Greenland'S "Thrilling Leap": Can The Financial Business Be Spun Off And Listed On The Stock Market?

Overnight, "digital transformation" has become a trend in the real estate industry - cutting into the digital mode in the business sector, or reconstructing the business model in the refined operation.

A few days ago, the 21st century economic reporter exclusively learned that with the help of digital transformation and upgrading and business restructuring, Greenland Holdings (600606.sh, referred to as "Greenland") plans to complete the spin off of its financial business plate and go public within three years.

Recently, Greenland digital division, a new company restructured on the basis of Greenland Financial Investment Holding Group Co., Ltd. (hereinafter referred to as Greenland Finance), is conducting a war. At present, Greenland finance is the third level subsidiary of Greenland, so Greenland branch will become the parent company of Greenland finance, and will be the listing subject of Greenland Group's financial business in the future. At present, all financial businesses of Greenland are placed in financial holding. After the completion of this round of capital increase, Greenland financial holding has become a first-class subsidiary of Greenland several branches. At present, the business segments in financial holding will be stripped out one by one and put into the green space branch. Greenland financial holding will become a licensed institution completely. Greenland Digital Technology Co., Ltd. plans to introduce the following four types of institutions: local government industry guidance fund; Internet technology leading enterprises; overseas well-known PE funds; domestic top investment and financial institutions. If there is no accident, the IPO will be completed within a few years.

According to another source, Greenland digital branch raised up to 6 billion yuan (US $876.41 million), raising its valuation to 34 billion yuan.

As the head of real estate enterprises, green space has been controversial. From the mixed reform, listing, market value all the way down, to now the "three red lines" are all trampled, trillion debt entangled.

According to the interim report in 2020, the asset liability ratio of Greenland after deducting the advance receipts will reach 82.70%; the net debt ratio will reach 180.3%, which is 24.7 percentage points higher than that at the end of 2019; the cash short debt ratio is 0.72.

Recently, Greenland has launched the second mixed reform, which highlights the urgency of Greenland's transformation from another angle: Zhang Yuliang, chairman of Greenland Group, has started the plan of splitting several new business sectors, including large infrastructure industry, finance and free trade port.

With the weakening of the financial attribute of real estate, green space finance is also given another role by Zhang Yuliang.

Geng Jing, executive president of Greenland Group, chairman and President of Greenland finance, disclosed to the 21st century economic report that Greenland began to plan for digital transformation in 2018. In the past few years, the financial attribute of real estate has made finance the core driving force for the transformation and upgrading of Greenland Group.

On the one hand, Greenland directly obtains the effect of debt reduction by splitting its core business and listing to improve its asset valuation; on the other hand, Greenland hopes to reverse the situation of high debt and profit decline by restructuring its overall business.

In Geng Jing's framework, the concept of "Greenland science and technology" is closer to that of "ant technology". He hoped that thanks to the support of Greenland branch, Greenland Group would tell the story of digital transformation of a large group.

Why split financial listing

In recent years, Greenland has experienced changes from surpassing Vanke to slowing down growth, from single real estate sales to diversified layout.

In 2014, the pre sales amount of Greenland reached 240.8 billion yuan, an increase of 50% compared with 2013, replacing Vanke and becoming the first in the scale of real estate industry. However, in 2015, the sales of green space decreased slightly, ranking second in the industry; in 2016, the sales growth rate of green space was about 10%, 17% in 2017 and 20% in 2018. In 2019, the sales scale of green space will decrease by 11% year-on-year, and in the middle of 2020, the sales volume of green space will decrease by 16%. While the growth rate of 10% - 20% is no longer the same, Greenland is also facing the growth of interest bearing liabilities for diversified development.

In recent three years, green space has been increasing in debt. In 2019, interest bearing liabilities will be about 293.7 billion, an increase of nearly 30 billion compared with 268.9 billion at the end of 2018; in the first half of 2020, interest bearing liabilities will continue to increase to about 329.8 billion, an increase of about 36.1 billion. The increasing debt repayment pressure has become a big loophole that erodes the profits of green space.

As early as six years ago, Greenland began to plan for industrial upgrading and carried out diversified industrial layout around consumption upgrading. Besides the main business of real estate, Zhang Yuliang has held three cards: large infrastructure construction, free trade port and finance.

In the composition of green space revenue, the level of real estate is comparable to that of large infrastructure. According to the annual report of 2019, the revenue of large infrastructure business exceeded that of real estate for the first time, accounting for 50%. In the interim report of 2020, the revenue of large infrastructure business decreased slightly. The income of Greenland finance is not reflected in the financial report, but people familiar with the matter disclosed that Greenland finance is profitable and "not short of money". The trade port belongs to the nurturing period.

