Housing Enterprises Earnings Season: The Development Of Deceleration And Profit Growth Under The Survival Of The War

Perhaps affected by the epidemic, most of the housing enterprises' annual reports this year are a little later than in previous years.

With incomplete analysis of the annual reports released by the housing enterprises, most of the housing enterprises in Suzhou have slowed down in recent years. In order to get profits, the market layout has gradually shifted to the Yangtze River Delta region where the rate of transformation is higher. Recently, the hot sale of the property market in Suzhou and the market of the earth auction is a signal.

In 2019, 100% of real estate enterprises maintained a growth trend in operating income and net profit. The growth rate slowed down compared with the previous year, and their profitability declined slightly. Even 02007.HK, known for its "high turnover", has to face the reality of slower growth. In March 27th, Biguiyuan released its 2019 earnings report, which achieved sales of about 552 billion 200 million yuan in the year, an increase of 10% compared with the same period last year, and the growth rate slowed 21 percentage points over 2018. In addition, the number of housing companies in the higher Yangtze River Delta region, which has a higher rate of de conversion, is also facing a slowdown in sales. The sales of 03301.HK (China) contract reached 141 billion 317 million yuan, an increase of 15.94% over the same period last year, a sharp slowdown compared with the growth rate of 73% in 2018. 00884.HK sales slowed down by about 30% in 2019.

In view of the management view of many housing enterprises, in 2019, by adjusting the balance scale, profit and leverage, there was a slowdown in scale growth and a decline in profits.

Today, the housing enterprises will face a major operational examination, which is also superimposed by multiple unfavorable factors.

Perhaps affected by the epidemic, most of the housing enterprises' annual reports this year are a little later than in previous years. Song Wenhui photo

Short term cash flow risk increases dramatically

Affected by the epidemic, the US dollar index has risen sharply in recent years, and the debt pressure of some housing companies with higher overseas debt ratio may increase.

Since March, with the rapid fluctuation of international financial market, the issuance of US dollar debt of Chinese funded Housing enterprises has been significantly reduced. Data show that in from March 1st to 20th, the total issuance amount of US dollar debt of Housing enterprises was 35 billion 510 million yuan, only 41.3% of the same period last year. As a result of the huge volume of US dollar debt issued by housing enterprises in January, as of March 20th, the total issuance of US dollar debt in housing enterprises has reached 190 billion 600 million yuan this year, of which 65.4% in January.

Before March 6th, due to the effectiveness of China's epidemic control, the US dollar debt of Chinese funded enterprises was once regarded as a hedge asset by overseas funds. However, as the "dollar shortage" situation in financial markets intensified last week, the high yield of domestic housing companies fell into a huge sell-off.

Data show that last week, the IBOXX China high yield index fell 7.5%, and the high-yield real estate index fell 9.3%. Credit rating between the B and BB of the domestic housing enterprises dollar debt prices fell by an average of more than 10%, of which, Zhong Jun, Yuzhou, Huaxia happiness and other domestic housing enterprises dollar debt weekly decline is more than 20%.

Many housing prices executives also expressed their consideration at the performance meeting that they would consider buying back the US dollar debt. At the same time, the first quarter of Housing enterprises overseas financing increased, which to a certain extent, can ease the expiration pressure in 2020. 01996.HK, for example, won $70 million in commercial bank club loans in January of this year.

In March 26th, the market rumor that 03333.HK planned to spend $2 billion to start bond repurchase, and last week, Hengda has returned a $1 billion 600 million foreign debt in advance.

And large housing enterprises also appear short-term capital risk in the rapid growth stage of small and Medium Housing enterprises, such as Hongyang real estate cash short debt ratio is 0.7.

Part of the housing sales decline in 2019, instead of "cash is king". Up to the end of 2019, the cash stock of Xu Hui was 57 billion 600 million, the short debt that was due in one year was only 20.4%, the cash short debt ratio was 2.7 times, and there was enough financial flexibility to deal with the market fluctuation this year. In contrast, China's cash short debt ratio is 1.38. Even 000817.HK, China's central bank, had a cash short debt ratio of only 0.64 in 2019.

Adjusting strategy to survive

This year, the land window period and the M & A opportunities have taken place, but the housing companies have become cautious. Many housing companies have taken the position cautiously, lowering their leverage and protecting their profits.

