Greenland Zhang Yuliang: Reducing Debt, Stabilizing Development, Promoting Transformation And Releasing Management Dividend

The central government adheres to the policy guidance of "no speculation in real estate" and plans to implement the prudential supervision system of real estate finance with the "three red lines" as the core. As a result, the development logic of the real estate industry has undergone profound changes.

Since 2021, the overall situation of macroeconomic recovery has been maintained. At present and in the future, China's economy is still in an important period of strategic opportunities, but compared with the past, opportunities and challenges have new development and changes. The external environment is still complex, and the real estate industry is undergoing great changes: anxiety and internal restructuring are intertwined.

Time will speak, through the long corridor of time, those enterprises that are good at seizing development opportunities and firm direction in the storm may be able to go further and further. According to the reporter's observation, large real estate enterprises have not only fully demonstrated their responsibilities and actions in the fight against epidemic prevention and control. In the past two years, they have also frequently released key information such as focus on transformation, reform, innovation, team, risk control, etc. In the new historical stage, what role will large enterprises play in the current of the times?

Recently, Zhang Yuliang, chairman and President of Greenland Group, repeatedly mentioned "stabilizing growth, promoting transformation and seeking development" in an exclusive interview with 21st century economic reporter. In 2020, Greenland accurately grasped the new development pattern of "double cycle", realized the overall positive growth of core performance, and achieved new breakthroughs in reform. Since the beginning of this year, Greenland has steadily arranged the "fourteenth five year plan" in accordance with the requirements of "making a good start and starting a good step for the development in the next five years", continuously promoted transformation and upgrading, and promoted high-quality development.

Responsibility of large enterprises

"21st century economic report": in the past year, the industry has experienced intensive regulation and control, and the survival mode of real estate enterprises has also changed. What are the new features and opportunities of China's economic development during the "14th five year plan"?

Zhang Yuliang: Generally speaking, the first is the new stage of China's economy. China's economy is changing from high-speed growth to high-quality development, and will gradually change the "world factory" development mode of "two ends at abroad" in the past, turn to rely on the unified domestic market, and speed up the construction of a new development pattern with domestic big cycle as the main body and domestic and international dual cycle promoting each other.

Second, the new stage of urbanization. With the urbanization rate over 60%, China has gradually entered the stage of "deep urbanization". For example, in terms of spatial form, more attention will be paid to the driving role of central cities and urban agglomerations to build a modern metropolitan area. In terms of policy orientation, more attention will be paid to promoting the urbanization of "people" and accelerating the citizenization of transferred population.

Third, a new stage of expanding domestic demand. China has a population of 1.4 billion, with a per capita GDP of more than 10000 US dollars and a middle-income population of over 400 million. It is the most potential domestic demand market in the world. China will adhere to the strategic basis point of expanding domestic demand, comprehensively promote consumption, expand investment space, and create a strong domestic market.

Fourth, the new stage of scientific and technological revolution. A new round of scientific and technological revolution and industrial transformation is in the ascendant, and the cutting-edge technologies represented by 5g and artificial intelligence are breaking through rapidly and penetrating into all walks of life. For example, promoting the digital transformation and realizing the deep integration of the real economy and the digital economy has become a consensus.

Fifth, the new stage of industry development. In line with the economic and social development, the development of real estate, infrastructure and other industries has entered a new stage. In particular, the real estate business model is undergoing profound changes, the "financial attribute" is declining, "manufacturing attribute" is rising, "leverage dividend" on large-scale work is gradually decreasing, and "management dividend" of intensive farming is gradually highlighted.

21st century: what role will big companies play in this cycle? What kind of industry responsibilities should be shouldered?

Zhang Yuliang: leading enterprises in the industry should always be at the forefront of the times, actively respond to the guidance of national policies, strive to explore new models of industry development, and closely combine their own development with national orientation, industry trend and social demand, so as to achieve double harvest of social value and enterprise development.