In the past 28 years, the business model of Greenland has been traditional and closely following the direction of industrial policies.

In September 2019, Zhang Yuliang, chairman and President of Greenland Group, put forward in his speech at the 11th China real estate scientific development forum that real estate has scene advantages and platform effect. In the future, real estate and science and technology will be deeply integrated and "two-way empowerment" will be realized. He firmly believes that a new round of scientific and technological revolution and industrial revolution is close at hand. Greenland will fully embrace innovation and technology, and promote the transformation of real estate science and technology and digitization.

Why does Zhang Yuliang have this idea? With 4.5 million family owners in Greenland, the offline scenes cover more than 130 cities in 29 provinces, more than 100 hotels and nearly 1000 complexes, and nearly 10000 real estate projects have been developed. This is the scene basis for green space to realize digital transformation and upgrading. One thing may be a turning point in Zhang Yuliang's decision: in early 2018, Greenland indirectly invested in ant financial services. The initial experience of investing in Internet companies made Zhang Yuliang start to think about the feasibility of Ma Yun's saying "all business should be digitalized; all data should be business oriented".

Greenland's latest interpretation of the industrial chain logic is "one body and two wings". One is a stepped industrial layout, from one million real estate to 100000 class cars, ten thousand yuan level culture, education and health care, 1000 yuan level tourism and leisure, and 100 yuan level global imported food direct mining.

But the diversified layout did not let the green space into the fast lane. In the first half of 2020, the operating revenue of Greenland was 209.8 billion yuan, with a year-on-year increase of 4.2%, and the growth rate was significantly slower than that of the same period of last year. The total profit was 15.3 billion yuan, a year-on-year decrease of 8%. The net profit attributable to shareholders of listed companies was 8.02 billion yuan, a decrease of 10.8% year-on-year, both of which were narrower than those in the first quarter.

Affected by the epidemic situation, the industry's profits generally declined this year, but Greenland's financial reports in 2018 and 2019 had a clue. Since 2018, the proportion of Greenland infrastructure business has gradually increased, but the profitability is still limited. The total assets ratio of Greenland increased from RMB 10345 million to RMB 9245 million in 2018.

Under such a background, the listing of Greenland finance has become a new "breakthrough" of Greenland.

On the one hand, finance is not only free from the industry, but also can feed back the main business. The establishment and development of Greenland finance is Zhang Yuliang's most free business. On the other hand, the large infrastructure and free trade port sector is still in the cultivation stage. At present, only Greenland finance is the longest established business sector with good profitability.

Green hope to improve the financing capacity through green space finance, at the same time, drive the improvement of overall operation efficiency.

Greenland launched the issuance of hotel REITs in Singapore in 2018, from the front-end real estate fund, to the cultivation of middle end business, to the back-end realization of REITs listing. Geng Jing disclosed that Greenland finance is trying to issue REITs on the Singapore Stock Exchange, and plans to complete the approval this year. "If we have time, we can issue REITs this year, but we will choose the issuance window.". According to its disclosure, it may choose early next year. If the issuance is successful, it will be the first REITs issued in Singapore by a super large enterprise with state-owned background in China. Another important significance is that this time, it will try the dual currency of RMB and new currency, and it will also be the first dual currency product issued by domestic enterprises overseas.

The sense of crisis under the change of sales mode

According to people familiar with the matter, the Ministry of housing and urban rural development may consider changing the pre-sale mode to the existing housing mode. These are the biggest changes to the investment and financing mode of the whole industry. For large-scale real estate enterprises such as Greenland, what they are facing is how to speed up the de inventory and ensure cash flow under the premise of the original decline in growth rate.

If the market value of Greenland has been over 800 billion since the reform, the total value of Greenland has been falling by more than 200 million. If the total value of Greenland has been on the market for more than 200 million years, it will only bring about the largest increase in the market value of Greenland.

On the eve of the IPO, ant financial changed its name to ant technology, which reflects the business model of this enterprise, which is to realize the data through a large number of financial services. Geng Jing deeply believes in this logic: ant financial is a tool and driver to realize Alibaba's application data through financial services.

Greenland is making four digital transformations, including product digitization, process digitization, management digitization, and service digitalization. After that, the logic of digital business is to realize profitability. This point has been practiced and verified by Alibaba. The business model of Taobao is the same as that of eBay, but Taobao does not charge. Taobao platform can not make money, but when Taobao accumulates a large amount of data and the data is commercialized, it realizes data realization through Alipay or ants.

Before the transformation from Greenland to Greenland, Nokia has not upgraded its business from green space to green space.

