The Change Of Industrial Ecology Behind The IPO Of Small Housing Companies Queuing Up In Hong Kong

On May 22nd, the three session of the thirteen National People's Congress was officially opened. This year's government work report reiterates that the house is used for residence, not for frying.

The key to real estate regulation remains unchanged. In the environment of "housing and housing speculation", domestic financing channels have been narrowed and financing costs have been raised. The capital problems faced by small housing enterprises have been enlarged. IPO has become one of the financing methods favored by these housing companies.

According to incomplete statistics, since 2018, the number of successful housing enterprises has reached 13. Among them, the number of Housing enterprises successfully listed in 2018 and 2019 was flat, 6 respectively, and 1 were successfully listed in April 2020. Up to now, there are 11 housing companies that have submitted prospectus in the HKEx, including Helen castle, Austrian holdings and Jinhui holdings. There are also 8 property companies in Hong Kong Stock Exchange waiting for IPO's housing companies.

In recent years, the debt rate of small housing enterprises has been rising, and the trend of lack of money and land has become increasingly evident. An industry insider pointed out that the survival state of small housing enterprises is a reflection of the high cost of financing and the overall profit decline of the industry. Over the past year, a number of small housing enterprises for the first time showed failure, because of high debt and short-term debt repayment pressure. The internal driving force of IPO, a small housing company with about 10 billion sales scale, lies in expanding financing channels and maintaining capital chain to ensure survival. In addition, successful IPO will help enterprises to continue to use bonds and other financing tools to maintain liquidity.

Combined with the recent wave of land market boom, Zhang Hongwei, chief analyst of integrated consultancy Research Institute and Lu Wenxi, Shanghai Central Plains market analyst, said that the enthusiasm of small housing enterprises increased greatly, but the big housing enterprises had slowed down. Under this background, the pressure of small housing enterprises is easier to be amplified.

In addition, there are people in the housing market on twenty-first Century economic report said that the second half of the housing enterprises will increase the number of pre-sale permits, increased the supply of the market; on the contrary, there is no effective way to release the market pressure, so that the stock pressure of Housing enterprises will naturally rise this year.

Hopes to sprint IPO release pressure

Industry entered the 2020, overlay the impact of the epidemic, the market is changing, the survival of small housing enterprises have been squeezed, the listing is just beginning.

As at the end of May 2020, the housing companies waiting for IPO in the HKEx had about 11 Helen fort, Austrian holdings, Wan Chuang international, three Sunda holdings, Hong Kong real estate, Datang real estate, Peng run holdings, Jinhui holdings, Shanghai Kun real estate, territory holding, real estate and so on. And Wen Yi property of Anhui also came to Hong Kong to be listed.

Among them, three Sunda group, Helen fort, Austrian holdings, Wan Chuang international, Hong Kong real estate and so on had been rejected for the first time when they submitted the prospectus, and now is the two time to start.

Zhang Hongwei pointed out that there are several very important core indicators for listing in Hong Kong. In recent three years, the profitability and debt ratio of enterprises and the profitability of main businesses should meet the minimum profit requirements. If core indicators fail to meet the requirements, they may be beaten back to declare again, and enterprises need to optimize land and liabilities in the process of re submission.

The information disclosed in the prospectus shows that these small housing enterprises have the common characteristics of high debt, short land reserve and obvious short-term capital pressure.

Take the three sunrise group, which started in Anhui, for example, the company claims to "achieve sales scale of 30 billion in 2019, achieve 100 billion goals in 5 years", and excavated Zheng Rong's president Wang Benlong at the end of 2019. However, statistics from third party platforms show that sales in three suns in 2019 dropped by about 10000000000 compared with 2018.

According to prospectus disclosure, three years, three sunrise debt increased: from 2016 liabilities 229 million yuan, up to the end of June 2019, liabilities 1 billion 420 million yuan. In addition, three years of continuous operating cash flow is negative, and the cost of financing has been at a high level of over 10% for many years. According to people familiar with the matter, trust loans in three sunrise financing account for a high proportion.

