Author: Han Jiangxue
Source: financial reporting Bureau
With a fortune of 126.9 billion yuan, Yang Huiyan became the richest woman in China in 2019, while Country Garden Holdings, who gave her this status, was saddled with 1.26 trillion in debt.
In 2018, Yang Huiyan's wealth shrunk by more than 30 billion yuan, making her still the richest woman in China. However, three collapses, two fires and eight lives cast a haze on the 2018 of the richest woman family and Country Garden Holdings.
After 63-year-old Yang Guoqiang said three things he didn't know one after another, Country Garden Holdings stopped talking about high turnover, which is regarded as the iron law, and turned to emphasizing safety. Less than three months after slamming on the brakes, 37-year-old Yang Huiyan was transferred from vice chairman Country Garden Holdings to co-chairman.
At Country Garden Holdings's annual meeting on January 21, 2019, Yang Guoqiang positioned Country Garden Holdings as a high-tech conglomerate that creates good life products for the world, rather than a real estate developer. He drew three priorities for Country Garden Holdings's 2019-real estate, agriculture and robots.
At this time node, it may be a good choice to dilute the imprint of the real estate company, but how easy is it to turn? With five accidents in three months, "slowing down and improving quality" may be a helpless move, but after abandoning the killer mace of high turnover, how can Yang Guoqiang and Yang Huiyan fill up the 1.26 trillion debt?
Seek transformation, slow down, and be effective?
"No enterprise makes robots from scratch. What the enterprise originally did is not the core issue, the key is what kind of market field to enter. " On January 21st, Yang Guoqiang cheered up Country Garden Holdings's transformation at the annual meeting.
His idea is to use agriculture and robots to form a mutually beneficial closed loop with the real estate business. "I want to do a good job in agriculture, and I also want to talk to my colleague Country Garden Holdings 150000." Yang Guoqiang expressed his wish in 2018.
In the face of the background of deleveraging, real estate financing has been very difficult, 2018 frequent accidents, Country Garden Holdings even worse. Under such circumstances, it is not difficult to understand that we should seek transformation and dilute the imprint of real estate, but this road has only just begun.
Its agriculture originated from the poverty alleviation project in mountainous areas nine years ago, when Country Garden Holdings helped poor mountainous areas according to the "company + cooperative + peasant household" model, which not only found high-quality nursery stock suppliers for Country Garden Holdings, but also led local farmers to get rich. After that, Country Garden Holdings thought of allowing agricultural and sideline products from poor areas to enter the community, so he derived a new retail business, Phoenix Optimum, which mainly operates agricultural and sideline products for the community.
The robot business started in 2018. In July of that year, Country Garden Holdings set up a wholly-owned subsidiary Guangdong Bozhilin Robot Company (referred to as "Bozhilin Robot"). According to Yang Guoqiang's vision, Country Garden Holdings wants to build a construction robot that can build a house.
"Last year, the framework of our agricultural company and robot company has been set up, and there are ideas for development, and then we look forward to their wonderful performance."In other words, although Country Garden Holdings has set up a subsidiary for the robot project, carried out personnel adjustments, and sought cooperation with the government and institutions of higher learning, it is still just the beginning.
After Yang Huiyan became co-chairman of Country Garden Holdings on December 7, 2018, part of her responsibility was to be responsible for Country Garden Holdings's strategic investment and new retail and other new business exploration.
In order to develop the robot industry, Country Garden Holdings plans to invest at least 80 billion yuan in the robot field within five years, bringing in 10, 000 of the world's top robot experts and researchers. At least for now, this is a pure input and debt-increasing project. When can we see output?
You know, as of June 30, 2018, Country Garden Holdings's debt was as high as 1.26 trillion.
Country Garden Holdings achieved sales of 550.8 billion yuan in 2017, ranking first in the industry. In the six years from 2011 to 2017, sales increased 11 times, and sales exceeded 400 billion yuan in the first half of 2018.