Perhaps in order to show the top priority of this year's sales to the capital market, the leaders of various housing enterprises will appear in the performance meeting. Yuan Chun, CO president of Hongyang real estate (01996.HK), said that this year, the company will use the 45%-50% to invest in order to ensure that the growth rate of the industry is higher than the industry average level. When Wang Fengyou, senior vice president of Jiangsu 00884.HK and President of the regional group of Jiangsu, talks about the regional strategic effect of Xu Hui, take Xu Hui as an example. At the end of June 2019, after the integration of Jiangsu Xuhui and Nanjing Xuhui and Xuzhou Xuhui Branch, Jiangsu's regional group was formed. After integration, sales reached 35 billion in 2019, and the first group to sell 35 billion and return more than 30 billion.

In March 25th, a land auction in Suzhou took 12 billion 370 million yuan from 4 plots. From the perspective of enterprises, no matter what strategy considerations, Suzhou became the focus of many housing enterprises layout as a second tier or new tier city. That is to say, the investment strategy of Housing enterprises is changing. Currently, the housing enterprises in the Yangtze River Delta have begun to concentrate their efforts on the second tier line, especially in the second tier cities. The housing enterprises with the main line of three or four tier cities have begun to return to the second tier, especially the relatively safer second tier cities.

Zhang Hongwei, chief analyst at the same policy group, believes that from the perspective of the participating companies, the whole can be divided into four categories: strategic consolidation, strategic strengthening, strategic return to the second line and regional deep tillage. He pointed out that some housing enterprises in eastern China occupy a higher share of the group, but the land reserve in East China is insufficient. If they do not actively make up their stocks, it is very likely that the performance of the whole region will decline because of the decline in the performance of the dominant regions in East China. Zhongliang, Xinli, Shinhong Yoshinobu, Hongyang and other high turnover, and most of them started in 2018 in the three or four tier cities active layout and rapid growth of housing prices, the majority of the three or four tier cities are facing changes in the layout of the money, speed up, inventory increase and other factors led to sales pressure, at present, a second tier cities in place of adjustment, return to the second line become these enterprise strategies. The main action of adjustment.

The improvement of profitability is the next important step of scale housing enterprises. Xu Hui holding CEO Raymond Lam said: "Xu Hui has always been making profits as an important part of our iron triangle. Our gross profit margin has exceeded 25%, adjusted caliber is over 30%, core net profit is more than 12.6%, core net profit is 6 billion 900 million, increased by 25%, core ROE (net profit / net assets) 24.8%, and the whole profit is in line with the overall planning and market expectation in early 2019."

Xu Hui is committed to growing into a well established company with high growth, steady debt and high profitability. After 200 billion, 20%-30% growth was maintained, debt ratio decreased, gross margin of 25%, and internal efficiency further improved.

In the face of the decline in gross margin, the gross profit margin will be raised through cost management, financial cost and integrated supply chain in the future. Xu Hui's goal is to maintain the gross profit margin of 25%-30%, such as cost management. Raymond Lam believes that it can be realized by diversifying and reducing the financial cost. At present, the average cost of financing is 6%, and the target is reduced to 5%.

From the recent choice of housing companies in cities, we can also see the pursuit of profits. Suzhou, Hangzhou, Guangzhou, Chengdu and other cities will become the focus of this year's preferred layout of housing prices. Under the background of ample liquidity at home and abroad, the property market in these cities is likely to take the lead in recovery and improvement. Secondly, Qingdao, Shenyang, Changsha, Chongqing, Nanjing, Hefei, Hefei, Hefei, post, and second tier cities deserve attention.

Zhang Hongwei believes that the housing financing environment after the outbreak is indeed a little looser. In addition, although the current market regulation is still sticking to the basic principles of "real relief", it is worth affirming that the property market regulation policy of the core cities including Suzhou will not be tightened again in 2020, that is to say, the original price limit, restricted sign, and existing housing sales policies. Affect the turnover rate of housing prices, and now there are substantial easing of policy areas, such as the cancellation of existing housing sales in Suzhou. Such a new first tier city in Suzhou has become a high turnover city with high volume. In the current special "window period", housing prices will also seize the layout, and run out of scale in the remaining 9 months of this year, making profits in 2021 and beyond.

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