By reducing leverage, optimizing the capital structure,High standard access to land andMeasures such as embracing change have created a key competitive advantage.
The real estate market in 2021 looks like a magical 2018.
In the first half of the year, the property market showed signs of "overheating", with 10,000 people snatching houses in some cities. In the second half of the year, key cities increased purchase restrictions, the market turned cold, the credit market was tight, mortgage interest rates continued to rise, and sales were weak.
From 2018 to the first half of this year, or longer cycle, excellent enterprises can always quickly respond to changes in the market environment and come up with solutions.
On August 30th, Sunac China (01918.HK) handed in a straight-An answer:
The contract sales reached 320.8 billion yuan, and the sales increased by 64.3%.
business income95.82 billion yuan, up 23.9%
Return to motherNet profit11.99 billion yuan, up 9.4%
Earnings per share were 2.62 yuan, up 8.7% from the same period last year.
The debt ratio continues to decline and the "three red lines" indicators improve steadily.
The international credit rating has been upgraded in an all-round way.
The strategy of financing and innovation shows strong resilience, passing through the market cycle and resisting industry risks. Under this kind of concentration, Rongchuang has not only achieved rapid growth in performance, but also tempered a strong comprehensive ability.
Pay attention to the performance at the same time, the outside world can not help but wonder, the difficult half of the year, what is Rongchuang doing? What will Sunac do in the second half?
01Sun Hongbin's request
In August 2020, the Ministry of Housing and Construction put forward new regulations on financing management of the real estate industry, dividing real estate enterprises into "red, orange, yellow and green" by "three red lines". Since then, "downgrade" has become the top priority of real estate enterprises.
The speed of downgrade of housing enterprises represented by Rongchuang is shocking. By the end of 2020, Rongchuang has been reduced by two consecutive gears in less than half a year. After a deep study of its internal causes, it is found that financial innovation is ahead of the policy requirements, taking the initiative to implement the strategic direction of more balanced and high-quality development from the second half of 2019, and continue to promote it. "Reduce leverage and optimize capital structureAnd formulated a comprehensive, clear and long-term action plan to enhance profitability while ensuring adequate and stable cash flow.
By the end of June 2021, the "three red lines" indicators will continue to improve, and the process of turning green in an all-round way will be accelerated.
We disassemble a set of data from the semi-annual report:
The net debt ratio was 86.6%, down 9.4 percentage points from the end of 2020.
The ratio of unrestricted cash to short debt rose to 1.11, an increase of 0.3 percentage points from the end of 2020.
Excluding accounts received in advance, the asset-liability ratio fell to 76%, down 2.3 percentage points from the end of 2020.
The financing structure of Sunac continues to improve, and the scale of trust borrowing has declined sharply for two consecutive years. In the first half of this year, Sunac successfully issued two preferred notes on January 26 and March 2, respectively, and the interest rates on both issues were the lowest since the company went public. At the same time, Sunac redeemed ahead of schedule the outstanding balance of $7875 million of senior notes due on February 15, 2022.
Replacing high-cost debt with lower-cost debt, the financing cost of financing has been reduced, and the debt structure has been further optimized.
The credit rating has been improved in an all-round way, and the recognition of institutions has been continuously strengthened. Since 2021, international well-known banks Morgan Stanley, Citigroup, JPMorgan Chase & Co, Haitong International, CICC and Credit Suisse have issued reports to vigorously promote Sunac China, giving Rongchuang a rating of "outperforming the market" and listed as the "preferred recommended" stock.
At the interim performance investment meeting, Sun Hongbin put forward higher requirements for the basic safety market, not only to reduce the debt ratio this year, but also to reduce the debt scale. "within three years, the financing cost will be reduced from the current 8% to less than 5%, and the credit rating will be investment grade."
02 "Management dividend" era
We should build high walls and accumulate a wide range of grain, but we should also give consideration to "controlling the total quantity and improving the quality".
In the land market, Sunac has its own set of investment rules, in a word:Take the land with a high standard。
In the first half of 2021, Rongchuang strictly controlled the total amount of land. Under the condition of ensuring the continuous optimization of financial indicators and meeting the requirements of the "three red lines", it made prudent decisions and reasonably replenished the value of high-quality land rights and interests of about 213.5 billion yuan.
In the second half of the year, the total available resources are more than 660 billion yuan, and the supply of goods is sufficient and high quality, laying a good foundation for sustained performance growth, and ensuring sufficient flexibility and absolute safety of operating cash flow.
