Xinda Real Estate: The Reputation Of "Land King" Under The Prestige

Once famous, you will be tired.

On the evening of October 29, Cinda real estate released its third quarterly report. In the first three quarters of this year, Xinda Real estate equity sales contract value reached 15.98 billion yuan, a year-on-year decrease of 33%. The company's cash flow, net profit and other indicators have declined significantly. In terms of indicators reflecting future development, land acquisition, new construction and completion indicators also declined.

This phenomenon has been reflected in this year's semi annual report. The company has said that in response to market risks, it will "increase sales efforts, accelerate sales receipts, and strive to improve the market's ability to respond." But for Cinda real estate, which is not good at developing and operating capacity, the effect is not good.

2015-2017 is the rising cycle of this round of real estate market. Many real estate enterprises seize urban land and consolidate land reserves. During this time, the unknown Xinda Real estate has repeatedly "snatched food from the mouth of a tiger" and snatched high price land from a large number of alligators. According to incomplete statistics, in the past three years, Xinda Real estate has won eight "land kings" in Shanghai, Guangzhou, Shenzhen, Hangzhou and Hefei, with a total land price of more than 43 billion, so Xinda Real estate is also known as "land King harvester".

After 2018, the price limit, sales limit and other real estate market control policies continue to put pressure, and many "Diwang" projects are faced with difficulties in market entry and sales. Xinda Real Estate once used some financial means to relieve the financial pressure on the balance sheet brought by high prices, but the "sequelae of Diwang" is still emerging.

As of the third quarter of this year, two of the five "Diwang" projects in Xinda Real estate have not yet generated sales results. In another project, sales were relatively slow due to high pricing.

All kinds of signs show that the "king of the earth" halo is becoming a heavy burden for Xinda Real estate.

All kinds of signs show that the "king of the earth" halo is becoming a heavy burden for Xinda Real estate. - Song Wenhui photo

Radicalism and financial planning

The time goes back to the afternoon of May 27, 2016, when the Olympic Sports unit plot in Binjiang District of Hangzhou was officially sold, starting at 6.286 billion yuan. The plot attracted 17 bidders to sign up, most of them are first-line real estate enterprises. Cinda real estate and Vanke formed a consortium to participate in the bidding.

The competition on the spot is fierce. The land price has jumped to 9.5 billion just after the fourth round of licensing. Since then, China Merchants - New City consortium, Longhu and Rongxin have been competing for the price of nearly 12 billion yuan. At this time, the Vanke Cinda consortium, which has been waiting for a long time, suddenly made a move and kept increasing its price. Finally, the Vanke Xinda joint venture won the plot with a total price of 12.318 billion yuan and a floor price of 21575.78 yuan / square meter, creating the national total price "land king" in 2016.

But soon, Vanke withdrew from the plot and Xinda enjoyed the "king of the land".

At this time, Xinda Real estate has long been "famous all over the world". During the year from June 2015 to June 2016, Xinda Real Estate won seven "land kings" in the form of a single or joint venture, and all of them were counter attacks of "tiger mouth seizing food". Among them, the total price of four plots is more than 4 billion, and the unit price of three plots is more than 30000 yuan / m2. In December 2017, Xinda Real Estate won the "land king" of Baohe in Hefei with a total price of 4.3 billion yuan.

XinDa real estate backdoor listing in 2009, initially very low-key, projects are mainly concentrated in the two or three line cities. This successive acquisition of "land king" is the first appearance of XinDa property in the spotlight. But until 2017, XinDa real estate contract sales amounted to only 22 billion 471 million yuan, regardless of size or influence, and could not compete with the first tier housing companies.

It is generally believed that the rise of Cinda depends on the strong resources of its parent company. XinDa real estate's actual control side is China Cinda Asset Management Corp, which is one of the four largest Asset Management Co in the country (also known as the four largest AMC).

A research report issued by Shanghai Yiju Real Estate Research Institute once pointed out that the real estate related non-performing assets, due to the high value of collateral and great potential for appreciation, are AMC's profit-making tools, mainly including land, construction in progress, uncompleted buildings, investment properties, etc. Four AMCs have quietly infiltrated the real estate industry, and may become the "largest landlord" in the real estate industry in the future.

However, the agency also pointed out that compared with traditional real estate enterprises, AMC's real estate subsidiaries have double advantages of capital and resources, but the ability to handle the real estate market is weak, "which is a big" hard injury "to the cyclical and highly volatile real estate development industry."

Therefore, cooperative development with traditional real estate enterprises has become the main choice of such enterprises. Cinda real estate is no exception.

Among the 8 "king of the land" projects acquired by Xinda Real estate, 6 have introduced partners. Cooperative development can not only make up for the lack of Xinda's real estate development capacity, reduce the financial burden, but also help to operate some financial means, so as to reduce the pressure on the balance sheet.

For example, Cinda real estate gave up the control rights of three "Diwang" so that these three projects became "significant equity investment" projects, without having to be incorporated into the financial statements.

The total land acquisition price of these three projects is 24.1 billion yuan, and the scale of subsequent development investment is also very large. For Cinda real estate, whose sales were less than 20 billion yuan and profits were less than 1 billion yuan at that time, once consolidated, the financial pressure can be imagined.

In fact, the capital pressure brought by other "Diwang" is not small, but in recent years, the financial statements of Xinda Real estate have been relatively stable, and the influence trace of "Diwang" seems not obvious.