Looking forward to the development in the next five years, the core is to do a good job in the "three new", that is: grasp the new development stage, implement the new development concept, and build a new development pattern. Large enterprises should accurately grasp the development characteristics of China's economy, urbanization, expansion of domestic demand, scientific and technological revolution, and industrial development in the new stage, comprehensively implement the core new development concepts of high-quality development, reform and innovation, collaborative development, embracing science and technology, and keeping the bottom line of safety, and strive to build a new pattern at the level of industry status, industry and capitalization, Promote the development of enterprises to a new height and thickness. In 2021, leading enterprises should also anchor the strategic vision of the next five years to ensure a good situation of high-quality development and start a good development in the next five years.

21st century: what are the objectives of green space management during the 14th Five Year Plan period? How will the goal be achieved?

Zhang Yuliang: "during the 14th Five Year Plan period, Greenland will focus on building a new development pattern, so that the development of enterprises can reach a new height and thickness. The overall grasp of internal and external environment, green space in the next five years will fully implement the development concept of five aspects. First, high quality development; Second, reform and innovation; The third is to create an industrial "ecosystem" and form a "1 + 1 > 2" synergistic development effect; Fourth, embrace science and technology; Fifth, keep the bottom line of risk control.

Greenland will focus on fine operation and management and continuously release "management dividend". Focus on key industries with outstanding performance in real estate, infrastructure, finance, consumption, etc., focus on key growth areas with space and potential, and focus on key units with sufficient competitive advantages to improve resource utilization efficiency.

In short, there are three main levels, including the first is the new status pattern. We have a goal of "1 billion", which are: first-class development of the main business, full of internal motivation, ranking among the top 100 of the world, building a 100 billion class legion, and forming a trillion level revenue. The second is a new industrial pattern, forming an industrial operation pattern of "improving the quality of real estate, improving infrastructure level, expanding consumption scale, digitalizing finance, and increasing kinetic energy through coordination". The third is the new capitalization pattern, further promote the capitalization strategy, and form the basic pattern of "the second mixed reform of group companies and the split listing of important businesses".

Industrial logic of green space comprehensive management

In recent years, in line with the trend of China's economic and social structural change, green space optimizes industrial layout, adjusts industrial structure, and promotes industrial transformation and upgrading. The general idea is: on the basis of consolidating the original advantageous industries such as real estate, actively extend to the upstream and downstream of the industrial chain, related industries and collaborative industries, carry out "limited and diversified" operation, and create a business model of collaborative development of "ecosystem". At present, Greenland has basically formed a comprehensive management pattern of "taking real estate and infrastructure as the main business, and coordinated development of consumption and finance industries". At present and in the future, China's development is still in an important period of strategic opportunities, but opportunities and challenges have new development and change, how will green space go?

21st century: what achievements have been made in green space deleveraging? What are the next deleveraging measures?

Zhang Yuliang: with the comprehensive and high-quality growth of the main economic indicators, Greenland has strengthened its efforts to actively de leverage and become a "green space sample" of efficient deleveraging of real estate enterprises. In the first half of the year, the main economic indicators of Greenland grew steadily and debt reduction achieved more than expected results. Greenland actively adapts to the prudent management system of real estate finance with the "three red lines" as the core, implements the established road map and timetable, promotes debt reduction, deleveraging, and structural optimization. The short-term cash debt ratio turns green ahead of the red line, and the net debt ratio index falls steadily and rapidly. It will also turn the target of meeting the standard to green as soon as possible and achieve the goal of debt reduction beyond expectations. By the end of February, Greenland's "three-year, three-step deleveraging" plan met the phased targets ahead of schedule. While steadily coping with the payment peak before and after the Spring Festival, Greenland successfully realized the cash short-term debt ratio of more than 1, and the "one red line" was "converted to green" ahead of schedule, more than a quarter ahead of the original plan. By the end of June, the total amount of interest bearing liabilities decreased by 34.7 billion yuan compared with the beginning of this year. Since the implementation of the deleveraging plan last year, the accumulated high point has dropped by more than 101.1 billion yuan; The higher net debt ratio decreased by 62 percentage points in total, and the asset liability ratio after deducting accounts receivable in advance continued to decline. On the other hand, Greenland has paid off the principal and interest of domestic and foreign open capital markets in full and on schedule, with a total of nearly 20 billion yuan and about 472 million US dollars. It has also increased the repurchase and cancellation of related bonds, and has repurchased about 60 million US dollars of US dollar bonds.

