Opinion Real Estate Network Confidence is more important than gold in capital markets. However, this kind of confidence is not a source of water or no roots, but rather an analytical judgment based on objective understanding.
Since 2021, the industry has been declining, the “thunderstorm” of housing enterprises has continued, and successive default incidents have dampened investors' confidence.
On November 19, according to official WeChat information of Jianye Group, the company signed a strategic cooperation agreement with Zhongyuan Bank. Zhongyuan Bank will provide comprehensive financing services totaling no more than RMB 10 billion to Jianye Group.
Affected by related news, Jianye Real Estate's stock price skyrocketed in the afternoon of the same day, with an intraday high of HK$1.17 and a closing price of HK$1.16, up 5.45% year on year.
In fact, in the context of macro-control such as “housing and housing,” and preventing and mitigating financial risks, financing difficulties for housing enterprises have become a reality. Positive signs of large financing and bank endorsements, such as Construction Industry, can often win investors' trust.
10 billion dollars in financing
In this “winter” of real estate, people clearly know that they can only “survive” if they get more capital. As a result, every bit of news about housing enterprise financing can attract market attention.
On November 19, Jianye Group and Zhongyuan Bank signed a strategic cooperation agreement.
According to the agreement, the two sides will establish a long-term strategic partnership and carry out all-round cooperation in the areas of livelihood housing, property services, construction projects, cultural tourism, capital markets, cash management and personal finance. The Central Plains Bank intends to provide comprehensive financing services totaling no more than RMB 10 billion to Jianye Group.
In response to this 10 billion dollar financing, analysts mentioned that on the one hand, there is a possibility that the real estate industry will relax financing; on the other hand, it is Jianye Real Estate's “self-help” initiative.
According to this source, “The housing financing environment has picked up recently. Situation with large financing by private enterprises, such as Construction Industry, is not ruled out to be a sign of relaxation.”
In fact, recently, data from the Banking Insurance Regulatory Commission showed that demand for reasonable real estate loans had been met. At the end of October, real estate loans from banking financial institutions increased by 8.2% year on year, and more than 90% of personal housing loans were used to support the first home.
Entering November, more than 10 housing companies, including Greentown, Poly Development, Jinyu Group, Yuexiu, and China Merchants Shekou, provided financing through debt issuance. According to statistics, as of November 21, the planned debt issuance scale of housing enterprises this month had reached 29.670 billion yuan, clearly exceeding the total amount of domestic debt issued by housing enterprises in October.
However, from another perspective, Jianye's move can use the name of the Central Plains Bank to endorse it and send a stable signal. After all, after the “letter of help” in September, market sentiment is gradually recovering, but there is still not enough confidence.
According to data, Central Plains Bank is the first provincial legal bank in Henan Province, which is the result of a further merger and restructuring on the basis of the “establishment and merger” of 13 urban commercial banks in December 2014. Up to now, Zhongyuan Bank continues to restructure 16 urban commercial banks through mergers and acquisitions.
Looking back at the past, we can see that this is not the first cooperation between Jianye Group and Zhongyuan Bank.
As early as 2014, when the “Central Plains Bank” was under construction in Henan Province, Hu Baosen revealed to the outside world that Jianye Real Estate had plans to participate. Then, in 2015, a wave of new policies for the real estate industry hit. It was also policy regulation, market confidence getting cold, and also Jianye Group and Central Plains Bank...
At that time, the two sides signed an agreement. According to the agreement, in the next 3 years, Zhongyuan Bank will use the “equity+debt” and “in-form+off-balance” models to provide Jianye Group with 30 billion yuan of comprehensive financing services including comprehensive credit, structured financing, integrated mergers and acquisitions, and bond underwriting.
At the same time, Jianye Group will make full use of the Central Plains Construction Industry Urban Development M&A Fund jointly initiated by the two parties to focus on supporting the pace of integration of Jianye Group and accelerating the implementation of its own “New Lifestyle Service Provider for Urban Residents” strategy.
Cooperating with Central Plains Bank one after another to raise more than 10 billion dollars to build an industry, hoping to use the Central Plains Bank to boost market confidence. In other words, Jianye hopes to send a positive signal to the market, that is, enterprises can still finance their debts...
Market sentiment
In the past few years, in the public's sense of investment: state-owned enterprises had government credit endorsements, there was a government guarantee behind state-owned enterprise debt, and there was no risk of default; while private enterprises could only finance through their own credit... This also led to differences in financing costs in the real estate industry.
However, this year, morale in the real estate industry is sluggish. With Huaxia Happiness, Blu-ray, and even one of the top three housing companies in the industry, investors are very worried about the real estate industry.
Therefore, the recent positive news on the financing side is certainly a strong shot for the capital market, but for most companies, buying back stocks and bonds, making early payments, etc. before financing picks up is a controllable measure to “endorse yourself.”
According to Opinion Real Estate New Media, recently, many housing enterprises have sent positive signals by repaying debts in advance and buying back bonds.
Among them, on October 31, Jianye Real Estate announced that it would remit 3 billion yuan of funds from its Chinese onshore bank account to its offshore bank account to pay the principal and interest of notes due in November. Subsequently, on the evening of November 8, Jianye Real Estate announced that it had redeemed all 6.75% of the US$363 million priority notes due in 2021.
On November 7, Metro Holdings said it would use the company's own funds to redeem the US$350 million bond in advance and cancel it.
On November 9, Xuhui Holdings issued an announcement stating that the company issued a maximum of about 418 million new shares through a stock offering, raising about HK$1,673 million. Among them, the majority shareholder, the Lin family, promised to invest HK$887 million to subscribe for 222 million shares, and intends to invest an additional HK$786 million to fully subscribe, with a total investment of up to HK$1,673 million.
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In addition to this, many companies such as Rongxin China, Zhengrong Real Estate, Zhongliang Holdings, and Shimao Group have successively bought back corporate bonds, sending an optimistic signal to the market.
“No shortage of money” is the message conveyed to investors by actions such as early payment, stock supply, and repurchase of bonds.
There is no denying that this kind of early debt repayment news caused a brief recovery in Jianye Real Estate's stock price. On October 29, the company's stock price reached a high of HK$1.25, with a market capitalization of HK$3.709 billion. However, the recovery did not last long. Its stock price finally bottomed out on November 10, recording a low of HK$0.97 in nearly a year, and the market capitalization evaporated to HK$831 million.
On November 19, due to financing news, Jianye Real Estate's stock price skyrocketed in the afternoon of the same day, with an intraday high of HK$1.17 and a closing price of HK$1.16, up 5.45% from the previous year. However, how long this recovery can last is yet to be answered by the market.