The Third Quarter Report Of Real Estate Enterprises: Revenue Decline And Loss Expansion

In 2020, the attention of small and medium-sized real estate enterprises in the real estate industry will increase. According to the data released by the people's court website, in the first half of this year, there were more than 200 real estate enterprises that issued bankruptcy documents or entered bankruptcy liquidation procedures. The proportion of small and medium-sized developers in third and fourth tier cities was relatively high, and the reasons for bankruptcy were mostly excessive debt and broken capital chain. The life of small and medium-sized real estate enterprises is quite difficult.

Taking 79 small and medium-sized real estate enterprises with operating revenue of less than 60 billion yuan in the third quarter of A-share as the analysis sample, from the aspects of revenue situation, profitability, robustness, turnover rate, etc., it can be confirmed that the survival pressure of small and medium-sized real estate enterprises is gradually increasing, and the loss has become a common problem, and some small real estate enterprises even face the loss peak for many years.

An employee of a 10 billion level real estate enterprise disclosed that its enterprise had been in a tight financing situation since the second half of last year, so it did not take any more land. After the outbreak, sales were greatly affected. But the real estate company can barely survive. Many small real estate enterprises with a sales scale of 10 billion in Shanghai are moving forward in the process of scale expansion and industry regulation: some change professional managers every half a year and keep trying and making mistakes; some actively seek project cooperation opportunities with other real estate enterprises.

Revenue declines and losses expand

From the perspective of operating income in the third quarter of 2020, 41 of the 79 sample enterprises had a year-on-year decline in operating income, while only 32 enterprises had this data in 2019, among which 17 real estate enterprises had a performance decline of more than 30%, which reflected the impact of market factors on the performance of real estate enterprises to a certain extent.

From the reasons for the decline in performance, the impact of the epidemic is a factor, but more lies in the company's own problems. In terms of profits, 45 enterprises in the sample companies in the third quarter showed a decline in profits, an increase of 5 compared with the same period last year, and 12 of them suffered losses.

From the perspective of enterprises, Taihe Group lost 1.9 billion yuan in the first three quarters, which was the largest loss among the sample enterprises, with a year-on-year decrease of 185.9%. Taihe is only a special case. In comparison, the loss decline trend of small real estate enterprises is more obvious. Jiakaicheng (000918. SZ) and new Hualian (000620. SZ) all had larger losses. New Hualian's loss in the first three quarters was the highest in nearly a decade. The third quarter report shows that in the first three quarters of 2020, the new Hualian achieved an operating income of 3.556 billion yuan, a year-on-year decrease of 36.79%; the net loss during the period was 680 million yuan, with a year-on-year decrease of 516.94%, which is the first huge loss in nearly ten years, and the loss after deducting non-profit will be expanded to 746 million yuan. Since the beginning of this year, the "black swan" incident of this small real estate enterprise, whose revenue has just exceeded 10 billion in 2019, has continued: default on debt has become the first default case of real estate enterprise under the epidemic situation.

Compared with the same period last year, the profitability of small and medium-sized real estate enterprises declined. In 2019, the average gross profit margin of sample enterprises is 37.8%, 3.3 percentage points higher than this year. In the sample enterprises in 2019, there are 42 real estate enterprises with a decline in gross profit margin, while 50 enterprises in the same period of this year show a decline in gross profit rate.

From the perspective of main business areas, real estate enterprises with industry and park leasing business have higher gross profit margin, such as Lujiazui and other enterprises. From the perspective of brand real estate enterprises, such as Zhongnan Construction, Jindi group, Yangguang City, zhaoshang Shekou, overseas Chinese town, etc., have declined to varying degrees.

Due to the influence of cost factors, the profitability of the industry is gradually declining. In addition, market and enterprise carry forward factors also cause the reduction of enterprise profit scale, which leads to the decrease of gross profit margin. The roe performance of these small and medium-sized real estate enterprises shows the same trend. On the whole, the roe of sample real estate enterprises in the first three quarters of this year has decreased compared with the same period of last year. The average roe of sample enterprises in 2019 is 6.05%, while this year's average is 1.97 percentage points lower. In the same period of 2019, the number of enterprises with roe decline is 45, and that of this year is 51.

Xiao Yunxiang, research director of Tongce Research Institute, pointed out that there are three reasons why small and medium-sized real estate enterprises are facing difficulties: small brand influence and weak appeal, which directly leads to insufficient sales force; low operation capacity and low efficiency; and lack of money.

