After a new wave of negative events of credit bonds, the real estate industry has successively seen cases of cancellation or postponement of bond issuance.
Since November 10, nearly 20 real estate companies have cancelled or postponed the issuance of bonds, according to Ifind data.
Recently, Huang Lichong, President of Huisheng international financing, told the times weekly that before the market worries disappeared, it would be more difficult to issue these bonds. Compared with the first half of this year, financing for the real estate sector has also been tightened recently.
The scale of default increases year by year
Compared with other industries, the default rate of real estate industry is not high, but the scale of default is increasing year by year.
According to Craig data, from 2018 to November 13, 2020, there were 6, 15 and 18 default bonds per year respectively.
In 2018, Huaye capital, Zhonghong, Yinyi, Guogou and other enterprises broke the contract one after another. However, Guotai Junan pointed out that all of the above-mentioned default subjects are small and medium-sized real estate enterprises, and the reasons for default are mainly focused on the problems of enterprise investment radicalization, failure diversification and corporate governance, which are not related to the real estate industry.
However, since 2020, new Hualian, Taihe, Tianfang and Sansheng Hongye have broken the contract successively, and the total default principal and interest amount of the real estate industry is 14.884 billion yuan, exceeding the default level in 2018-2019.
Among them, the actual controllers of Tianfang trust and Tianfang group are Tianjin SASAC. The total default principal and interest of Taihe Group is 11.677 billion yuan, which is the first top 50 default real estate enterprise. The common characteristics of the four default entities are as follows: sales collection is blocked, liquidity is under pressure, financial leverage is high and financing cost is increased.
The net debt ratio of many defaulting enterprises is far higher than the average level of the industry, and the leverage ratio is too high. Among them, 6 enterprises blindly diversify and enter the fields far away from the main industries of real estate, such as chemical industry, medicine, etc., with large amount of deposited capital and slow payment collection, which increases the pressure of cash flow. Kerry pointed out that the increase of default events in recent years is mainly due to the continuous tightening of industry financing. This year, the impact of epidemic situation will be superimposed again, which will further increase the pressure on cash flow of enterprises.
The first quarter of next year will be the peak of debt repayment
While the scale of default continues to rise, real estate companies will also usher in the peak of debt repayment next year.
According to the data of Guotai Junan, in the coming year, the maturity of domestic credit bonds of real estate enterprises will exceed 400 billion yuan, and the debt repayment peak will be in the first quarter of 2021. From the point of view of debt repayment in April 2020, it will be the highest in November 20202. According to the calculation of Lianhe credit, the due amount of real estate bonds in 2021 is 527.8 billion yuan without considering the exercise of rights. If we consider the exercise of debt with rights, the maturity and exercise amount of real estate bonds in 2021 will be about 784 billion yuan.
At the same time, under the background of the three red lines, the financing end of the real estate industry has been tightened, and some of the real estate enterprises with red file and orange file and not rich in local reserves have been greatly impacted, and the Matthew effect of the industry has been intensified.
Guotai Junan pointed out that, on the one hand, such real estate enterprises are difficult to borrow large-scale due to policy restrictions, debt rolling and land investment are limited; on the other hand, the lack of land reserves restricts the growth of their operating cash flow. When facing the pressure of selling back at maturity, there may be a problem of capital chain fracture and credit risk.
Recently, Liu CE, vice president and chief economist of jiazhaoye group, told the times weekly that under the control of the three red lines, not only the financing scale of real estate enterprises is directly limited, but also the situations under penetrating supervision, such as the real debt of public shares and on balance sheet and off balance sheet, will be included in the regulatory system. In this context, the survival space of small and medium-sized real estate enterprises will be further squeezed.
Yan Yuejin, research director of the think tank center of E-House Research Institute, told time weekly that under the background of the implementation of the three red lines, enterprises need to pay attention to follow-up financing and other contents. If the capital situation is not good or it is difficult to issue bonds, it is necessary to reduce land acquisition and actively do sales. This is to ensure the stability of real estate enterprises and real estate sector. Especially for some real estate enterprises that touch the red line, we need to pay more attention to introducing new investors to ease the pressure on debt.
Fast turnover becomes the core direction of real estate enterprises
High leverage is difficult to sustain, the financing side continues to tighten, and fast turnover has become the core direction of major housing enterprises.
According to CSCI, since the tightening of real estate financing policy in 2016, the sales return under the fast turnover mode is the most important cash inflow mode for real estate enterprises, and the proportion of sales return / development fund source is about 60%. Liu CE also said that the return on net assets of real estate enterprises reached a historical peak in 2019, which is not driven by profit, nor driven by leverage, but driven by turnover capacity.
Xu Jinye, chief financial officer of SunPower holdings, said that the companys future growth will still increase its scale through fine management and fast turnover. Guo Guanghui, vice president of Chinas overseas development, said that the company will continue to improve project operation efficiency and speed up project turnover in the second half of the year. In response to the project investment standards, Mr. Liu Weiliang, executive director and vice president of Zhengrong real estate, said that he would still pay attention to several core indicators such as turnover efficiency and profit scale of the whole project.
Previously, the vice president of a 100 billion level real estate enterprise once told the times weekly that fast turnover refers to the rapid turnover of funds, that is, planning and designing ahead of time, and then striving to get the land to start construction quickly, open the market as soon as possible, accelerate the return of cash, and then invest in the next project to strive for scale growth and industry ranking. He also said that fast turnover is not the fast turnover of the construction cycle. The delivery period stipulated in the sales contract of the project is still the original standard. For example, for the 30 storey high-rise residential buildings, the delivery period is generally 2-3 years. On November 30, the middle level of another 100 billion level real estate enterprise told the times weekly that although fast turnover is a financial perspective, it is different from quality in two dimensions. But if the enterprise does not have the mature systematic management and control ability to do the support, the rapid development sometimes will bring the product quality reduction or the non-standard. Source of this article: times weekly Author: Hu Tianxiang, editor in charge: Wang Xiaowu_ NF
Previously, the vice president of a 100 billion level real estate enterprise once told the times weekly that fast turnover refers to the rapid turnover of funds, that is, planning and designing ahead of time, and then striving to get the land to start construction quickly, open the market as soon as possible, accelerate the return of cash, and then invest in the next project to strive for scale growth and industry ranking.
He also said that fast turnover is not the fast turnover of the construction cycle. The delivery period stipulated in the sales contract of the project is still the original standard. For example, for the 30 storey high-rise residential buildings, the delivery period is generally 2-3 years.