Prosperous development, how to develop?

This month, Rongsheng Real Estate Development Co., Ltd. (hereinafter referred to as "Rongsheng Development") celebrates its 14th anniversary of listing. Looking back at the entrepreneurial history of Rongsheng Development is quite inspiring and full of bitterness. It started in Langfang, Hebei Province, and worked in the Beijing-ring area, focusing on small and medium-sized cities. Later, it spread across the country and developed diversified tracks. Rongsheng Development has risen all the way, like a "grassroots counterattack." It typically reflects the glory days of the real estate industry in the past, and also profoundly reflects the transformation of real estate into a downward cycle.

Rongsheng Development’s share price has plummeted since its “highlight moment” of 9.42 yuan per share in July 2020. By July 2021, it fell to the lowest point in the past five years, only 4.40 yuan per share. . Of course, the stock price cannot fully represent a company's ability to continue operating. Judging from the 2020 financial report released by Rongsheng Development, Rongsheng Development's full-year sales and revenue in 2020 have increased year-on-year, but in-depth observation reveals that there are also factors behind it. Hidden worries.

In the eyes of many people, the explosive China Fortune Land Development seems to be a "lesson" for prosperous development. Both of them are real estate companies that started in Hebei and have taken root in the Beijing-based area. They are both facing the winter of the Beijing-based real estate market. According to data from CRIC, in the 2020 list of the TOP 30 real estate companies in the surrounding Beijing area, Rongsheng Development ranked first with sales of 22.631 billion yuan, and China Fortune Land Development also entered the tens of billions camp. But "if you want to wear the crown, you must bear its weight." The decline of the real estate market in the surrounding Beijing area has undoubtedly put Rongsheng in a development dilemma. The annual report shows that Rongsheng Development's net profit in 2020 was 7.774 billion yuan, a year-on-year decrease of 18.9%; the net profit attributable to the parent company was 7.501 billion yuan, a year-on-year decrease of 17.75%. It is worth mentioning that this is the first time in the past four years that Rongsheng Development’s net profit has experienced negative growth.

In 2016, Rongsheng Development launched the last round of "Five-Year Plan", aiming to transform from traditional real estate development to "big real estate, big health, big finance" and the comprehensive development of new industries. In the latest "Sixth Five-Year Plan", Rongsheng Development has established "one main, three pillars and multiple supports" with real estate as the main industry, tourism, industrial new cities, and property as the pillars, and other related industries as auxiliary support. "New industrial development pattern. The development of new industries and new businesses will inevitably mean the need for more sufficient funds to drive them. This has also brought more "transformation pain" to Rongsheng Development, leaving it trapped in a high-risk development situation.

In fact, a vivid example is enough to summarize the current funding situation of Rongsheng Development. Recently, Rongsheng Development’s project in Langfang, Hebei Province posted an eye-catching poster: the land price is 9,132 yuan and the house price is 9,500 yuan. How tempting, but also how helpless. In order to speed up the repayment, it did not hesitate to "fire sale" at a loss. The industry said that Rongsheng Development had launched a "self-rescue".

In 2020, Rongsheng Development’s asset-liability ratio after deducting advance receipts was 73.78%, and the “three red lines” were on the first line. By the end of the first quarter of this year, Rongsheng Development's financial report showed that Rongsheng Development's total liabilities reached 238.872 billion yuan, and the asset-liability ratio reached 81.17%. The rising debt pressure led Rongsheng Development to choose multiple channels for financing, but what it received was a "cold look" from the capital market. According to reports, in early July, Rongsheng Development’s US$500 million US dollar bond with an 8% coupon due in April next year suffered its largest decline since its listing, attracting attention from all walks of life. In response to this incident, Rongsheng Development held an investor conference call. The management of Rongsheng Development said that everyone from the chairman to the team is working hard to maintain it. Earlier, reports on the Internet that Rongsheng Development was unable to pay due commercial bills also affected the credit of Rongsheng Development to a certain extent.

Judging from the current Internet environment, hot topic words accompanying the development of Rongsheng are often related to "debt", "weak growth", "becoming a person subject to execution", etc. The reporter noticed that in addition to the stalled development, Rongsheng Development also gradually lost its reputation in terms of product quality.

According to media reports, less than two months after the handover of the Rongsheng Huayu Waterfront building in Zhengzhou, a major collapse occurred at the door and a large amount of water entered the underground garage. This project has been subject to repeated rights protection by owners due to delayed delivery, quality issues, etc. During the May Day holiday this year, the Rongsheng Huayu Waterfront Zhengzhou project also triggered large-scale on-site rights protection by owners.

In Langfang, Hebei Province, the headquarters of Rongsheng Development, the Rongsheng Arcadia Huayu City project has not yet been completed and does not meet the conditions for handover, but it is forced to hand over a single unit, which has been criticized. Group complaints from owners. According to public reports, Rongsheng Development currently has more than a thousand lawsuits, nearly half of which are house purchase and sale disputes.

In addition, Mr. Zhang, a consumer who had intended to buy a property from Rongsheng Development, told reporters that he "almost fell into Rongsheng Development's sales trap." Located in Laishui County, Baoding City, Hebei Province Rongsheng Kanglvye Sanpo International Resort Four Seasons Fairy Tale Town is a cultural tourism resort invested and constructed by Rongsheng Development. Mr. Zhang took a fancy to the courtyard at the edge of the project and paid a deposit in advance. Before paying the deposit, the salesperson promised that the courtyard at the edge of the house could be expanded to expand the owner's activity space. But later, Mr. Zhang learned through many inquiries that in the future, a public garage will be built one meter away from the courtyard wall, so there is no possibility of expanding the courtyard, and a high-rise hotel will be built around it. As a result, not only the privacy and safety of the courtyard terrace cannot be guaranteed, but the lighting and indoor view of the house will also be greatly reduced. As for the plan to build a garage, the salesperson said nothing about it before Mr. Zhang paid the deposit; about the construction of a high-rise hotel, the salesperson was also evasive. After learning the truth, Mr. Zhang was very dissatisfied with the "sales trap" set by the developer and insisted on refunding the deposit. However, the developer required Mr. Zhang to sign a letter of commitment stating that "a refund of the deposit has been received" before he would be able to refund the money. It may be difficult for consumers to accept such overbearing terms.

The service quality of "Hebei King" Rongsheng Development in Hebei is still like this. The reporter can't help but question, can Rongsheng Development, which is now deployed nationwide, really bring trustworthy products to consumers? In the company's "Sixth Five-Year Plan", Rongsheng Development has put forward the overall goal of comprehensively improving the quality of development and "improving quality and advancing". The reporter also sincerely hopes that Rongsheng Development can fulfill this promise step by step and take practical actions. .