Digital Transformation: Real Estate Enterprises Want To Reverse The Crisis Of "Three Red Lines" Through Transformation

A few days ago, Ali joined hands with E-House to launch the "tmall good house". Core executives of Vanke Yuliang, Biguiyuan Mobin, Fuli Li Silian and xuhuilin all attended the conference. In fact, Ali, as the protagonist, is not the first time to "touch the real estate", causing such high attention in the industry. On the one hand, the real estate enterprises are facing the uncertain factors in the second half of the industry, and are looking for breakthroughs; on the other hand, digital transformation is an industry trend, and leading enterprises in the industry have increased their efforts in digital transformation.

So, can digital transformation reduce pressure for real estate enterprises in the second half?

In this regard, Xiao Yunxiang, a senior analyst at Tongce Research Institute, points out that the trend of digital transformation of real estate enterprises is becoming stronger and stronger, because the market is changing. The market has entered the stock market from incremental market, customer demand has developed from passive to active, diversified demand, and the trend of deleveraging industry is clear. Facing the changes in the industry, real estate enterprises need to find new business growth momentum and actively promote business innovation to achieve transformation and upgrading. Actively embracing new technologies and promoting digital transformation is the inevitable choice for real estate enterprises to reshape growth and business transformation.

Great pressure on destocking

According to Kerui data, among the 65 real estate enterprises that disclosed the inventory details in the first half of 2020, the total inventory of existing houses was 1.3 trillion yuan, which further decreased by 0.4 percentage points to 11.3%.

With the strengthening of the policy on financing and debt control, under the new policy framework, some of the debt pressure is greater, and the real estate enterprises may strengthen inventory de stocking and reduce investment.

Ding Zuyu, CEO of E-House enterprise group, said that with top 30 real estate enterprises as the dividing line, the average inventory proportion of real estate enterprises outside top 30 has increased significantly, jumping from 10% to 14% - 16%. This shows that although the scale of top 30 real estate enterprises still actively replenish inventory through bidding, auction, acquisition and other means, with the improvement of inventory turnover times and the optimization of regional structure, more cash has been effectively digested Housing, more significantly reduced the inventory pressure. For example, Xuhui, whose inventory proportion of existing houses in 2019 is higher than the average value of key monitoring real estate enterprises, has obvious inventory digestion in the first half of 2020. The total inventory of existing houses has decreased by 28.8% compared with the beginning of the period, and the proportion of existing houses has dropped below the average.

According to a research report from Kerui, in terms of the trend from 2015 to 2019, the total inventory of 39 typical real estate enterprises in 2019 increased by 25% year-on-year, but the total amount of completed inventory only increased by 12% year-on-year, far less than the increase of total inventory. At the same time, the proportion of completed inventory of real estate enterprises, as a core indicator to measure the degree of inventory backlog, has been reduced for four years, from 18.5% at the end of 2015 to 10.3% at the end of 2019, and it can also maintain a constant downward trend in recent two years. Specifically, 20 real estate enterprises have optimized the proportion index of completed inventory in 2019, and 9 of them have achieved remarkable results in removing the heavy load for three consecutive years. Dexin has the lowest proportion of completed inventory, accounting for 1.6%. Yuexiu has the most outstanding performance, and the proportion of completed inventory has not rebounded within four years.

Kelui Research Center pointed out that although the current market is continuously affected by the epidemic situation, the overall expectation of real estate enterprises on the market remains cautious and optimistic from the perspective of supply arrangement and target removal rate of scale real estate enterprises in 2020. Most of the real estate enterprises' target value removal rate is about 60%, which is basically the same as that in 2019. From the two indicators of inventory backlog index and de stocking ability index, the inventory turnover times of 39 typical listed real estate enterprises in 2019 is 0.33, showing a long-term downward trend, which is 0.05 times lower than 0.38 in 2016, but it is basically the same as that in 2018.

At the same time, many real estate enterprises have a large inventory pressure and a weak ability to eliminate inventory. Meanwhile, many real estate enterprises have a temporary backlog of inventory, so prudent operation may improve the situation. This also reflects the trend of stabilizing the real estate market from the side.

Among the 39 typical real estate enterprises mentioned above, 21 real estate enterprises had a year-on-year increase in inventory turnover times, and 6 real estate enterprises achieved a two-year continuous increase, indicating that most of the real estate enterprises have improved their capital utilization efficiency. Among the real estate enterprises, Landsea has the highest number of inventory turnover in 2019, reaching 0.7 times.

In fact, a single index of inventory turnover rate can not fully reflect the de turnover ability. The scale of the enterprise itself, the layout of the project city and even the product customer group will affect the turnover ability. In order to improve the speed of de urbanization, the real estate enterprises start from the profitability and profit space. At the same time, due to the special pre-sale system, the completed unsold inventory is usually regarded as sales difficulties, and real estate enterprises still need to continue to pay attention to the transformation of this part of inventory, so as to obtain cash flow faster to resist the capital pressure brought by the continuous tightening of financing.

Transformation from straw to digital life saving?

In the face of completed unsold inventory, real estate enterprises have to face the realization and conversion of these goods value in the second half of the year, so as to obtain cash flow faster to resist the capital pressure brought by the continuous tightening of financing.

Xiao Yunxiang pointed out that from the perspective of digital development of real estate enterprises, it can be roughly divided into three stages: the first stage is to establish the internal management informatization of real estate enterprises, especially some large-scale real estate enterprises have huge organizational structure and complex business system. Internal management informatization can provide support for management, cooperation and decision-making, and fundamentally improve the efficiency of internal operation. From the industry point of view, Vanke, Longhu and other real estate enterprises go relatively early; the second stage is the online business, that is, different value chains in internal operation can realize interaction, and at the same time realize the interaction between internal and external suppliers and end customers, such as bidding and purchasing system, site management, customer management, etc. The value lies in the improvement of collaborative efficiency under the internal and external fixed mode, the improvement of customer research ability, and the innovation of marketing mode; the third stage is the transformation of AI and big data, which has a high degree of concern, and its value lies in providing decision support for enterprise operation through the analysis of a large amount of data. For example, in land acquisition positioning, customer research, marketing strategy formulation, and even extended to customer service, big data analysis can be used to support the formulation of strategy.

Combined with the current industry situation, most of the enterprises are in the stage of internal management informatization, and a few real estate enterprises have entered the business online stage. At present, only a small number of real estate enterprises are practicing and exploring in the digital stage. Most of these are leading enterprises, such as Vanke, country garden, Evergrande, etc.

From the perspective of the implementation path, it needs to go through several steps: the adjustment of corporate culture and business philosophy, the transformation from the past production-oriented corporate culture to Internet thinking. Only when the bottom thinking changes, can the digital transformation have the soil for growth; the adjustment of organizational structure and top-level design and other mechanisms should create a space and atmosphere for the company's digital development, and be able to endure a long time Cultivation period means the investment of cost, including strategic resource cost, human cost, hardware cost and so on, so as to realize digital enabling business and enhance the competitiveness of enterprises.

From the perspective of business decision-making, people are still the first factor. The application of digital technology only improves efficiency and provides support for business decision-making. The core decision-making is still completed by people.

Lin Zhong, chairman of Xuhui holding, said that real estate has entered a new era of competition, and digital transformation and empowerment will become the driving force of enterprise development, from traditional industry to real estate + ecology, to real estate + technology, scientific and technological real estate and digital real estate. In his view, digitization will become a new productivity in the future. Therefore, the improvement and reform of their all-round ability in the future mainly involves decision-making mode, operation mode, cooperation mode and organization mode.

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