Apple's business model is a milestone. Its greatness lies in that it can master the customer information of Apple mobile phone. When people start to use apple, they need to register an ID. from Apple generation to now, customer data has been in Apple's hands. In other words, Nokia doesn't know who its users are, but Apple knows every one.

Zhang Yuliang wants to bring Greenland from the "Nokia" era to the "apple" era. Apple stores, equivalent to sales offices of real estate enterprises, realize their cash through hardware sales. When customers become Apple's customers, apple can create an open ecosystem. The app store app enables Apple's partners to integrate into the same ecosystem. Zhang Yuliang believes that real estate enterprises can also bring customers into a consumption scene.

In short, the first step of green space transformation is digital transformation; the second step is to realize through financial technology. This is the same logic as that of Alibaba and Taobao through ant financial services Alipay. Greenland launched the whole industry coverage of green space g preferential enjoyment, which is superimposed with the financial services of to C, from wealth management of high net worth people to financial consumption, which is also the value embodiment of flow and data realization through the provision of financial services. Geng Jing believes that this model is the same as Alibaba's ant technology.

The "thrilling leap" of green space

In 2018, the total profit of Greenland finance increased by more than 50% year-on-year. Previously, in 2017, the total profit of Greenland finance reached 2 billion yuan, and the profit in 2019 was 3 billion yuan, which was a trend of gradual growth.

When it comes to Greenland finance, we should start with Geng Jing. Geng Jing, 46, has a professional financial background. He is a scholar named Lee Kuan Yew from Harvard Kennedy College, a researcher at the University of California Berkeley, a part-time professor at Peking University, a visiting professor at Fudan University, and a member of the North American Bankers Association. In 2014, Geng Jing chose to enter Greenland to build a financial holding platform. Over the past six years, with the support of the group, Greenland finance led by Geng Jing has continuously improved and optimized its own business sector, which has become an important multi industry pillar and profit source of Greenland Group.

Geng Jing frankly said that when he joined Greenland, he paid attention to three points: the advantages of green space system and mechanism attracted many people to start businesses and develop on the green space platform, which is the driving force of enterprise development; the industrial resources and advantages of green space endogenous; and Zhang Yuliang's clear and accurate positioning of green space, which is the key core competitiveness.

Before Geng Jing joined Greenland, Zhang Yuliang had a long talk with him. During the exchange and discussion, Zhang Yuliang revealed his idea of making the financial industry bigger and stronger. "My first question was to ask Mr. Zhang, do you want to be a corporate finance or a financial company?" Geng Jing said: strategically, if we are to do corporate finance and only provide financing supporting services for Greenland, we can't build a financial industry; only by being a financial company can we make the financial industry bigger and stronger. So Zhang Yuliang let Geng Jing do his best in the financial industry of Greenland. Facts have proved that Zhang Yuliang's vision is right, and Greenland finance will stand on the C position in this transformation of the group.

In fact, when Geng Jing studied financial engineering at Berkeley business school in California, his thesis was "how to build a financial holding group". At that time, Geng Jing also worked as a temporary post in JPMorgan group and did research on how the financial industry in the United States evolved and the future model of financial holding groups represented by JP Morgan. Finally, he formed his own paper. After returning home, Geng Jing once submitted a special report on how to establish a financial holding group to the Organization Department of the Shanghai municipal Party committee. Out of his ambition to build a financial holding company, Geng Jing hoped that what he had learned could be brought into play on the platform of Greenland.

Geng Jing believes that when Greenland realizes the value of customer data through business means, it is a thrilling leap.

On the contrary, green space finance is the most appropriate path and channel to realize C-end value realization through consumption scenarios. Compared with the large infrastructure and trade port sectors, it is Greenland finance that can link the existing application scenarios of Greenland to maximize profits. However, Greenland finance is only a three-tier subsidiary, so it needs to be a platform company to put financial business into it. There are green space branches.

Although the green space Finance Division has not yet completed the registration, the path of green space financial separation is clear: at present, all financial businesses are in green space finance. In the future, Greenland finance will become a first-class subsidiary of Greenland finance, and all business segments of Greenland finance will be put into Greenland Digital Division, and Greenland finance will become a licensed institution.

It is not easy for a big ship to turn around, let alone reshape a new organizational structure. Recently, the National People's Congress of the people's Republic of China has set the financial holding admittance standard. After the benchmarking of Greenland finance, it will apply for the license of financial holding company, and all licensed institutions will stay in Greenland finance. Geng Jing doesn't care so much about the insurance and other licenses he has been striving for in the past two years.

In fact, all licenses are tools, channels and paths in the ecology of digital technology. By injecting green finance into green technology, Greenland completes the stripping of core content of business services. It is not known whether this approach will enable Greenland to realize asset valuation improvement and debt reduction.

