High debt has become a hidden thunder buried in the expansion of real estate companies. Starting from the second half of this year, corporate bonds of real estate companies and loans to various financial institutions have entered an intensive redemption period. To make matters worse, financing channels are still tightening step by step
Investors' News reporter Zhou Yueming
In the first half of 2018, real estate policy regulation entered a new stage. On the one hand, we continue to curb irrational demand, especially speculative housing purchase demand. On the other hand, policies focus on adjusting the medium- and long-term supply structure, and the policy characteristics of "structural regulation" are becoming increasingly obvious. But no matter what, it is an indisputable fact that the real estate market will find it difficult to show a prosperous situation of both supply and demand and rapid progress.
. In the market context where policy regulation is still strict, as the backbone of the real estate industry, how much are they affected by policy regulation? How is its performance? With the release of the 2018 semi-annual reports of listed real estate companies, we can see it from it. In addition, when capital costs are becoming increasingly expensive, what about their cash flow pressure? Investors' Daily reporter recently analyzed the semi-annual reports of various real estate companies and sent interview letters to some companies in order to provide some answers.
01
More than 30% of real estate companies still have high performance
At present, 126 listed real estate companies in A-shares have released their semi-annual reports, of which 15 have revenues exceeding 10 billion yuan, and the top 5 are Greenland Holdings, Vanke, Poly Real Estate , China Fortune Land Development, and China Merchants Shekou. There are 74 companies with revenue growth, accounting for about 58%, and 12 companies with growth rates exceeding 100%, accounting for about 10%. Among them, Rongfeng Holdings' revenue growth rate is 2140%, and ST Jinyu's revenue growth rate is 1209%, ranking in the top two, but its revenue volume is relatively small, less than 200 million yuan. In addition, it is worth noting that Poly Real Estate and China Merchants Shekou, which ranked among the top five in revenue, both have low revenue growth rates, at 9.3% and 6.6% respectively, which to a certain extent indicates that these two companies have slowed down in the pursuit of scale. In terms of net profit of
, there are five companies with net profits of more than 5 billion yuan, the same as the top five companies with revenue. Among them, only Vanke's net profit exceeded 10 billion yuan, reaching 13.5 billion yuan. Overall, 82 companies had net profit growth, accounting for about 65%, and 38 companies had growth rates of more than 100%, accounting for about 30%.
It is worth noting that the top 5 real estate companies (Vanke, Poly Real Estate, etc.) that rank in the top 5 net profits (Vanke, Poly Real Estate, etc.), except China Merchants Shekou, have a net profit growth rate of around 30%, which is relatively not outstanding. This shows that it is difficult for leading real estate companies with huge scale to continue to grow rapidly.
02
High debt has become a collective dilemma
From the data, under the strict regulation of the real estate market, more than 50% of real estate companies still have increased performance, and 30% of real estate companies' net profit growth rate is even above 100%. However, it is worth noting that behind such a report card, the increase in the debt-to-asset ratio and the increase in debt repayment pressure have become increasingly hidden worries on the development of real estate companies.
Overall, there are 35 companies with debt-to-asset ratios exceeding 80%, accounting for about 27.7%, of which more than 90% of Lushang Real Estate. Due to the particularity of the real estate industry, prepayments represent the house payments that have been collected and can only be recognized as operating income when the house is delivered. It also means that the current prepayments are part of the future revenue. If the prepayments are excluded, then look at the debt-to-asset ratio, there are still 18 companies with more than 80%.
Leading real estate companies also generally have increased their debt-to-asset ratios and net debt ratios. Specifically, Vanke's net debt ratio in the first half of the year was 32.7%, a sharp increase from 8.8% at the end of last year; the debt-to-asset ratio was 84.7%, setting a new high since Vanke's listing in 1991; the total debt in the first half of the year was 1.14 trillion yuan, making it the real estate company with the highest debt among A-share listed real estate companies.
03
Debt repayment pressure increased significantly in the second half of the year
It is worth noting that with the high debt ratio, the debt repayment pressure of listed real estate companies has also become increasingly greater.