An analyst of an unnamed securities firm told 21st century economic report that it is inevitable to borrow money in the expansion, but the acquisition of projects will also expand the company's total assets. As long as there is no excessive borrowing, the asset liability ratio will not grow too fast. It is worth mentioning that after the successful acquisition of Huaihe mining real estate in 2018, the total assets of Xinda Real Estate increased from 72 billion to over 100 billion, and the asset liability ratio decreased from 86.01% to below 80%.

But he also said that this kind of operation can only bring about a static financial balance. In order to maintain a good financial status in the expansion, the existing projects must be operated quickly to realize development, sales and bring in the payment.

Emergence of "sequela"

But the shadow of the "king of the earth" is gradually emerging. The 21st century economic report combed the projects under Xinda Real Estate and found that in recent years, non "Diwang" projects contributed most of the sales and receipts, and the operation of "Diwang" projects was in good or bad condition, and the pressure brought by some projects is still there.

As of the third quarter of this year, among the five "Diwang" projects incorporated into the financial statements of Xinda Real estate, the sales of Hangzhou Nanxing Diwang and Hefei Binhu Diwang are relatively good.

Recently, the Hefei Bao River "Di Wang" was launched in 2018. The second half of the year started the pre-sale, which is called "Emerald skyline". Because of the high land cost, the average selling price of the project exceeds 20 thousand yuan / square meter, which is obviously higher than the price of the same type of products and second-hand houses. Public information shows that at present, the rate of elimination has reached about 50%, and about half of the volume has not yet started.

Shanghai Gucun "Diwang" was acquired in June 2016, which is an independent trading platform for Xinda. In 2017 and 2018, the two plots started successively. By the third quarter of 2019, the project is still under construction, and no sales performance has been generated so far. The total investment of the project is about 9 billion yuan, and the accumulated investment is less than 1.5 billion yuan.

As for the progress of the "Diwang" project under Cinda real estate, as well as the company's financial situation, development planning and other issues, as of the press release, Cinda real estate did not reply.

Yan Yuejin, a financial commentator, told the 21st century economic report that large-scale development at the same time would bring considerable financial pressure to enterprises. If there is a lack of sufficient financial strength, it is usually difficult for enterprises to take account of it, which makes some projects develop slowly.

At the same time, he said that there would be another problem in centralized access to the "Diwang" project, that is, long development cycle and large scale of funds. If the unit price is "king of land", it will usually be sold in the form of luxury houses, and its removal speed is slower than that of ordinary projects. "Historical experience shows that although the" Diwang "project can also be decoupled, the cycle is long and the cost of capital is not low, so real estate enterprises usually avoid taking" Diwang "intensively."

In 2018, the sales volume of Xinda Real Estate exceeded 30 billion for the first time, achieving a breakthrough in scale. But scale pressure and "Diwang's sequelae" appear at the same time. Even if a large number of projects are for cooperative development, the capital chain is still tight.

In 2018, the operating cash flow of Xinda Real estate was 7.06 billion yuan, down 51% year-on-year, due to "the expansion of the company's scale, the increase of project payment and land payment". Due to the good sales of non consolidated items, the company's investment cash flow reached 4.47 billion in that year. However, the financing cash flow was poor, which was negative 8.43 billion, due to the "increase in repayment of loan from related parties of cooperative projects".

Move forward, or you'll fall behind

In 2019, the regulation and control of the real estate market continue to exert pressure, the financing channels of real estate enterprises are greatly limited, and the hot first and second tier city market enters a downward period. In the first three quarters of this year, the equity sales area of Xinda Real estate was 940800 square meters, and the equity sales contract value was 15.98 billion yuan, down 13.5% and 33% respectively year on year.

In January, may and July this year, Cinda real estate raised 4.9 billion yuan through issuing corporate bonds, but the company's capital pressure has not been really relieved. Some analysts believe that with the continuous pressure of the real estate market regulation, the control of the parent company's "blood transfusion" will become more and more severe, and the capital channel of Cinda real estate will be affected.

In June, Xinda Real Estate transferred all the equity of Guangdong Jiajun investment real estate Co., Ltd., Zhanjiang orchid Real Estate Development Co., Ltd. and Zhanjiang Yunyu Real Estate Co., Ltd., which were acquired when Xinda was involved in the bankruptcy and reorganization of Jiayue group, the largest private enterprise in Zhanjiang.

According to the equity transfer information, as of April 2019, the three companies are in the state of insolvency, with the owner's equity of - 348 million yuan, - 585 million yuan and - 176 million yuan respectively. After Cinda took over in 2014, these projects have progressed slowly. By the end of 2018, the area to be developed of the six plots involved had reached 349000 square meters, the same as that in 2017.

Yan Yuejin pointed out that Xinda Real estate is not good at development and operation, and has strong dependence on plot quality and partners. Once the project with poor quality is encountered, it is more difficult to operate independently. Therefore, the transfer project can be regarded as the performance of "stop loss".

He also believes that if the funding situation has not been improved, it will not exclude the possibility of XinDa property continuing to sell.

In the first three quarters of this year, both operating cash flow and investment cash flow of Cinda real estate declined, while financing cash flow continued to be negative.

Moreover, the rapid growth of Cinda real estate in the past few years may also come to an end. In the first three quarters of this year, the new land scale and new construction area of Xinda Real Estate decreased by about half compared with the same period last year, and the completed area also decreased significantly. Some institutions believe that Xinda Real estate is likely to fall behind in this round of adjustment.

Yan Yuejin pointed out that in order to stop losses quickly, the urgent task is still to solve the pressure of the "king of the earth". Among them, it will be the top priority to deal with the two "Diwang" who have not generated sales performance as soon as possible.