With the “three red lines” at the top, how can Sunac and Yunnan City Investment save themselves in the liquidity crisis?

The real estate market is still going through a difficult transition period.

Behind Evergrande’s announcement of a 30% discount on all real estate projects across the country and its sales target of 100 billion yuan is the pressure of the “three red lines”. According to the Beijing Business Daily, in anticipation of the "Three Red Lines", the financing of real estate companies continued to surge. In the 20 days after the symposium, real estate companies issued 65 bond financings at home and abroad, with a financing scale equivalent to approximately RMB 55.49 billion. Yuan, the average financing cost rose to 5.53%. Some analysts believe that some real estate companies are currently trying to seize the final financing window before the impact of the "three red lines" is fully reflected.

Yunnan City Investment Private Equity Bond Information

Previously, according to the Shanghai Stock Exchange, Yunnan City Investment’s 5 billion yuan corporate bond was accepted on August 27. The bond was “Yunnan City Investment” Investment Group’s Non-public Issuance of Corporate Bonds in 2020", the type of bonds is private placement bonds. Last month, Yunnan Urban Investment Group released multiple financings: On August 12, the Shanghai Stock Exchange disclosed that Yunnan Urban Investment Group’s public issuance of corporate bonds to professional investors in 2020 was accepted, with a planned issuance amount of 12 billion yuan; on August 27, The company's 2020 non-public issuance of corporate bonds was accepted by the Shanghai Stock Exchange, with a planned issuance amount of 5 billion yuan.

Yunnan Urban Investment’s difficulties originated from the “vigorous acquisitions” that began in 2016. Radical investment acquisitions caused Yunnan Urban Investment’s debt to soar. According to the financial report, the company’s total debt increased by 44.49% year-on-year to 57.227 billion in 2016. Yuan, and three years later the value has reached 83.325 billion!

In Dali, Yunnan Urban Investment invested a total of about 500 million yuan through two equity acquisitions to acquire a project called "Dali Haidong International Tourism and Leisure Experience" The high-end tourism real estate project in the "District" was later the "Ocean Oriental" project of Yunnan Urban Investment. On March 28, 2020, the project was notified by the Dali Haidong Development Management Committee to make immediate rectifications due to the problem of illegally built villas. Among them, the Haidong Sports Park (golf project) was cancelled, and the land leased for the project needs to be funded by the company and built into an ecological park. Affected by this, Yunnan Urban Investment’s initial project investment and land rent totaling 215 million are difficult to recover. The 2019 annual report of Yunnan Urban Investment shows that many major holding companies of Yunnan Urban Investment suffered losses last year, among which Yunnan Urban Investment Haidong Investment Development Co., Ltd. lost 472 million yuan!

The long-term effect of "Haidongfang"

"Misfortune arises from Xiaoqiang"

In May last year, Xu Lei, the former chairman of Yunnan City Investment, voluntarily surrendered to the case for disciplinary review and supervisory investigation on suspicion of serious violations of disciplines and laws. It was also from that time that the company's financing The amount has dropped significantly. According to public information, the annual financing amount of Yunnan Urban Investment in 2019 dropped by 41% compared with 2018!

"Misfortunes never come singly"

Performance of Yunnan Urban Investment It’s also unsatisfactory. In 2017, the company's operating income rose 47.3% year-on-year to 14.391 billion. In 2019, the revenue was halved to 6.248 billion, and its net profit plummeted 865.9% year-on-year to -3.482 billion!

Yunnan listed company 2020 Semi-Annual Report

Due to continued losses, Yunnan Urban Investment has sold equity interests in many subsidiaries this year. Among them, Yunnan Urban Investment transferred 60% equity of Kunming Xinjiang Heda Urban Construction, with an estimated value of 491.25 million yuan, and the final transaction price was 491.25 million yuan; Yunnan Urban Investment transferred 90% equity of Dongguan Yuntou Real Estate, with an estimated value of 95.551 million yuan yuan, and the final transaction price was 95.551 million yuan; a subsidiary of Yunnan City Investment transferred 80% of the equity of Xishuangbanna Aviation Investment Real Estate, with an estimated value of 19.1606 million yuan, and the final transaction price was 19.165 million yuan. Yunnan Urban Investment transferred 51% of the equity of Xi'an Yuncheng Real Estate, with an estimated value of 82.8076 million yuan and a final transaction price of 82.8076 million yuan. In addition, in 2020, Yunnan Urban Investment will launch a major asset reorganization and plans to transfer the equity of 18 subsidiaries held by Yunnan Urban Investment, including Tianjin Yinrun, to the group. At present, the company and all parties are actively promoting the reorganization work, and the audit and evaluation of the assets involved in this reorganization are being actively promoted.