According to research, the first wave of debt repayment peak faced by real estate companies is in the second half of the year. According to a report released by Evergrande Research Institute, as of the end of June 2018, except for private financing and loans to financial institutions, the balance of interest-bearing liabilities of real estate companies was approximately 19.2 trillion yuan. The second half of 2018 to 2021 will be the centralized redemption period, with the scales being 2.9 trillion, 6.1 trillion, 5.9 trillion and 3.4 trillion respectively.Among them, loans from the largest banks and non-bank financial institutions will mature in the next four years; corporate bonds will be issued in a centralized manner from 2015 to 2016, and will mature in a intensive manner from the second half of 2018.
. Data from Tianfeng Securities shows that in the second half of 2018, the amount of bonds of real estate companies expired was 105.2 billion yuan. The bonds considered entering the repurchase period were repaid at a principal of 50%. In the second half of the year, the amount of bonds of real estate companies expired was as high as 254.2 billion yuan, higher than the 85.13 billion yuan repayment in the first half of 2018.
The pressure to repay debts has increased. If you want to maintain the stability of the cash flow chain, you must borrow new debts to supplement funds or rely on your own "hematopoietic ability" to repay the debts. However, with strict regulation, the financing channels of real estate companies are tightening step by step. It was previously rumored that the Banking Regulatory Bureau in some regions issued a document to suspend the reporting of new real estate trusts, and trusts that have passed the review can be issued. Poly Real Estate Research Institute pointed out that the regulators have still sent out a signal of "strict control of real estate leverage" in the near future, and it is unlikely that real estate companies will have a major improvement in the financing end of the second half of the year.
According to the data, there are only 11 companies with net cash flows exceeding 10 billion yuan, and 18 companies with net cash flows exceeding twice their revenue, accounting for only about 10%.
In addition, judging from the financial expenses of listed real estate companies in the first half of the year, 7 companies had more than 1 billion yuan, and 29 companies had more than 10% of their financial expenses, accounting for more than 23%. This means to a certain extent that the interest burden on listed real estate companies is getting greater and greater.
Among the leading real estate companies, Poly Real Estate's financial expenses in the first half of the year were as high as 1.792 billion yuan, approaching 20% of its net profit, an increase of 137% over the same period last year.
is relatively difficult to reduce debt repayment pressure by re-borrowing, so the endogenous "hematopoiesis ability" of a company is particularly important.
However, under the current strict regulation and increased loan interest rates, it will affect the sales and repayment speed of real estate companies.
For example, in the first half of 2018, Vanke's prepayment was only 2.377 billion yuan, a decrease of 99.34% compared with the beginning of the year. However, Vanke explained in its annual report that changes in accounting policies have caused Vanke's prepayment to be reduced by 490.712 billion yuan. After making up for this part, Vanke's prepayment was 493.089 billion yuan, a growth rate of 20%. However, this growth rate is still slower than real estate companies of the same scale such as Poly Real Estate (29%) and China Merchants Shekou (38%).
Check the net operating cash flow of each listed real estate company. 63 have negative values, accounting for as high as 50%. The lowest three are Binjiang Group, Jinde Group and Poly Real Estate, with -11.4 billion yuan, -10.7 billion yuan and -9.8 billion yuan respectively. The negative net operating cash flow means that your own hematopoietic ability will decline. If you still face debt maturity and financing difficulties, the pressure on the capital chain of real estate companies will increase significantly.
04
Real estate companies are facing a key turning point
Now, high debt and debt repayment pressure have become a hidden thunder ambush on the road to expansion of real estate companies. Continuing to compete for scale, aggressively acquire land, or slow down and putting money into the liability is an important choice facing real estate companies, and leading real estate companies have also diverged.
Vanke acquired land in the first half of this year. According to the semi-annual report, Vanke acquired 117 new projects in the first half of the year, with a total planned construction area of 20.491 million square meters, which is basically the same as the sales area in the first half of the year.
According to other data, Vanke paid 123.7 billion yuan in cash for purchasing goods and receiving services, an increase of 27% year-on-year. The net operating cash flow also became negative for the first time in recent years, at -4.2 billion yuan, a year-on-year decline of 119%.