Another example is Austrian holdings. In its first public prospectus, the debt ratio exceeds 800%. Similarly, the first IPO failure of Hong Kong real estate also had the same high debt problem: in 2017, 2018, 2019 and March 31, 2020, the assets and liabilities ratio of Hong Kong real estate was 98.8%, 122.1%, 172.6% and 287% respectively, and the debt rate increased more than 2 times over 3 years. The total amount of loans was 318 million yuan, 856 million yuan, 2 billion 853 million yuan and 5 billion 176 million yuan respectively, and the total amount of loans increased over 16 times in 3 years.

It is disclosed that the real estate financing interest rate rose from 6.59% in 2017 to 8.37% in 2019. By the end of March this year, the total amount of interest bearing debt covered by the field was 4 billion 287 million yuan in one year, and the non-standard financing balance involving unpaid trusts was nearly 2 billion 400 million yuan, accounting for 18.5% of the total loans in the same period, with an annual interest rate of at least 10%.

These small housing enterprises waiting for the two IPO, the asset liability ratio is much higher than the industry average asset liability ratio, listed in order to solve the short-term liquidity risk, but the smaller scale has become the main reason why Hong Kong equity capital is not optimistic. The land reserves of Hong Long estate and three Xun group are less than 5 million square meters, and the resources available for sale in the future are not sufficient. In particular, three Sunda and 90% earth storage are concentrated in Anhui, most of which are three or four line cities. According to the data of Yi Ju Research Institute, the stock of 64 three or four line cities has entered the growth cycle. As of now, the stock of three or four tier cities has risen 1.6%, up 1.1% over the same period. For the housing enterprises in the three or four tier cities, the scale expansion and profitability improvement are faced with certain difficulties. In recent years, under the influence of the real estate regulation policy, housing prices in the three or four tier cities have basically fallen into stagflation. Therefore, it is very difficult for Austrian holdings to sell gross domestic product in these cities in the short term.

The industry insiders believe that if housing prices were listed in the past in order to find money, find cheaper money for repayment of debt, and replace the expensive money by borrowing new and old, then for small housing companies, increasing liquidity after listing is the most important.

"We may need sufficient additional financing to meet financing needs, support operations and company expansion because of negative cash flow. If there is no sufficient cash flow to operate, or no sufficient external funds can be allocated for operational purposes, the company's liquidity and financial position may be seriously adversely affected. " One of the small housing companies listed in the prospectus disclosed this paragraph. This shows that the liquidity crisis of small housing companies is being amplified.

Affected by the epidemic this year, most of the housing prices in the first quarter of the year are not smooth, many industry insiders told reporters that this year's inventory increase and sales target can not be completed. If the recent round of the tide is to add performance in the year, then small housing enterprises in this round of land grabbing is more dangerous.

Low chemical removal rate and rising stock

According to a research report by a billion think tank, after the 2020 epidemic, the domestic financing environment has a marginal improvement potential. The high credit rating Housing enterprises are more likely to seize the opportunity. This is not difficult to understand that small housing enterprises in such a financing background, eager to be listed on the mood. Only listing has the opportunity to raise the rating, thereby financing and expanding.

Yi Han think tank combed the domestic credit rating of Housing enterprises, and found that domestic credit rating agencies rated the housing enterprises generally higher. 43 Housing enterprises, credit rating AAA Housing enterprises accounted for 77%, the credit rating of AA+ Housing enterprises accounted for 19%, the credit rating of AA and BB housing prices were only 1. Judging from the domestic credit rating of Housing enterprises, both the head housing enterprises and the relatively small scale housing enterprises are likely to get the AAA rating of the highest credit rating in China. This shows that domestic rating agencies are not only "scale" theory when rating the housing enterprises, but also can not improve the financial situation and sound investment strategies. Accredited by rating agencies.

