Binjiang Group Chairman Qi Jinxing Binjiang Group once again confirmed the honor of "Hangzhou's No. 1 Brother". On June 30, in the second round of land auctions this year in Hangzhou, Binjiang Group won 12 land parcels in one fell swoop, totaling 11 parcels won in the first round

Binjiang Group Chairman Qi Jinxing

Binjiang Group once again solidified the honor of "Hangzhou's No. 1 Brother".

On June 30, in the second round of concentrated land auctions this year in Hangzhou, Binjiang Group won 12 land parcels in one fell swoop, totaling 11 parcels won in the first round. In the first half of this year, Binjiang Group has publicly acquired 23 land parcels in Hangzhou, with a total cost of about 40.9 billion yuan.

Looking at another set of data, according to statistics, in the first half of this year, as many as 82.5% of listed real estate companies have not yet acquired land in 22 concentrated land supply cities, and the vast majority are private enterprises.

Industry risks have not yet been cleared, and private enterprises are generally not willing to acquire land. Why is Binjiang Group so strong?

01 combined "increased leverage" for development

According to industry insiders, most of the 11 land parcels Binjiang won in the first round of land supply in Hangzhou this year were obtained through cooperation or the subsequent introduction of cooperative development partners.

Gao Yuansheng, executive deputy general manager of the Zhejiang branch of the Zhongzhi Research Institute, revealed in an interview with the Economic Observer that Binjiang’s shareholding ratio in the project companies established in the first round of land acquisition in Hangzhou this year is generally between 10% and 40%.

This is also the scale expansion model that Binjiang Group has been adopting.

According to CRIC data, in terms of sales, when it entered the 100 billion camp in 2019, Binjiang Group's equity sales accounted for less than 40%, and it increased to more than half in 2020.

In terms of new land reserves, Binjiang Group has publicly emphasized many times this year that the ratio of the amount of equity land acquisition to the amount of cash repayment remains at around 0.6.

On July 1, according to a reply from Binjiang Group’s secretary of the board of directors on the investor relations platform, Binjiang realized 32.2 billion yuan in equity sales in the first half of this year.

This means that to maintain the ratio of 0.6, about half of the approximately 40.9 billion land acquisition cost in the first half of the year must be funded by the partners.

And cooperative land acquisition or cooperative development is also a "double-edged sword." Especially if a partner encounters a financial crisis, it may drag down the project development progress and be forced to acquire the project partner's equity, and some may even "get burned".

02 High turnover + intensive cultivation

Behind Binjiang Group’s strong land acquisition, there are two important supports:

One is the high turnover from land acquisition to sales; the other is the cost advantage formed by regional focus.

A high school student revealed that for projects with a construction area of ​​less than 100,000 square meters, it takes about 6-8 months for Binjiang Group to liquidate the project from land acquisition to liquidation. The reason why

was able to be liquidated so quickly was not only due to the government's cooperation in speeding up the approval process, but also due to the market share and brand reputation accumulated by Binjiang Group through its deep roots in Hangzhou.

And because it focuses on Hangzhou, Binjiang Group also has advantages in centralized procurement costs and management costs. When calculating land acquisition investment, Binjiang Group can also acquire land that other real estate companies cannot acquire after accounting for losses. It may not make money, but it can increase Performance scale.

In May of this year, at Binjiang Group’s 2020 annual performance briefing, Chairman Qi Jinxing said that for the five newly acquired lands in the first half of the year, it would take hard work to achieve a net profit of 1%-2%.

03 Focus on key cities

According to calculations by the CITIC Securities Research Department, since the first half of this year, Binjiang’s proportion of goods value in Hangzhou has increased from about 70% at the end of 2021 to about 77%.

Binjiang Group, which is deeply focused on the region, seems to have broken the law of "don't put all your eggs in one basket" said by Nobel Prize winner in economics James Tobin.

However, it goes without saying that the reason why Binjiang, as a private enterprise, can actively acquire large amounts of land is because the property market in Hangzhou, which it focuses on, is relatively strong.

Although Hangzhou is also facing the pressure of declining new and second-hand housing transactions, compared with most other cities that are struggling to de-escalate, Hangzhou still maintains a relatively high market popularity.

Binjiang Group's high market share also contributed to its cash flow .

According to CRIC data, in the first half of this year, in the semi-annual sales list of Hangzhou real estate companies, Binjiang topped the traffic list, equity list and full-scale list with an absolute advantage.

In addition, Sister Hong also noticed that Binjiang Group is one of the few real estate companies that often discloses investor relations activity records. Transparency and professionalism make investors more trustful and bring it a financing cost advantage.

It can be said that focusing on key cities, maintaining high turnover, "leveraging" cooperation, being transparent and professional, Binjiang Group has become the "star" in the camp of private real estate companies that can still actively acquire land in large quantities.

However, there is no such thing as a "one-size-fits-all" approach. Looking to the future, Binjiang Group is also looking for a second "key city" or a second development "track."