Half-year loss exceeds RMB 700 million, Yunnan Urban Investment Group has no way out to save itself

Wen︱Fang Xiaoli

After losing 2.778 billion yuan in 2019 and becoming the veritable "loss king" among listed Yunnan companies, Yunnan Urban Investment lost another 762 million yuan in the first half of this year. Yuan, continues to hold the title of "Loss King".

The semi-annual report data released by Yunnan Urban Investment showed that the net profit attributable to shareholders of listed companies in the first half of 2020 was a loss of 763 million yuan, and the basic earnings per share was a loss of 0.49 yuan; operating income was approximately 2.832 billion yuan, year-on-year. An increase of 50.23.

As of the end of June, there were 36 listed companies in the Yunnan area, of which 26 were profitable and 10 were in the red. Yunnan Urban Investment was probably the one with the worst losses.

Yunnan Urban Investment’s losses in the first half of the year were largely caused by subsidiaries. Data from the semi-annual report show that Yunnan Urban Investment has 5 major holding companies and 5 joint-stock companies all losing money, with a total loss of 458 million yuan.

Among the main holding companies of Yunnan Chengtou, Yunnan Art Park Real Estate Development and Operation Co., Ltd. lost 82.5517 million yuan in net profit in the first half; Yunnan Chengtou Longrui Real Estate Development Co., Ltd. lost 9.0195 million yuan; Kunming City Guandu District Chengzhongcun Renovation Real Estate Co., Ltd. lost 44.8251 million yuan; Chengdu Yincheng Real Estate Co., Ltd. lost 24.2414 million yuan; Ningbo Yintai Real Estate Co., Ltd. lost 31.197 million yuan.

Among Yunnan Chengtou’s major shareholding companies, Yunnan Chengtou Huashangzhijia Investment and Development Co., Ltd. achieved a net profit loss attributable to its parent company of 92.2338 million yuan; Yunnan Wancheng Century Investment and Development Co., Ltd. achieved a net profit loss of 1,266.46 yuan attributable to its parent company. Yunnan Overseas Chinese Town Industrial Co., Ltd. lost 91.9275 million yuan; Qingdao Weilan Tiandi Real Estate Co., Ltd. lost 38.119 million yuan; Yunnan Hot Spring Valley Real Estate Development (Group) Co., Ltd. lost 31.2493 million yuan.

Yunnan Urban Investment stated in the report that as the market cools down and financial regulatory policies are tightened across the board, Yunnan Urban Investment is facing a situation of tight funds. New funds and sales receivables are mainly used to protect financial institutions. Repayment and insufficient funds for subsequent development.

As of the end of June, Yunnan Urban Investment used its own assets to provide mortgages, pledges and guarantees for loans from financial institutions, with a total book value of restricted assets of 31.769 billion yuan.

How tight the capital chain of Yunnan Urban Investment is, a set of data can reflect it. As of June 30, Yunnan Chengdu had a capital balance of 1.591 billion yuan, and short-term borrowings and non-current liabilities due within one year totaled 19.896 billion yuan. There is a huge funding gap between the two. In addition, Yunnan Urban Investment still has 34.9 billion yuan in accounts payable and other payables that need to be repaid. Total liabilities reached 78.2 billion yuan, and the debt-to-fund ratio was as high as 94.52.

From the perspective of cash flow, in the first half of the year, Yunnan Urban Investment’s net operating cash flow was 792 million yuan; its net investment cash flow was 1.554 billion yuan; its net financing cash flow was -2.748 billion yuan, a year-on-year decrease of 34.29%; The net increase in cash flow was -400 million yuan.

Yunnan Urban Investment sources explained that the main reason was that the financing amount received in this period decreased and the loan repayments increased compared with the same period last year.

Yunnan Urban Investment’s main businesses are real estate, commercial management, and hotel operations. In 2019, the contribution rates of these businesses to the company’s profits were 46.47, 29.71, and 13.7 respectively.

It is worth noting that since this year, Yunnan Urban Investment has sold shares in many subsidiaries one after another to save financial pressure, but now it seems that it is far from quenching its thirst.

Not long ago, Yunnan Urban Investment Group launched a major asset reorganization. According to its announcement on the progress of the reorganization on August 3: it plans to transfer funds to its controlling shareholder Yunnan Urban Construction Investment Group Co., Ltd. (hereinafter referred to as "Yunnan Urban Investment Group" ) sold equity interests in 18 subsidiaries.

After the transaction is completed, Yunnan Urban Investment Group will provide loans of 5.09 billion yuan to the above-mentioned target companies, which will be used by the target companies to repay debts of 9.592 billion yuan due to Yunnan Urban Investment and its affiliated companies.

On the evening of July 31, Yunnan Urban Investment also transferred 100 shares of its Xishuangbanna Cangjiang Cultural Tourism Development Co., Ltd. and 51 shares of Xishuangbanna Yunchen Real Estate Co., Ltd. to Sunac for a total price of about 500 million yuan. The group's holding subsidiary is located in Xishuangbanna.

Yunnan Urban Investment also came up with a way to pay off debts with capital. Also on the evening of July 31, Yunnan Chengtou announced a debt settlement and related-party transaction, which it planned to enter into with Yunnan Chengtou Health Industry Investment Co., Ltd. (hereinafter referred to as the "Health Company") and Kunming Xiyuan Real Estate Development and Operation Co., Ltd. company (hereinafter referred to as "Xiyuan Company") to repay debts. Xiyuan Company will use its offsetting assets (commercial and office buildings located in Kunming, with a price of approximately 332 million yuan) to repay part of the debt to Healthy Company on behalf of Yunnan City Investment.

In the first half of the year, Yunnan Urban Investment also sold 60% equity of Kunming Xinjiang Heda Urban Construction Co., Ltd., 90% equity of Dongguan Yuntou Real Estate Co., Ltd., 80% equity of Xishuangbanna Hangtou Real Estate Co., Ltd., Xi'an Yuncheng Real Estate Co., Ltd. has 51 equity interests, with a total return capital of 689 million yuan.

Yunnan Urban Investment said that in 2020, the company's operating performance declined sharply, the asset-liability ratio increased, the company's external financing work was restricted, and financial pressure increased. In the second half of the year, the company will accelerate major asset restructuring, Actively take measures such as collecting debts, accelerating inventory removal and asset disposal to improve operational levels.

This means that Yunnan Chengtou still has a long way to go to save itself by selling its assets. There is no solution yet as to where the final way out will be.