But also in 2018, the secret of high turnover that pushed Country Garden Holdings to the altar exposed Country Garden Holdings's safety worries to the sun. In five accidents in three months, eight people were killed and 25 injured. In the face of the uproar of public opinion, Yang Guoqiang and Country Garden Holdings had to bend over to apologize and then were forced to announce: "put safety and quality first in the second half of the year and slow down the pace of development."
In line with the slowdown, Country Garden Holdings management is also playing down the brand of "residential developers", looking for new competitiveness, at least to the outside world.However, it is not easy for the ship to turn around.
Country Garden Holdings has incubated his property and education business for more than a decade, and his market capitalization is less than 1/6 of Country Garden Holdings's market capitalization. Country Garden Holdings's sales in half a year are more than 10 times the combined revenue of the two companies. After more than ten years of hard work, he finally failed to become a "giant" like real estate. Can the newly emerging agricultural and robotic business become a miracle?.
▲ Country Garden Holdings is a comparison of 3 listed companies.
On January 4, 2019, Country Garden Holdings released unaudited operation data in 2018. Country Garden Holdings achieved sales of 501.88 billion yuan in 2018, ranking third in the industry after Vanke and Evergrande. But the weird thing is that Country Garden Holdings's sales in the first half of 2018 was 412.49 billion yuan, that is to say, according to the results announced by Country Garden Holdings, his sales in the second half of the year were only 89.39 billion yuan.
When the sales results of Evergrande and Vanke both exceeded 200 billion in the second half of 2018, does the inexplicable data of Country Garden Holdings mean that the effect of reducing speed and improving quality is remarkable?
At the apology meeting on August 3, 2018, Country Garden Holdings's management was deeply aggrieved but had been defending high turnover, and its CFO Wu Bijun even said bluntly: "it will not slow down the pace of high turnover." As a result, Country Garden Holdings announced that he attached importance to safety and slowed down the performance meeting on August 21. The industry judges that even if it slows down, the financial impact should not be withdrawn until a year and a half or two later.
According to data released by Kerry, a third-party platform, Country Garden Holdings achieved 728.69 billion yuan in sales for the whole year in 2018, which is more credible than the weird data released by Country Garden Holdings. If the real data exceeds 700 billion, Country Garden Holdings would rather give up the reputation of the sales champion to hide the volume, in order to tell the outside world that the speed has really slowed down?
The sales of the three major real estate companies in ▲ in 2018 are based on official data.
According to the latest data from Wind, Country Garden Holdings has total liabilities of 1.26 trillion yuan, total assets of 1.4 trillion yuan and asset-liability ratio of 89.85 percent. Under the general trend of deleveraging, reducing debt is the inevitable path for real estate companies. If we give up the trump card of high turnover, how can we make up for this debt of 126 million yuan?
Financing is difficult, repayment is difficult, debt repayment is difficult?
When Sun Hongbin and Xu Shoufu were asked about high debt, they responded arrogantly that there was no shortage of money, while the low-key Yang Guoqiang seemed to encounter this problem rarely. So, is Country Garden Holdings short of money?
On January 18, 2019, Country Garden Holdings announced the issuance of US $1 billion in preferred bills with interest rates as high as 7.125% and 8%, which will be used to refinance overseas debts. Country Garden Holdings issued bonds five times in two months, raising about 24.6 billion yuan. On September 19, 2018, Country Garden Holdings just issued 975 million US dollars of bonds. Frequently borrow new money to pay off old debts. Is it short of money?
It is not terrible to borrow the new or the old, but the terrible thing is that the money is becoming more and more difficult to borrow and the financing cost is getting higher and higher.
Since the second half of 2018, Country Garden Holdings has issued US dollar bonds with interest rates of 7 per cent and 5 per cent, up from 4.75 per cent in January 2018, two to three points higher.
▲ Country Garden Holdings frequently borrows the new and pays off the old at high cost.
Country Garden Holdings's domestic corporate bonds are frequently terminated or suspended.
In February 2018, Country Garden Holdings's proposed issuance of 20 billion yuan of corporate bonds showed "suspension". Three months later, the fund-raising was suspended again, which was originally planned to be used to repay loans and long-lease projects; Country Garden Holdings's updated corporate bonds in 2018 involved an amount of 75.57 billion yuan. only 33.57 billion yuan was approved; in July, news came from the market that some trust companies were asked to suspend all their real estate business.
