The Risk Of Capital Chain Of Real Estate Enterprises Is Magnified, And The New Financing Policy Will Force The Fine Management To Accelerate

In the post epidemic era, whether the head of real estate enterprises or small and medium-sized real estate enterprises' internal survival state has shown that the industry bottleneck period has come.

Especially with the gradual implementation of the new policy of "three red lines" in the financing management of real estate enterprises, the development road of real estate enterprises will be more difficult.

"The concentration of real estate enterprises will be higher and higher, 30 is definitely a barrier." An internal researcher of real estate enterprises told the 21st century economic report that once the new deal is implemented, small and medium-sized real estate enterprises will face major adjustments. Once a red line is reached, interest bearing liabilities will be limited and they will not be able to develop. They will not cooperate with others or wait for capital acquisition. "Now everyone is a little anxious, do not know whether the follow-up details will bring much fluctuation to the enterprise."

People from securities companies and banks disclosed that the policy of financial supervision has been brewing for a long time, at least for 2-3 years, and it is only at this time that it is introduced. The source also revealed that the next will start to find enterprises for pilot, many details of how to operate and implement still need time to run in. When it comes to M & A, for example, when the debt ratio rises? Is it not included in the red line of listed assets? Should the real estate enterprise report or audit, the bank take the initiative to check, whether the real estate enterprise financing every time to come to the right seat? It will take some time for such problems to break in.

To be sure, the tightening of the financing end of real estate enterprises this time may lead to Matthew effect. If the previous asset management regulations are one size fits all, then the "three red lines" are the foreshadowing for the fine management of real estate enterprises. Before that, the land market regulation has been gradually refined, and the macro level has also adopted urban policies, but the management of real estate enterprises has not been refined.

In fact, in view of the overheating of the real estate market, since July, many provinces and cities have issued centralized regulatory policies. The "three red lines" regulation is from the perspective of the supply side, not to deal with overheating, but to limit the number of new development projects and reduce the inflow of credit resources from the root.

According to the aforementioned people, the new deal has a reserve period of at least two years. In essence, the new deal is not aimed at debt or not, but to prevent the break of the capital chain. We should eliminate this risk before this situation occurs.

Collection and liabilities

The big real estate companies, which have always had a good sense of smell, have already made some moves.

In 2018, Evergrande executives proposed to reduce the net debt ratio to 70% in the first half of this year; according to the performance data of the first half of 2020, the net debt ratio of rongchuang dropped by 23%. On the other hand, the head of the real estate enterprises are also accelerating payment. Take Xuhui as an example. In the first seven months of this year, Xuhui's sales and payments have both exceeded 100 billion yuan.

The reporter of 21st century economic report combs and statistics the financial report data of typical real estate enterprises ranking 10-60 in the industry in recent years, and finds that in 2019, there is a watershed between the comprehensive payment rate and sales payment return rate of real estate enterprises.

A person from a real estate enterprise pointed out that the bad payment was due to sales. In the past two years, large real estate enterprises focused on the second tier and the strong third tier cities, ranking 30-60 in the industry, and even later, they were still in the process of adjusting the soil storage structure. At the same time, the real estate enterprises are very hot, where does the money come from? In the premise of bad payment, only through debt to obtain funds. "From the perspective of the government, it is not willing to face too many risks. This wave of financial crisis is different from the global easing. If this wave uses real estate as a reservoir, there will be problems with financial security."

Real estate enterprises still need to balance investment and payment, because among the top 30 real estate enterprises, the situation of touching the "three red lines" can not be underestimated. According to the data of the annual report in 2019, nine of the top 30 real estate enterprises touch three red lines, five touch two red lines, and 11 touch one red line, which means that once the new deal is fully implemented, most real estate enterprises will face greater contraction pressure.

In the top 30 real estate enterprises in 2019, the growth rate of interest bearing liabilities of most real estate enterprises exceeds 15%, which indicates that the pressure on subsequent real estate enterprises to reduce leverage as a whole will be greater.

Asset liability ratio is an important indicator to reflect the operation ability of real estate enterprises. To reduce this indicator, it is necessary for real estate enterprises to strengthen sales, speed up inventory turnover, and expand the scale of advance payments. At the same time, the behavior of hoarding sales will also be hit. Most of the top 30-60 real estate enterprises have a slow decline in their asset liability ratio. Especially for the real estate enterprises like Xinli, which are in the scale expansion cycle, the asset liability ratio of the first two years is only a percentage difference.

