In the announcement of the rating downgrade, Dongfang Jincheng said that the profitability of Taihe Group declined, with revenue of 23.621 billion yuan and 480 million yuan in 2019 and January March 2020 respectively, down 23.77% and 93.57% year on year, and net profit of 728 million yuan and - 539 million yuan respectively, down 81.38% and 154.08% year on year; Taihe Group has a heavy debt burden, and will face the pressure of centralized debt repayment in 2020 By the end of March 2020, the total debt will be 97.14 billion yuan, including 67.908 billion yuan of short-term interest bearing debt, 0.08 times of coverage of monetary capital to short-term interest bearing debt, and the total principal of domestic credit debt due and resold by the company in 2020 will be 8.916 billion yuan.
In addition, the crisis at the level of controlling shareholders is also one of the reasons why Dongfang Jincheng lowered the rating of Taihe Group. Dongfang Jincheng said that the freezing of some shares held by the controlling shareholders restricted the liquidity and refinancing ability of Taihe Group. Up to now, the companys shares held by Taihe Groups controlling shareholder, Taihe investment and its concerted actors have been frozen for 828 million shares, accounting for 53.06% of its shares and 33.27% of the companys total share capital.
On June 19, Taihe Group issued a notice that, upon the application of the company, the trading of 16 Taihe 02 and 16 Taihe 03 was suspended for two trading days from the opening of the market on June 22, and resumed from the opening of the market on June 24. The trading mode was adjusted to only adopt the agreed bulk trading mode and maintain the original net pricing mode. 16 Taihe 02 and 16 Taihe 03 bonds were issued by Taihe Group in May 2016. The issue amount of 16 Taihe 02 bond is 3 billion yuan, the coupon rate is 6%, the term is 5 years, the value date of the bond is May 25, 2016, the interest payment date is May 25 of each year from 2017 to 2021, which is the interest payment date of the previous interest year, and the payment date is May 25, 2021. After deducting the issuing expenses, the raised funds of this issuance of corporate bonds are used to repay the companys debts and supplement the working capital. The issue amount of 16 Taihe 03 is 1.5 billion yuan, with a nominal interest rate of 7.2%. The value date is May 25, 2016, and the maturity date is May 25, 2021. The interest is paid once a year, and the principal is repaid once when it is due. The last interest is paid together with the principal repayment.
The financial situation of Taihe Group is tense, and there are early signs. On the evening of July 11 last year, Taihe Group issued a notice on the issuance of overseas US dollar bonds by wholly-owned overseas subsidiaries, involving a scale of US $400 million, and the interest rate level was as high as 15%, which made the market in an uproar.
On May 13, 2020, Taihe Group announced that the controlling shareholder Taihe investment group is planning to introduce strategic investors, which may lead to changes in the companys control rights. The main business of the strategic investors to be introduced includes real estate business. The planned transaction involves the prior approval of the competent department, and the approval result is uncertain.
The net cash flow from operating activities of 83 real estate enterprises is negative
Zhou Guannan, an analyst at Huachuang securities, said: Taihe Group is under great pressure to repay debts, has tight cash flow, or is an important reason for introducing war investment. The companys four private bonds and two medium-term notes will be matured in four months, with a total scale of 8.92 billion yuan. However, according to the first quarter report, the companys cash flow pressure is large, the sales receipts affected by the impact of the epidemic in the first quarter slowed down significantly, the companys matured debt has a large capital gap, and the external financing demand is strong. In addition to Taihe, recently, new Hualian Group, green city China, sunshine city, Fusheng group, Jinghan Co., Ltd. and other real estate enterprises announced plans or intentions to introduce war investment. From the statements of some companies, the main purpose of seeking strategic investors is to resolve the pressure of the capital chain. On the other hand, it shows that under the background of strict supervision and epidemic impact, the operation of the real estate industry is hard to be optimistic.
From the industry level, under the impact of the epidemic, the sales revenue of real estate enterprises in the first quarter was slow, and the cash flow pressure was generally large. According to the information disclosed in the first quarter report of real estate enterprises, there are 35 real estate enterprises with negative year-on-year growth in monetary capital balance, including poly real estate, Wanda business, Huaxia happiness, Taihe Group, Fuli real estate and other large-scale real estate enterprises with a scale of 100 billion. In addition, the net cash flow from operating activities of 83 real estate enterprises was negative, which was higher than that of 72 in the same period of last year, with a total of 67 real estate enterprises showing negative growth.
From the perspective of interest bearing liabilities, the scale of interest bearing liabilities of 76 real estate enterprises rose month on month in the first quarter. Compared with the increment of interest bearing liabilities in the first quarter of 2019 compared with that in the fourth quarter of 2018, the increment scale in the first quarter of this year is significantly improved. Among the top ten real estate enterprises with the largest increment scale in the first quarter of this year, including poly south, poly development, Huaxia happiness and other top enterprises. According to the balance of monetary capital, among the top ten real estate enterprises in terms of asset size within the statistical range, the ratio of monetary capital to short-term debt of Vanke, poly development, poly South and other enterprises decreased, indicating that the degree of guarantee of cash flow relative to debt decreased.
In terms of leverage, about half of the real estate enterprises net debt ratio decreased year on year. In the first quarter, real estate enterprises land acquisition slowed down, and the overall net debt ratio of the industry decreased significantly year on year. In the 103 real estate enterprises that disclosed the first quarter report, the net debt ratio of 47 real estate enterprises decreased, and the net debt ratio of 56 real estate enterprises realized a positive growth; in large real estate enterprises, except CCCC real estate, the net debt ratio of other top real estate enterprises in the first quarter decreased significantly, mainly because the owners equity increased more year-on-year, and the potential risk of explicit real debt is worthy of attention, and the net debt under this background We still need to be vigilant when the rate drops.
From the perspective of external financing environment, the refinancing situation of real estate enterprises in the first quarter was further differentiated. Under the highly leveraged operation mode, most of the real estate enterprises are facing the pressure of cash flow. On the one hand, the structural adjustment in the industry is still continuing. On the other hand, some of the top enterprises also have the phenomenon that the ratio of monetary capital to short-term debt has declined. The current low interest rate environment has a certain effect on reducing the financing cost of all kinds of real estate enterprises, but it has a more significant impact on the head real estate enterprises. Especially in the primary market, the issuance difficulty of small and medium-sized real estate enterprises is still high. In addition, the risk preference fell rapidly in the first quarter, and the proportion of the issuance scale of high-grade real estate enterprises increased rapidly, which has caused a certain crowding out effect on the direct financing of small and medium-sized real estate enterprises. With the acceleration of industry resource integration, the industry concentration may be further improved. At present, the overall sales growth of the real estate industry has declined, the sales ends of real estate enterprises with different qualifications continue to differentiate, the policy of superimposed financing end is tightened, the impact of large-scale real estate enterprises is relatively small, small and medium-sized real estate enterprises are greatly affected by the tightening of financing policy, and the sinking qualification of real estate enterprises still needs to be cautious.