How can Yunnan Urban Investment save itself by selling land and converting shares?

On the 29th of this year, Yunnan Jinghong Municipal Government, Xishuangbanna Global Sunac Tourism Company, and Yunnan Urban Investment’s Jinghong The three parties of the investment company signed a strategic cooperation agreement, which mainly involves the "Lancang River International Ecological Cultural Tourism Resort Lanxiba Dai Water Town Characteristic Town" project. The cooperation announcement released on July 31 disclosed that Xishuangbanna Cangjiang Cultural Tourism, a subsidiary of Yunnan Urban Investment, 100% equity and 51% equity of Xishuangbanna Yunchen Real Estate were transferred to Xishuangbanna Sunac for a total price of 500 million yuan.

As early as April 17, Yunnan Urban Investment disclosed two announcements that it planned to transfer the equity interests of Cangjiang Cultural Tourism and Yunchen Real Estate. The above-mentioned cooperation projects are the core assets. In the "China Times" investigative report on this incident, an insider from Yunnan Urban Investment confirmed to reporters that "our (urban investment) advantage is that we have a large amount of land resources and complete procedures." Faced with financial pressure, Yunnan Urban Investment The first operation that can be carried out by investors must be the sale of land and the transfer of equity.

Sun Hongbin, chairman of Sunac China, has recently become very interested in Yunnan's cultural tourism industry and has visited Yunnan many times for on-site inspections. Because the land resources developed by Yunnan Urban Investment Group have high development value, this cooperation was successfully reached.

Scene of the signing ceremony

While Yunnan Chengtou was frequently issuing bonds, selling land, and converting shares, Sunac on the other side was still attacking the city. Sunac's 2020 interim performance report shows that Sunac China achieved revenue of 77.34 billion yuan, attributable net profit of 10.96 billion yuan, and core profit of 13.04 billion yuan, a year-on-year increase of 0.7%, 6.5%, and 3.0%. Such a comparison shows that the company is even stronger. Sunac's Sunac will look more "calm and calm", but by comparing with last year, we can find that in the first half of 2020, Sunac China's cumulative contracted sales amount and cumulative contracted sales area have both declined year-on-year, and the pace of land acquisition has slowed down. slow.

In 2019, Sunac China's net debt ratio was 172%, its asset-liability ratio excluding advance receipts was 84%, and its cash-to-short-term debt ratio was 0.93, seriously crossing the "three red lines." As of the end of June 2020, Sunac China's asset-liability ratio was 86.56%, a year-on-year decrease of 4.3 percentage points; the net debt ratio was 149%, a year-on-year decrease of 23.3 percentage points.

Sunac China 2020 Interim Results: Profitability

Sunac China 2020 Interim Results: Land Acquisitions

From this point of view, Sunac China is also Actively save yourself

In the first half of 2020, Sunac China’s property management and other income was 3.29 billion yuan, accounting for 4.2%; cultural tourism city construction and operating income was 980 million yuan, accounting for 1.3%; as of In June 2020, Sunac had deployed 12 cultural tourism cities, 4 tourist resorts, 25 cultural tourism towns, and 8 conference and exhibition centers in China, covering 49 paradises, 48 ??businesses, and nearly 150 high-end hotels. However, such an unbalanced revenue ratio is obviously far from its so-called "collaborative empowerment" vision.

Sun Hongbin once compared investing in cultural tourism to "poetry and distance". He may have already realized that the increase in property holdings will slow down the company's cash flow, but it is not so much his love for the cultural tourism industry. Rather, it is his optimism about environmentally friendly, low-density, low-density products. Although Sunac has rich operations and abundant funds, the cultural tourism industry still has the inherent disadvantages of "slow cycle" projects compared with the traditional real estate development model-the internal consumption of investment is too high and the cash return is too slow. The huge debt requires Sunac China to maintain high turnover and accelerate carry-overs and disposals to ensure that cash flow remains balanced.

Under the influence of the "Three Red Lines", the trend of the real estate industry in the future will be continuous integration. The only way to survive is to "return blood" from the outside, to "generate blood" oneself, or to endure the pain and "sell blood". It's urgent.

As of the end of 2019, Yunnan Urban Investment Group alone holds 22 real estate reserve projects in 8 cities and 7,389 acres of land. In addition to buying land or transferring equity, how can Yunnan Urban Investment Group cultivate sustained profits? Ability deserves more attention.

As for Sunac China, how to obtain "more money, cheaper money, longer money, money that can travel through cycles" as Sun Hongbin said? It needs to be considered between cultural tourism projects and residential business. How to make trade-offs.