On the one hand, the decline of interest bearing liabilities depends on the improvement of cash flow of real estate enterprises, so as to make the debt repayment scale exceed the new scale. However, for the long-term leveraged real estate enterprises, it is difficult to resolve the debt in the short term. Therefore, at this stage, the real estate enterprises may be more inclined to stock management of debt. On the other hand, because it is less difficult to expand non controlling shareholders' equity, real estate enterprises may prefer to reduce the net debt ratio by expanding the scale of minority shareholders' equity, which means that the events of joint venture and joint venture of real estate enterprises may increase, and the risk of real debt may also rise.

Therefore, the cash short debt ratio in the "three red lines" further emphasizes the efficiency of fund recovery, and requires real estate enterprises to compress the payback cycle and ensure the abundance of operating cash flow, instead of relying on debt funds to maintain the stability of surface liquidity through borrowing new and old ones. Secondly, the assessment of cash short debt ratio also helps to improve the financing structure of real estate enterprises, focusing on cracking down on "short-term borrowing and long-term repayment". From this perspective, the dependence of real estate enterprises on long-term debt funds may increase in the future.

Payment collection and land acquisition

According to the statistics of the 21st century economic report, in the first half of 2020, the real estate enterprises with land investment exceeding 50% of the sales return include Jianfa, Jinke, Blu ray, Rongsheng development, etc.

One of the reasons why the enthusiasm of real estate enterprises to take land is the continuous recovery of sales side. At the same time, under the loose liquidity environment in the first half of the year, the overall financing environment improved and the enthusiasm of real estate enterprises to acquire land increased. The balance of commercial housing development loans increased slightly in the first quarter compared with the same period of the same period last year, but it still maintained a double-digit growth; From the performance of the local auction market, the premium rate of residential land in 100 large and medium-sized cities reached 25% in April this year, and it has remained at 15% - 20% since May, higher than the same period last year. This shows that the epidemic did not have a great impact on the acquisition of land by real estate enterprises. On the contrary, their financing environment has been improved due to the relaxation of monetary policy, and the enthusiasm of real estate enterprises to acquire land has also increased.

Real estate is a cyclical industry. In the past small cycle law, in order to maintain and expand the sales scale, real estate enterprises naturally took land to replenish inventory during the same period of sales. For example, in the two rounds of small weeks from 2009 to 2011 and 2012-2014, the land with large sales volume in 2010 and 2013 was also released correspondingly, and the supply and demand between sales and land acquisition was more synchronous. However, in this round of weekdays started at the beginning of 2015, the amount of land taken in the year with large sales volume in 2016 was reduced. Green city is a typical example. In 2016 and 2017, the land acquisition of Greentown was almost stagnant, which led to the sales cash collection rate of more than 95% in the first half of this year, but the carryover area decreased by about 30%; the full year sales return rate of Greentown in 2019 remained at 87%, and that in the first half of 2019 was 88%. Its management revealed that the annual payment collection rate of this year would be slightly lower than that of the first half of this year.

On the one hand, from the macro environment point of view, the financial deleveraging policy has come to an end. The central economic work conference at the end of 2019 pointed out that "China's financial system is generally healthy and has the ability to resolve various risks" and "maintains the basic stability of macro leverage ratio".

On the other hand, the leverage ratio of real estate enterprises has also declined from the high level in 2017-2018. In 2019, the average net debt ratio of A-share real estate enterprises is 79.4%, which is - 12.3 PCT, which is already in a relatively reasonable position. The pattern that the scale of the follow-up industries has decreased slightly and the concentration has increased will also promote the mainstream real estate enterprises to maintain a relatively stable leverage ratio.

Huachuang Securities pointed out that the current gross profit margin of sales has reached the bottom periodically. Taking sunshine city as an example, the interest bearing liabilities at the end of 2019 were 110.7 billion yuan, of which bank loans, bonds and others accounted for 47%, 28% and 25% respectively. Assuming that the financing costs of the above channels decrease by 50bp, 80bp and 300bp respectively, the corresponding interest expense / revenue will decrease by 3.4% in 2020. Assuming that the duration of the outstanding debt is 3 years, the corresponding interest expense / revenue will decrease by 1.1% during the year.

Industry insiders point out that if the new deal is implemented, the reduction of net debt ratio depends on the pressure drop of interest bearing liabilities or the expansion of consolidated equity. At the same time, the significant downward trend of financing cost this year will further help the net profit rate of sales form a periodic bottom, and even some high-quality real estate enterprises will show a bottoming out recovery.

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