"Country Garden Holdings's financing cost of commercial tickets in 18 years is 15% Mur19%. The financing cost of Country Garden Holdings's commercial tickets on the market in May and June is already 16%-18%." According to a person in the financial industry, real estate companies such as Evergrande and Country Garden Holdings often issued commercial tickets on the market for financing, but since August 2018 (when the Country Garden Holdings safety accident continued to ferment), Country Garden Holdings's commercial tickets have been difficult to see on the market because few people have accepted them.
Country Garden Holdings faces financing difficulties and high financing costs on the one hand and high debt on the other, whose debt level is much higher than that of Vanke and Evergrande.
In the two and a half years from the first half of 2016 to the first half of 2018, Country Garden Holdings's total assets increased from 424.2 billion yuan to 1.4 trillion yuan, tripling, while liabilities climbed from 92.5 billion to 1.26 trillion, nearly 14 times, and the asset-liability ratio climbed all the way from 78.2% to 89.85%.
During the same period, Vanke's debt ratio was between 80.6% and 84.7%, while Evergrande fell to 81.66% from 88.74% in 2017, which is in a relatively safe range. Even though Country Garden Holdings's sales exceed that of Evergrande, its profit level is always a far cry from that of Evergrande.
Comparison of the development quality of the three leading housing enterprises of ▲ in the past two years.
Unlike Country Garden Holdings and Evergrande, Vanke's financing channels are much looser and its financing costs are much lower.
In 2018, Vanke raised 19.5 billion yuan through eight ultra-short bonds and two corporate bonds, with a financing cost of 3.25 per cent and 4.6 per cent, and raised 3 billion yuan and $917 million respectively through two issuance of medium-term notes, with interest rates between 4.15 per cent and 4.6 per cent. It can be seen that Vanke's weighted average financing cost in 2018 is only 3.91%.
▲ 2018 Vanke financing costs.
In the three years from 2015 to 2017, Country Garden Holdings's monetary capital was much lower than that of Evergrande and Vanke, although its monetary capital grew extremely fast. As of June 30, 2018, Evergrande and Vanke had 257.9 billion yuan and 159.55 billion yuan in cash respectively, while Country Garden Holdings had 209.91 billion yuan in cash, more than Vanke.
You know, in 2015, Country Garden Holdings's monetary capital was only 47.878 billion yuan, while Vanke and Evergrande had 53.18 billion yuan and 164.022 billion yuan respectively. Over the past three years, the funds available on hand have increased by more than three times, and sales have won the championship one after another, firmly sitting in the top three positions in the industry.
"High turnover is our invincible magic weapon." In Yang Guoqiang's view, high turnover is Country Garden Holdings's killer mace. Due to the high turnover, its capital turnover rate can reach 1.5 times per year.
Comparison of financial data of the three leading real estate enterprises of ▲ in the past 3 years.
At the interim results meeting on August 21, 2018, Country Garden Holdings CFO Wu Bijun revealed: "in the first half of the year, the cash recovery rate of the company's sales property is about 336.02 billion yuan, the cash recovery rate after the sale of the house is 81.5%, and the net operating cash flow is positive." In 2017, the return rate of funds after the sale of the house was as high as 90%.
In 2018, Country Garden Holdings's early owners violently defended their rights because of a large number of price cuts. In the view of people in the industry, the purpose of the price reduction is to speed up their recovery at the expense of profits and ease the pressure to pay due accounts. How big is the financial pressure of Country Garden Holdings? The total debt is 1.26 trillion yuan, and the debt to be repaid within one year is as high as 530.721 billion yuan.
At this time, if you throw away the killer mace of high turnover, Country Garden Holdings's capital turnover rate will inevitably be reduced, and the return rate of funds after selling the house will further decline. With less cash on hand and a cold winter of capital, how can the 1.26 trillion be repaid? Once there is overdue, what will be the consequences?