It is worth noting that since 2012, Vanke has proposed that the industry has entered the silver era. In recent years, it has been announcing its transformation to become a city supporting service provider and has entered many fields such as long-term rental apartments. At the semi-annual report performance press conference, Chief Financial Officer Sun Jia once said: "Vanke's new business has been fully opened and a hundred flowers are blooming. This is a transformation from the originally determined residential business to what we call uncertain expansion business today."
However, judging from the semi-annual report performance, among Vanke's various businesses, the operating profit margin of the real estate business is still rising, while the profit margin of property services and other businesses is declining.
While emphasizing the transformation to become a city supporting service provider, Vanke launched a large-scale land acquisition in the first half of this year, while the sales speed on the other hand was relatively low, and the land acquisition area was even the same.In the first half of 2018, the sales growth rate of Vanke Real Estate was significantly lower than that of leading real estate companies such as Country Garden and Evergrande, at 9.9%. Country Garden's sales in the first half of the year increased by 42.8% year-on-year, and Evergrande's sales in the first half of the year increased by 24.6% year-on-year. The growth rate of the three giants has increased.
Why is Vanke trying hard to acquire land while growing sales at a slower rate? Is the land price lower during this period and wants to hoard more land in the future to release performance? This move is worthy of fun.
In addition, some real estate companies in the second echelon also choose to speed up and catch up with sales targets. For example, Xuhui Real Estate's sales scale reached 66 billion yuan in the first half of this year, a year-on-year increase of 40%. If it can achieve the annual sales target of 140 billion yuan, Xuhui's compound growth rate in the past two years will be close to 100%, becoming a representative of high-growth real estate companies. Xuhui Group Chairman Linzhong said at the performance meeting, "We can still maintain this speed in the next three or four years."
Unlike these companies, some real estate companies have begun to choose to slow down. For example, Yan Jianguo, Chairman and CEO of , China Overseas Real Estate, once said that the current policy is in a period of highly variable change, the company is highly cautious about the market, the debt ratio is at a low level, and there is a lot of cash on hand, so it would rather miss some opportunities than invest in the wrong piece of land.
Yan Jianguo predicts that real estate regulation will be more stringent in the second half of the year, real estate regulation policies will continue to remain unrelaxed, relevant policies of long-term mechanisms are gradually approaching, market volatility adjustments will gradually increase, and housing prices and sales will face downward pressure. Accelerating development, speeding up sales, speeding up payment collection, and accelerating the operating scale and revenue growth of holding commercial properties are China Overseas' main strategies in the second half of the year.
In addition to China Overseas Real Estate, Poly Real Estate's land acquisition speed is also slowing down. A reporter from the Investors News once sent an interview letter to ask about the reasons, but received no reply. As of the first half of 2018, Poly Real Estate had a land reserve area of 89.5 million square meters, of which 54.25 million square meters were 54.25 million square meters in first- and second-tier cities, accounting for about 61%, and the total land reserves decreased by 2% compared with the end of 2017.
In the first half of this year, the company had 69 new expansion projects, including 45 acquisitions, cooperation and other methods, accounting for 64% of the total expansion projects. The new floor area ratio area was 15.1 million square meters, and the total cost was 107.2 billion yuan, a decrease of 11% from the same period last year.
The data on land acquisition can be reflected in the cash payment of purchases and services from the cash flow statement. It was 95.9 billion yuan in the first half of 2018, an increase of 18% year-on-year, while the year-on-year growth was as high as 73% last year.
While land reserves are decreasing, Poly Real Estate is also accelerating the destocking. As of the end of June 2018, the company's national commercial housing area for sale fell to 551 million square meters, a year-on-year decrease of 14.7%. In addition, the number of new openings also accounts for a relatively small proportion. In the first half of 2018, there were 567 properties on sale, including 557 domestic properties, and only 69 newly opened in 2018. These data reflect Poly Real Estate's prudence to a certain extent. ”■
(The content of this article is for reference only and does not constitute investment advice. The market is risky, so investment must be cautious)
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