Greenland finance has supply chain finance and technology brands, together with factoring and leasing companies. Geng Jing believes that this is an open supply chain finance mode with to B end. Greenland finance should create ecology for the enterprises and partners in the supply chain and industrial chain, provide financing services for enterprises through supply chain finance, and at the same time provide investment opportunities for these ecological enterprises, empower their industries, and enhance their value. For example, when making equity investment, it reflects the return on equity investment, which corresponds to the enabling investment results. Compared with the previous investment in Yajule property, after industrial empowerment, the market value of Yaju life has increased by 5 times compared with that of Greenland.

Based on a service platform, channel and tool, the license plate can provide financial services for C end and B end at the same time. Geng Jing thinks that the relationship between Greenland finance and Greenland will be more and more like Alipay to Taobao. The core of the future of green space finance is to give consideration to both to C and to B. the former takes green space as the main body, which adds financial services, including wealth management and consumer financial services.

The difference is that the Greenland finance institute does not have to-b business with ant technology, Jingdong technology, Suning finance and other enterprises, but Greenland branch has to B business. It is such a case that inspires Zhang Yuliang that Greenland will use the financial sector to make a "breathtaking leap": gradually realizing the data of to B.

To this end, Geng Jing plans to apply supply chain finance to green space, but he points out that not all industries are suitable for supply chain finance. This depends on the systemic risk of the industry in which it is located. When an industry or industry is in a period of decline or contraction, it is not to solve the risk, but to increase the risk. One example is that Ping an HP once launched mutual guarantee and mutual loan interconnection in Zhejiang Province. Once there are systemic risks, none of them is immune.

Geng Jing used the story of "burning Chibi" as an analogy. When the wind blows from the northwest, it is very safe for the ships to be connected as if they were walking on the ground. Once the southeast wind blows in Chibi area, it shows that there is a systematic risk and it becomes a fire company.

Can green space be rebuilt by green space science?

Geng Jing believes that Greenland has 28 years of real estate experience, has accumulated 4.5 million owners' families, nearly 500000 first-class suppliers and nearly 3 million secondary suppliers. How to make full use of this huge application scene to realize the rapid improvement of value and profit maximization may be the key point to rebuild a green space.

Greenland has been planning to restructure its organization since 2018. At present, the technical means of science and technology finance have been provided. As far as financial industry is concerned, it is absolutely necessary to sublimate the financial industry on the basis of ecological technology. Just as Jia Yueting first proposed the concept of creating an ecological chain, but ecology can not be built by a LETV. If it is closed, it will be easy to "dead cycle". "Geng Jing pointed out that ecology is open and must be composed of many subjects, including government and enterprises. The third subject is C-end. Offline is called scene, while online is platform, which constitutes" industry + service ", forming an open ecology. After the listing of Greenland finance, it will further explore how to improve the relationship between B and C.

Referring to the real estate development mechanism in Europe and the United States, Geng Jing believes that with the industry segmentation, investors and developers will be separated. In the next 5-10 years, perhaps faster, the industry giants will no longer be Vanke, Evergrande and other leading enterprises, but will be the capital side, such as investors such as ping an real estate. In the future, what Greenland finance should do is to play the role of investors.

In fact, Geng Jing began to think about and discuss the change of housing sales mode for a long time. He started to fund the front end and introduce external investment institutions. He also carried out fund operation in the holding stage of operating property and realized the back-end exit through asset securitization such as ABS and REITs. Mature REITs in the world are the best way to withdraw from operating properties, including rental housing can be used as REITs in a certain mode in the future. The two major domestic stock exchanges have begun to test the water.

At present, the core business of Singapore's digital Finance Bureau is to apply for the wholesale business of Singapore's Financial Bureau in the 21st century.

Green space is also faced with the problem of "people". Geng Jing pointed out that the aforementioned entrepreneurial platform is a channel for Greenland to absorb excellent talents. Geng Jing compared Greenland to an aircraft carrier. Besides the aircraft carrier, there were strategic ships and frigates. In the whole green space system, Greenland and many enterprises are mutual strategic partners and investors. In this context, Greenland provides an entrepreneurial platform and introduces the mechanism of business partners. The so-called first-class talents "come without paying". Standing on the shoulders of giants, outstanding talents are like combat aircraft on aircraft carriers, which are the most powerful. Under Greenland, the highest shareholding ratio of business partners can reach 40%. For example, Green's green garden companies, car sales companies, etc., the management team holds 40% of the equity.

One side is the repayment pressure of high interest bearing liabilities, and the other is the prospect of big data realization. Can Zhang Yuliang rebuild a green space?

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