to exert pressure, the financing channels of real estate enterprises are greatly limited, and the hot first and second tier city market enters a downward period. In the first three quarters of this year, the equity sales area of Xinda Real estate was 940800 square meters, and the equity sales contract value was 15.98 billion yuan, down 13.5% and 33% respectively year on year.
In January, may and July this year, Cinda real estate raised 4.9 billion yuan through issuing corporate bonds, but the companys capital pressure has not been really relieved. Some analysts believe that with the continuous pressure of the real estate market regulation, the control of the parent companys blood transfusion will become more and more severe, and the capital channel of Cinda real estate will be affected.
In June, Xinda Real Estate transferred all the equity of Guangdong Jiajun investment real estate Co., Ltd., Zhanjiang orchid Real Estate Development Co., Ltd. and Zhanjiang Yunyu Real Estate Co., Ltd., which were acquired when Xinda was involved in the bankruptcy and reorganization of Jiayue group, the largest private enterprise in Zhanjiang.
According to the equity transfer information, as of April 2019, the three companies are in the state of insolvency, with the owners equity of - 348 million yuan, - 585 million yuan and - 176 million yuan respectively. After Cinda took over in 2014, these projects have progressed slowly. By the end of 2018, the area to be developed of the six plots involved had reached 349000 square meters, the same as that in 2017.
Yan Yuejin pointed out that Xinda Real estate is not good at development and operation, and has strong dependence on plot quality and partners. Once the project with poor quality is encountered, it is more difficult to operate independently. Therefore, the transfer project can be regarded as the performance of stop loss.
He also believes that if the fund situation fails to improve continuously, the possibility of Xinda Real Estate continuing to sell the project will not be ruled out.
In the first three quarters of this year, both operating cash flow and investment cash flow of Cinda real estate declined, while financing cash flow continued to be negative.
Moreover, the rapid growth of Cinda real estate in the past few years may also come to an end. In the first three quarters of this year, the new land scale and new construction area of Xinda Real Estate decreased by about half compared with the same period last year, and the completed area also decreased significantly. Some institutions believe that Xinda Real estate is likely to fall behind in this round of adjustment.
Yan Yuejin pointed out that in order to stop losses quickly, the urgent task is still to solve the pressure of the king of the earth. Among them, it will be the top priority to deal with the two Diwang who have not generated sales performance as soon as possible.
Source: responsible editor of 21st century economic report: Chen Hequn, nb12679