Within The Year, The Second IPO Of Real Estate Enterprises Is Imminent, And The Real Estate Capital "Ticket" Is Less And Less?

Recently, the information disclosed by the Hong Kong Stock Exchange shows that Jinhui Holdings has passed the listing hearing and is expected to be officially listed on the Hong Kong Stock Exchange on October 29.

The IPO price range of Jinhui holdings is HK $3.50-hk $4.50 per share, with a basic issuance scale of 600 million shares, and no more than 90 million shares can be over allotted, and the maximum raised capital is HK $3.105 billion.

After this year's IPO, Jinhui will become the second real estate company in mainland China.

Due to the strict regulatory policies in the mainland of China, it is difficult for real estate companies to land in A-shares through IPO in recent years, so Hong Kong shares have become the first choice for enterprises to land in the capital market. Since 2018, mainland real estate has started a wave of IPO in Hong Kong. In 2018 and 2019, there were 7 and 6 IPO companies respectively.

Since the beginning of this year, more than 10 real estate companies have been listed in Hong Kong. However, before Jinhui, only one real estate company completed IPO. Analysts believe that fewer and fewer high-quality enterprises have become the main reason for the low IPO pass rate. At the same time, with the increasingly serious division of the industry, some small real estate enterprises that are unable to catch up with them seem to have difficulty in entering the capital market.

For the real estate industry, is capital "ticket" really more and more scarce?

Only one of the top 40 real estate companies is unlisted

Jinhui started its business in Fuzhou in 1996, began to carry out nationwide layout in 2004, and moved its headquarters to Beijing in 2009. At present, Jinhui has entered 16 provinces and municipalities, 31 cities, and has 160 property development projects.

According to the statistics of e-ju Kerui, in 2019, Jinhui holding's full range sales volume was RMB 88.86 billion, ranking the 40th, and the equity sales volume was RMB 66.16 billion, ranking 37th. According to this standard, only Jinhui and Xiangsheng are left among the top 40 real estate enterprises in China.

Jinhui's listing road is not smooth.

In 2013, Jinhui submitted its listing application to the Hong Kong stock exchange for the first time, but failed to do so. After that, Jinhui tried to land a shares and submitted an application for listing to the Shanghai Stock Exchange in 2016. It plans to issue no more than 600 million shares and raise 6 billion yuan.

However, due to the strict policy supervision, since 2015, there has been no successful IPO attempt of real estate enterprises in the A-share market. At the beginning of 2020, Jinhui voluntarily withdrew its application for listing a shares and submitted an application for listing to the Hong Kong Stock Exchange on March 25. On September 25, Jinhui submitted the statement again and updated some financial data.

According to the latest version of the prospectus, as of August 31, this year, the outstanding pre-sale housing funds (contractual liabilities) of Jinhui holdings was 71.384 billion yuan, which was significantly higher than the previous updated data.

According to the prospectus, in 2017, 2018 and 2019, the income of Jinhui holdings was RMB 11.777 billion, RMB 15.971 billion and RMB 25.963 billion, respectively, with an annual compound growth rate of 48.5%. Over the same period, Jinhui's gross profit was 3.792 billion yuan, 4.826 billion yuan and 5.662 billion yuan respectively, with an annual compound growth rate of 22.2%. In the first half of 2020, Jinhui achieved an operating revenue of 10.972 billion yuan.

As for land storage, as of July 31, this year, Jinhui's total land reserve was 29.082 million square meters, of which the land reserve of second tier cities and core third tier cities accounted for 93.3%.

In terms of debt, on April 30, 2017, 2018, 2019 and April 30, 2020, the asset liability ratio of Jinhui holdings after deducting contract liabilities was 54.8%, 50.7%, 47.7% and 46.6%, showing a gradual downward trend, and the debt level was better than most companies in the industry.

On October 14, Fitch upgraded Jinhui's rating to "B", and its outlook was raised from "stable" to "positive". Fitch said that the increase reflected the improvement of Jinhui's market position and financial leverage, including non controlling interests (about 20%) lower than its peers, continuous optimization of leverage ratio and improvement of debt structure; the land reserves mainly concentrated in provincial capitals and municipalities with high quality and sufficient total building area are enough to meet the long-term development needs in the future.