Around six core measures, Greenland has taken the initiative to reduce liabilities and deleverage in a planned, step-by-step and multi pronged way, mainly including: first, actively reducing the scale of interest bearing liabilities and optimizing the structure of assets and liabilities. Second, focus on growing areas, optimize the land reserve structure and improve the quality of land investment. Third, according to the market situation, the production and supply rhythm should be adjusted flexibly. Fourth, accelerate the withdrawal of sales funds and implement prudent and stable cash flow management. The fifth is to speed up the construction and delivery of sold projects. Sixth, actively enrich the capital of enterprises and enhance their capital strength.

21st century: Greenland infrastructure has become another core industry besides Greenland real estate. Why develop large infrastructure?

Zhang Yuliang: Greenland infrastructure has become another 100 billion level industrial plate besides the real estate industry. This is the result of green space conforming to the trend of China's economic and social structural change, vigorously optimizing the industrial layout, adjusting the industrial structure, and promoting the industrial transformation and upgrading. The general idea of green space development is: on the basis of consolidating the original advantageous industries such as real estate, actively extend to the upstream and downstream of the industrial chain, related industries and collaborative industries, carry out "limited and diversified" operation, create a business model of coordinated development of "ecological circle", and better serve the economic and social development of China. The development of green space infrastructure is due to the historic opportunity of new urbanization and infrastructure interconnection in China.

At present, the revenue of green space infrastructure construction is second only to the six state-owned construction companies, with one member enterprise of 100 billion level and two member enterprises of 50 billion level, initially forming a nationwide operation network. In 2020, Greenland officially established "big infrastructure group", as a platform company leading the development of infrastructure industry, with a registered capital of 20 billion yuan. Greenland will take this opportunity to comprehensively improve the development level and core competitiveness of infrastructure industry, and strive to be among the top five industries in China within three years. Looking forward to the "14th five year plan", by 2025, Greenland Infrastructure Group will enter the forefront of "ENR global / international contractors 250", and become the leading and most reliable trillions level, scientific and technological, comprehensive investment and construction service group in China.

In addition to major infrastructure construction, Greenland's "major business spin off and listing" is also an important capitalization layout of the company during the "14th five year plan". It is to carry out joint-stock reform and promote the split listing of business sectors with relatively good themes such as consumption and finance, and promote the split listing. At present, the relevant work is steadily advancing.

21st century: why do you want to follow up?

Zhang Yuliang: the mechanism of real estate project follow-up investment is mainly aimed at the newly launched projects, and the business unit and the project team contribute to follow-up investment according to a certain proportion.

Promoting project follow-up investment is an important measure for the company to promote the real estate industry to comply with the long-term and trend changes of the industry. It will promote the main real estate industry to optimize the structure, stabilize the performance growth, enhance the competitive advantage, and achieve high-quality development. Taking the implementation of the project follow-up investment system as the "bull nose", change the development mode, optimize the management and control structure and workflow, promote systematic change and enhance the development momentum. The comprehensive implementation of the follow-up investment reform is conducive to improving the operation efficiency of the project, implementing the interest binding, enhancing the shareholder awareness of the project team, and promoting the project company to maximize the revenue and expenditure, improve the operation quality and maximize the return of shareholders; It is conducive to optimizing the management and control structure, adjusting the division of rights and responsibilities among the group, business division and project company, optimizing the assessment system, and promoting the sinking of management resources.

21st century: under the new rules of the game, how does the company "change positions"?

Zhang Yuliang: "double centralization" is essentially the upgrading of the central real estate regulation and control idea, and also an important specific means of classified control in land sector. It is also the key idea of classified regulation to control land price and stabilize housing price expectation. Through centralized supply and expansion of supply, effectively control market expectations and stabilize market sentiment, which is conducive to stabilizing house prices and "housing without speculation" from stabilizing land prices and expectations.

At present, the policy effect of "double concentration" is gradually emerging. In recent years, the situation of centralized land supply in several important cities shows that the hot and cold conditions in different cities are uneven, and the profit space of some land and real estate enterprises has been compressed.

In the face of new regulatory measures, the key is to change the way of investment and continue to invest prudently and accurately. Combined with the company's resources and reform direction, flexible response.

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