However, from the point of view of the distribution of credit rating AAA in the echelons, in the TOP10 and TOP11-TOP30 Housing enterprises, the proportion of the housing enterprises with the main credit rating of AAA is nearly 90%, while the TOP33-TOP83 Housing enterprises, the main credit rating AAA Housing enterprises accounted for a relatively low proportion of 56%. At the same time, the main credit rating of AA+, AA, BB lower credit rating of the housing prices are mostly distributed in the echelon, indicating that the scale housing enterprises are generally more recognized by the rating agencies.

If you want to do mass work, you need to take more and more places.

Recently, the three Sunda group and the Hong Kong real estate company appeared on the site. Three the second prospectus submitted by Sunda showed that at the end of 1 2020, three Sunda holdings had 36 projects, the total land reserve was 3 million 964 thousand and 300 square meters, and Anhui, Jiangsu and Shandong accounted for 89%, 4.7% and 5.5% respectively. Anhui's land reserve slightly reduced slightly, indicating that since the last prospectus submitted, the company has carried out a round of land reserve.

The Austrian mountain is a typical housing enterprise with uneven storage and uneven distribution. The Austrian mountain 60% is located in Wuhan. As of March 31, 2019, the company has 25 projects in Hubei, Anhui, Sichuan, Chongqing and Zhejiang. The estimated total land area of the land reserve is about 3 million 400 thousand square meters, including the planned gross area of about 2 million square meters. The total planning area is about 1 million 100 thousand square meters, which is for future development property.

Among the small housing enterprises listed in Hong Kong, the territory group is the largest among them. As of February 2020, the territory had more than 13 million square meters of land storage, but the financing cost and liabilities of the territory were also high, which became an important reason for its urgent listing. From 2017 to 2019, the real interest rates of the territory increased by 6.4%, 8.8% and 9.9%, respectively, and the current ratio showed a downward trend of 1.3, 1.3 and 1.2 times respectively. The net assets liabilities ratio was 0.6 times, 1.1 times and 1.4 times respectively.

In fact, not only small housing enterprises, most of the housing enterprises in the first half of this year's performance is not satisfactory. A top 20 housing company official told reporters that in order to increase market supply, occupy market share and expand sales coverage, housing companies had to take this place to ensure that new products were launched before the end of the year. But going to the chemical industry is very important. If it goes bad, this year's stock will increase again, which will bring financial pressure to the housing enterprises. The performance in the next one or two years is worrying.

Lu Wenxi pointed out that recently, this wave of land auction Housing enterprises, the first tier leading enterprises, including Hengda, Biguiyuan take the pace of slowing down obviously, small and medium-sized Housing enterprises instead take positive. The old projects have been released in succession. For example, in May, Ruian real estate recently won two yuan homestead in Qingpu District of Shanghai with 1 billion 666 million yuan, while Vanke and China Construction consortium took the land in Baoshan, and the two land transfer involved plots were all old projects that Ruian and Vanke had already intervened.

Yan Yuejin, director of research center of the think-tank of Yi Ju Research Institute, pointed out that from the urban inventory data, it is also objectively explained that short-term pressure is increasing. On the one hand, the cooling of the housing sales market has affected the tempo of inventory. On the other hand, the reduction in pre-sale control and the increase in the scale of real estate supply are obvious. Therefore, from the actual situation, this will lead to the increase of stock in various cities. According to the classification of cities, the inventory of first tier cities and second tier cities is rising, which are all risks that need attention. For housing enterprises with inventory in a second tier city, if inventory can be actively promoted, it will also help improve the performance of the housing enterprises and reduce the risk of inventory.

Take the Zhengzhou market as an example, the Zhengzhou market has fallen down under the influence of the epidemic, and the digestion period of commercial housing has been prolonged obviously, and the stock in the previous period has been overloaded. Zhengzhou has fewer new homes during the epidemic. But looking back on the market over the past one or two years, since August 2019, Zhengzhou has basically shown a state of oversupply, so there is more stock. The new housing market is mainly for the pre digestion inventory. The digestive cycle jumped to over 21 months. In May, a local auction showed that interest in residential land in Zhengzhou was subsiding. In the 4 plots sold, only Hengda a foreign housing company took a commercial area.

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