Capital "tuyere" gradually goes away

Due to its large scale and healthy finance, Jinhui's IPO scale is expected to exceed HK $3 billion, making it the largest real estate enterprise in Hong Kong after Zhengrong in 2018.

But this "achievement" cannot represent the general situation of IPO of real estate enterprises this year. Dragonair, which went public earlier this year, raised less than HK $1.5 billion.

In 2018, a total of 7 mainland real estate enterprises were listed in Hong Kong, raising a total of 9.83 billion yuan; in 2019, the number of listed real estate enterprises in Hong Kong was 6, raising 8.69 billion yuan.

At present, there are holding companies such as Sunland holdings, Sunland holdings, sunway real estate holdings, sunway real estate holdings, sunway real estate holdings, sunway real estate holdings, etc. Except Xiangsheng, the rest are small and medium-sized real estate enterprises.

From the data of these enterprises, small scale, concentrated regional distribution, high debt ratio, single financing channel and high financing cost are the main characteristics. If there are only nine projects under Pengrun holding, the profits in 2017 and 2018 are 357 million yuan and 224 million yuan respectively, and the profit is less than 100 million yuan.

Another real estate company to be listed has a total outstanding loan of 12.657 billion yuan at the end of 2019, of which the short-term debt to be repaid within one year is 3.584 billion yuan, while the cash and cash equivalent held on the spot is only 2.039 billion yuan, so the cash is not enough to cover the short-term debt.

The IPO path of these real estate companies can be described as bumpy. Among them, wanchuang international has failed to apply for listing for four times, Datang real estate has submitted its third prospectus, and hailenburg, Aoshan holdings and Sanson group have IPO for the second time.

The capital market's "blessing" effect on financing, land acquisition and corporate governance of real estate enterprises is recognized by the industry. In recent years, many small and medium-sized real estate enterprises have taken a "fast train" in the capital market by pounding on the IPO of Hong Kong stock market under the severe financing policy in the mainland. But since this year, the road to listing real estate companies seems to be more bumpy.

Is the HKEx stricter?

Bai Wenxi, vice president of China enterprise capital alliance, told the 21st century economic report that the exchange mainly reviewed the application materials in terms of compliance in form, legality in procedure and completeness in letter. Recently, small and medium-sized real estate enterprises are the main ones. Failure to pass the examination may be due to problems in these aspects, but the examination of real estate stocks by non Hong Kong stocks is more stringent.

The head of the financing department of a large listed real estate enterprise told the 21st century economic report that compared with a shares, Hong Kong's capital market pays more attention to the stability of finance, return and performance sustainability. In recent years, the industry has been seriously divided, and the disadvantages of small and medium-sized real estate enterprises in land acquisition, financing, sales premium and other aspects are becoming more and more obvious, which has greatly affected the financial performance.

Even if the market value and stock price of these companies are successful, they will not perform well. It is reported that among the real estate enterprises listed in 2019, Dexin China and SunPower holdings have "broken" on the first day of listing.

This person believes that since this year, more stringent regulatory policies, as well as the "three red lines" management of the financing of real estate enterprises by the regulatory authorities, will aggravate the disadvantages of small and medium-sized real estate enterprises. If the basic financial indicators can not meet the standards, the listing difficulty of these enterprises will inevitably increase.

Yan Yuejin, director of the think tank center of Shanghai E-House Real Estate Research Institute, believes that the window period for mainland real estate enterprises to Land Hong Kong stocks has passed. With the industry moving from the golden age to the silver age and the normalization of the regulation of the mainland property market, the market space of the industry and the profitability of real estate enterprises have been declining in the past two years. Affected by this, even the large-scale traditional real estate enterprises, P / E ratio is difficult to climb up.

At the same time, the property management industry has ushered in a boom of listing, and both the stock price and the P / E ratio are higher than those of traditional real estate enterprises. Poly property, which landed in Hong Kong stock in 2019, has a price of HK $35.1 per share and a net fundraising of HK $4.579 billion. In the same year, Zhongliang holdings, a 100 billion yuan listed real estate enterprise, priced at HK $5.2-6.88 per share and raised only HK $2.918 billion.

According to statistics, since this year, 6 property management enterprises have landed in the capital market, including Xingye Wulian, Yixing group, Jianye xinlife, Financial Street property, Hongyang service and Zhengrong service. Another 14 enterprises have submitted their forms and are waiting in line.

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