Since 2021, the "double centralization" land supply policy has emerged and has been continuously optimized. As an important part of the long-term regulation and control mechanism of the real estate industry, with the re-adjustment of the rules of the second round of centralized land supply, enterprises take land from "capital" to "strategy" and "quality".
In order to cope with the changes in the land market, Sunac put forward the land acquisition strategy in the second half of 2021 and its follow-up. In other words, the ratio of equity to land sales is expected to be controlled within 20% in the second half of the year, and less than 30% for the whole year.
This strategy also caters to the observation index that the ratio of land to sales is limited to 40%.
How to achieve the above goals? Fuchuang has also found a way to solve the problem here: increase the proportion of wholly-owned projects, optimize the existing cooperation model, and select partners with strong financial strength to establish a long-term platform for cooperation.
More importantly, in order to achieve the above goals and even longer-term goals, Sunac comprehensively promotes digital construction, supports fine management, and creates value for customers. The Group comprehensively promotes digital construction and regards digitization as one of the important tasks of the three-year planning. Digital construction work mainly covers the real estate, service and cultural and tourism business sectors.
In the first half of 2021, Sunac will comprehensively promote the construction of digital technology, including online sales, online construction, calculation center, online procurement, online customer service and other systems, comprehensively improve operational efficiency and support the company's further refined management.
Take the real estate sector as an example, the new delivery of real estate projects, Fuchuang comprehensive provision of smart community services, has landed in 45 places across the country, and it is expected to complete the launch of nearly 200 projects smart community platforms across the country this year.
There is no doubt that under the regulation and control of the policy of "housing speculation" and "three stability", the real estate industry tends to be stable and healthy, entering the era of management dividend, and the fine management ability of housing enterprises has become one of the core competitiveness.
03Embrace change
A history of financing and innovation is exactly half of the history of real estate development in China. The past decade is also the decade of the highest development of real estate in China, and it is also the decade of rapid growth of the leading real estate enterprises.
Since its inception in 2003, after 18 years of development and precipitation, it has probably experienced three important stages of development, which are very representative in the development of real estate in China.
From 2003 to 2010, various driving forces for the development of China's real estate market were firmly established. Huge investment demand, consumer demand, government-driven and price deregulation made the real estate industry develop savagely like a wild horse. China's major cities gradually form "huge construction sites". This stage is the initial stage of financing. At that time, it grabbed the layout of the core cities, ensured survival, and established basic operational capabilities.
From 2010 to 2019, Fuchuang entered a stage of rapid growth and established a key competitive advantage in the first half of high-turnover and high-growth real estate.Faster, better, better quality, deeper ploughing"the advantage, quickly ranked among the forefront of the industry. It was at this time that Sunac realized that the optimization of the capital structure was very important to the company's long-term development, so ahead of the policy requirements, it took the initiative to optimize the capital structure and reduce leverage from the second half of 2019. Improve profitability while ensuring adequate and stable cash flow.
2020 is the transformation year of financial innovation, at the same time, the industry also ushered in a great turning point.
This year, Sunac officially opened the prelude of the company's "balanced and high-quality development": take the initiative to adjust the pace, the amount of land is only half of what it was in 2019, the "three indicators" fell two grades in a row to yellow, and financing costs continued to fall. in order to build a strong ability to be lower than cyclical risk.
In 2021, the development pattern of the real estate industry has been reconstructed, and Fuchuang has ushered in a new strategic goal of "four shifts":Safer, more leisurely, longer-term, more valuable. This principle will become the basic principle of Fuchuang team, which takes profit as the core, customer satisfaction as the core, safety and soundness as the core, enhance the comprehensive competitiveness, and continue to create value for employees, customers, shareholders and society.
This coincides with the "long-term" orientation of the industry.
The past decade is the decade of residential development, residential development accounts for 84% of the total commercial housing, especially before 2018, as long as adhere to the three-high model can enjoy the maximum dividend, but now, the "three-high model" is difficult to sustain.
Real estate fluctuations are closely related to policy adjustment, and Sunac is good at embracing change. Wang Mengde, executive director and chief executive of Sunac China, said inside the company, "Regulation is good for the industry and enterprises." will become more stable and healthier. But at the same time, it also requires enterprises to quickly adjust and adapt under the new policy environment. Fuchuang actively integrates into the national strategy, resolutely responds to the policy guidance, and calmly embraces industry changes.
The curtain of a new round of reform in the real estate industry has opened. It is more important to clarify ourselves and put forward a series of feasible methodologies according to strategic objectives.