Many small and medium-sized real estate enterprises have the problem of low capital turnover efficiency. For example, for a small project with tens of thousands of square meters, the development cycle of small real estate enterprises is long, and the project turnover speed is slow, which directly leads to the decline of capital turnover rate. The consequence of low operating capacity is not only to increase the industry gap, but also to increase the pressure of real estate enterprises themselves. Low operational efficiency will directly affect the efficiency of capital utilization, increase capital pressure, increase cost and reduce profit margin.

In addition, the financing difficulties of small and medium-sized enterprises have led to the decline of their competitiveness in the land market and the loss of development opportunities. Capital is the blood, and the operating efficiency of small and medium-sized real estate enterprises is low, resulting in more tension in the capital chain. However, the financing of small and medium-sized real estate enterprises is too difficult and expensive for a long time. In the loan business of real estate enterprises, the sales scale of real estate enterprises is an important reference index when examining the qualification of enterprises. As a result, the financing channels of small and medium-sized enterprises become narrower and they can only find "shadow bank" for financing. This brings out another problem: high financing costs, which constantly erode the profits of small and medium-sized real estate enterprises, but they have to sacrifice profits to survive.

Aggravation of differentiation

According to the data provided by Tongce Research Institute, compared with the "three red lines" index, the average debt ratio of small and medium-sized real estate enterprises in the third quarter of this year was 62.3%, an increase of 0.6 percentage points compared with the same period last year. In terms of the number of enterprises, the number of enterprises increased by the index is 2 less than that in the same period of 2019, but the growth rate is relatively high, of which 34 enterprises are more than 70%. In terms of net debt ratio, the average value of the sample enterprises is 111.3%, an increase of 13 percentage points compared with the same period in 2019. Among them, 40 enterprises grew in the same period, 2 enterprises increased compared with the same period in 2019, of which 30 enterprises exceeded 100%. In terms of cash short debt ratio, excluding 14 enterprises with abnormal indicators, the average cash short debt ratio of 65 sample enterprises in 2020 is 126, which is 5% lower than that of the same period last year.

Through the analysis of the three indicators, overall, compared with the same period last year, the robustness of sample enterprises showed a downward trend. But there are also some enterprises cash flow situation is better, indicating that the differentiation of small and medium-sized real estate enterprises is intensified. In terms of cash, the average monetary capital of the 79 SMEs in the third quarter was 9.38 billion yuan, an increase of 1.06 billion yuan over the same period last year. From the perspective of a single enterprise, the monetary capital of HUAFA shares increased the most, reaching 20.6 billion yuan. Secondly, the scale and range of cash growth of real estate enterprises such as joy city and shoukai show a good level.

The average inventory turnover rate of small and medium-sized real estate enterprises in the third quarter was 0.1545, an increase of 0.0038 over the same period last year. From the perspective of enterprise changes, in the sample enterprises, 41 real estate enterprises increased year on year in the same period of 2019, compared with 45 this year. The increase in average value is mainly due to the large increase of individual enterprises, such as Asia Pacific, Hefei urban construction and Daming city. In terms of total asset turnover, the average value in the third quarter of this year was 0.1073, down 0.0049 compared with the same period last year. There are 49 enterprises showing a year-on-year decline, compared with 42 enterprises in 2019. During the period of the epidemic, the decline of inventory turnover rate was mainly caused by the decline of operating efficiency.

Xiao Yunxiang believes that if at the beginning, we all took the same road and were on the same starting line, then different development ideas later determined the gap between small and medium-sized real estate enterprises and large real estate enterprises in 10 years. Some small and medium-sized real estate enterprises, in the era of the best market, wasted the best opportunities and lacked crisis awareness and strategic vision; while some developed real estate enterprises seized the rare market opportunities at that time, took the road of large-scale expansion, increased the number of development projects and expanded the number of entering the city.

After two years of adjustment, the property market has been transformed into a buyer's market. The changes in the market force the industry to pay attention to product quality and brand building, strengthen the construction of management capacity, cost control, and enhance the financing ability in innovative ways. The exit of small and medium-sized real estate enterprises is also an embodiment of effective allocation of market resources. Xiao Yunxiang believes that to eat the old capital or to be acquired depends on the adjustment and transformation ability of small and medium-sized real estate enterprises, "survival of the fittest and survival of the fittest".

As Yu Liang, chairman of Vanke's board of directors, said at the 2020 Shanghai Vanke media meeting, "to live" is another language called time enterprise. At present, industries and policies are changing rapidly. The so-called era enterprises should strive to adapt to the changes and the dimensions of changes. "Today's real estate industry is facing great changes. On the one hand, if it does not adapt to the change, it will be eliminated; on the other hand, change is also a new opportunity. Who adapts to this change will have new opportunities."

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