Important Matters For Chinese Enterprises To Suspend Business

Faced with the regulation of real estate financing, various listed companies have opened up a new path, and trust has once again been in urgent need.

In May 16th, Chinese enterprises received a letter from the controlling shareholder of Shanghai real estate (Group) Co., Ltd., saying that they were studying major issues involving listed companies and suspended their business cards for 5 working days from May 17th.

As for why the suspension is stopped, Chinese enterprises concerned said that they did not know the specific suspension content when interviewed by reporters, but some market analysts believed that they were related to the company's financing. A week ago, the company issued a notice that it decided to raise 1 billion 350 million yuan through trust channels for land use and project development. Through trust financing, Chinese enterprises will face the trust financing cost of at least 8.5% of annual interest.

However, the above analysts believe that for Chinese enterprises with net debt ratio exceeding 100%, there is a need for further plans to solve the financial problems.

Net debt ratio of over 100% must not bypass trust financing

As early as May 8th, the Chinese company issued a notice of trust financing. The company said it would issue 2 trust products through the trust company, and together raised 1 billion 350 million yuan for the development of its real estate projects.

One trust scheme is to issue 24 month trust products through the Shanghai International Trust, with a total cost of 350 million yuan and a combined cost of 8.8%/ years. Another trust plan is to issue a 24 month trust product through the China integrity trust. The total amount will be 1 billion yuan and the total cost will be 9%/ years.

In fact, before that, Chinese enterprises had issued 2 real estate collective fund trust schemes through the Shanghai International Trust Company, which raised nearly 500 million yuan in total, and the annual cost of financing was more than 8.5%. The cost of raising funds was much higher than that of bank loans.

Despite the high cost, Chinese enterprises have no choice but to do so. The company has built up its liabilities, and its net debt ratio has exceeded 100%. Analysts believe that although many state-owned housing companies take aggressive and highly indebted operations, the net debt ratio is higher than 100%, which is still worrying for the survival and development of the company.

Chinese enterprises operating cash flow per share in the first quarter was -1.11 yuan, down 1394% compared with the same period last year, and the company had to raise money everywhere.

With the continuous development of the real estate policy, real estate companies are increasingly worried about the future. After the advent of the "ten new countries", the joint supervision of the central bank, the Banking Regulatory Commission, the securities and Futures Commission, the Ministry of housing, the Ministry of land and other ministries has greatly reduced the financing channels of real estate enterprises.

As early as January, the board of directors passed the resolution to borrow 610 million yuan from the Shanghai Pudong Development Bank in the first half of the year. In February, Chinese enterprises borrowed 500 million yuan of entrusted loans to affiliated brothers companies. Under the strict regulatory indicators such as capital and loan to deposit ratio, the scarcity of credit lines has made Chinese enterprises continue to make loans more difficult. Moreover, a corporate bond was issued as early as last year, so there is little chance of issuing bonds again in the short term.

Trust financing has become the first choice for Chinese enterprises to finance, even if the cost is high, it has to be rushed.

Real estate enterprises trust trust financing

The real estate companies that are not having a good time are not Chinese enterprises. With the tightening of the financing of real estate listed companies, many housing enterprises are fond of trust financing.

According to incomplete statistics, since May, 5 listed housing enterprises, including Chinese enterprises, Fuxing shares, Zhejiang Guangsha, Xiangzi island and Xiangjiang holding, have been released through trust financing, together with a 3 billion 160 million yuan trust financing plan. Among them, Fuxing, a wholly owned subsidiary of Fuxing shares, will set up a equity investment trust with 1 billion yuan in cooperation with China financial trust. Zhejiang Tianxia Industrial Co., Ltd., a wholly owned subsidiary of Guangsha, will raise 120 million yuan to the Hangzhou industrial and commercial trust by holding part of its residential land as collateral, and the annual interest rate of the above two trust financing will be as high as 12% for the successful completion of the financing. For a time, the real estate trust quickly occupied the mainstream of Real Estate Company financing channels and became a real emergency.

Relevant statistics show that in 2009, a total of 37 trust companies set up 186 real estate collection trust products, raising the total size of 37 billion 500 million yuan, and by the 1 quarter of this year, 29 trust companies have set up 65 real estate collection trust products, the total scale of raising funds is 17 billion 300 million yuan, the number and scale increased 150% and 665.24% respectively over the same period.

Analysts said that the most urgent demand for real estate enterprises, the frequent implementation of trust financing is helpless, as the country's further regulation of the housing market, housing enterprises through the capital market refinancing more difficult, and previously refinancing housing prices also fell sharply, and 60% fell below the issuance price. In this context, although the trust financing costs relatively high, but it is obviously the real estate enterprises to ease the tension of the capital chain.

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