Respond to liquidity pressures caused by internal and external factors such as market downturns, slowdowns, and blocked financing.
01 ExtensionOn January 26, Sino-Ocean Holdings Group (China)**hereinafter referred to as "Sino-Ocean Holdings") announced that the extension plan of 7 corporate bonds and 3 asset-based products has been voted and approved by the holders' meeting, involving a total amount of 1826.6 billion yuan.
Announcement of bond rollover.
According to the announcement, Sino-Ocean Holdings has made significant positive progress in the extension of debt in the domestic open market, which can effectively alleviate the pressure of capital repayment in the short term, support the company to maintain normal and orderly operation, and effectively guarantee the work of "ensuring the delivery of buildings and stabilizing people's livelihood".
The overall plan of the extension: the extension period is 30 months. From the 15th month onwards, the principal amount will be repaid in % instalments.In addition, Sino-Ocean Holdings also communicated with the holders of two directional debt financing instruments about the extension plan and accelerated the supplementary voting work, among which "21 Sino-Ocean Holdings PPN001" did not fully repay the principal and interest due on January 21 for 313.8 billion yuan, and the relevant procedures of the holders' meeting are still in progress.
It is worth noting that 7 corporate bonds including "H15 Sino-Ocean 3" under Sino-Ocean Holdings will continue to be suspended.
According to the statistics of "Small Bond Market Watch", Sino-Ocean Holdings currently has 11 domestic bonds, with an existing scale of 1857.6 billion yuan, and the original principal to be repaid in 2024 was 60200 million yuan.
Future debt service cash flows.
In terms of offshore bonds, from 15 September 2023, the trading of 8 offshore USD** tranches of Sino-Ocean Group has been suspended on the Hong Kong Stock Exchange; At the same time, all foreign debt payments will be suspended and a comprehensive restructuring will be carried out.
Sino-Ocean Group has appointed Houlihan Nokee (China)** as its financial advisor and Sidley Austin as its legal advisor to assist the company in evaluating and developing the best solution to its existing capital structure and liquidity challenges.
On September 18, 2023, Moody's downgraded Sino-Ocean Group Corporation's Family Rating (CFR) to "CA" from "CAA2" and downgraded the backed senior unsecured rating of the bonds guaranteed by it to "C" from "CAA3", with a negative outlook.
Moody's ratings. In recent years, Sino-Ocean Group has been comprehensively arranging the redemption of open market debt due within the year in combination with the sales and operation plan, the feasibility of debt rolling financing, and the asset disposal plan.
However, Sino-Ocean Group's liquidity improvement was not as expected, the company's available funds on the books continued to decrease, and the implementation of asset disposal in parallel was uncertain.
In terms of financing, Sino-Ocean Group's credit bond refinancing continued to stagnate, and it became more and more difficult to draw down normal project financing, its overall liquidity was highly stressed, and it was difficult to pay the corporate bonds in full and on time.
Previously, Sino-Ocean Group had extended the principal or interest of a number of onshore bonds, and even the bonds that had already been rolled over had undergone a second and third rollover.
02 Financial deterioration According to the official website, Sino-Ocean Group was founded in 1993 and listed on the main board of the Hong Kong Stock Exchange in September 2007.
Sino-Ocean Group's main business includes residential development, real estate development and operation, property services and construction industry chain services, and synergistic businesses include real estate finance, pension services, logistics real estate, data real estate, etc.
The official website of Sino-Ocean Group.
From the perspective of shareholding structure, the largest shareholder of Sino-Ocean Group is Chinese Life, with a shareholding ratio of 2959%, and the second shareholder holds 29% of the shares of Everybody Insurance58%, the company has no actual controller.
Shareholding structure chart.
In 2022, Sino-Ocean Group's cumulative agreed sales will be about 1,002900 million yuan, down 26% year-on-year; In 2023, it will achieve sales of 505300 million yuan, a year-on-year halve.
It can be seen that the continuous decline in sales will continue to weaken Sino-Ocean Group's cash flow and credit indicators in the future.
In addition, low prices** put pressure on Sino-Ocean's margins, with its average sales** falling by 8% in 2022 and 10% in 2021.
In terms of land banking, Sino-Ocean Group, together with its joint ventures and associates, purchased 2 parcels of land in the first half of 2023.
As of June 30, 2023, Sino-Ocean Group, together with its joint ventures and associates, had a land bank of 40.95 million square meters, and the attributable interest portion of the land bank decreased to 21.54 million square meters.In terms of performance, 2022 is a turning point for Sino-Ocean Group's performance, after the company has been stable in a profitable state for many years.
In 2022, Sino-Ocean Group achieved a turnover of 4612.7 billion yuan, down 28% year-on-year, gross profit of 237.7 billion yuan, a year-on-year decrease of 79%, and the loss attributable to the company's owners was 159300 million yuan.
In the first half of 2023, Sino-Ocean Group's net profit attributable to shareholders of listed companies was -1836.9 billion yuan, an increase of 1589% year-on-year.
Among them, the net impairment loss of Sino-Ocean Group's financial assets was 1129.4 billion yuan, far exceeding the 0500 million yuan.
Net profit attributable to the parent company.
Due to the performance loss, Sino-Ocean Group's gross profit margin at the end of 2022 increased from 1752% fell sharply to 515%, the lowest level in history, with a gross margin of -0 as of June 20236%。
Gross margin on sales.
As of mid-2023, Sino-Ocean Group's total assets are 2,1614.3 billion yuan, total liabilities 19028.5 billion yuan, net assets of 2585.8 billion yuan, with an asset-liability ratio of 8804%。
In recent years, Sino-Ocean Group's financial leverage has been high, the company's debt burden has been heavy, and the company's asset-liability ratio has soared since 2022 due to a significant reduction in its loss-making net assets.
Debt-to-asset ratio.
The analysis of the debt structure of "Small Debt Market Watch" found that Sino-Ocean Group mainly consists of current liabilities, accounting for 73% of the total debt.
As of the same reporting period, Sino-Ocean Group's current liabilities were 13900.6 billion yuan, mainly accounts payable and notes payable, with 446 short-term debts due within one year1.6 billion yuan.
Compared with the pressure of short-term debt, Sino-Ocean Group's liquidity is extremely tight, with 31 cash and cash equivalents on its books4.6 billion yuan, a further decrease from the end of 2022, and the cash short-term debt ratio was as low as 007. The company has huge short-term debt repayment pressure.
In addition to this, Sino-Ocean Group has 512Non-current liabilities of RMB7.9 billion, mainly long-term borrowings, totaled RMB47.3 billion.
On the whole, the total scale of Sino-Ocean Group's rigid debt is 919RMB1.6 billion, mainly long-term interest-bearing liabilities, with an interest-bearing debt ratio of 48%.
The scale of interest-bearing liabilities is large, and the financing cost of Sino-Ocean Group in 2021 and 2022 is 223.9 billion and 306.6 billion yuan, compared to 188.1 billion yuan, which eroded the company's profit margin.
From the perspective of debt repayment funds**, Sino-Ocean Group mainly relies on external financing, mainly bonds and bank borrowings, and as a Hong Kong listed company, it has smooth overseas bond financing channels.
However, in terms of cash flow, Sino-Ocean Group's net financing cash flow in 2022 and the first half of 2023 will be -797.9 billion and -828.7 billion yuan, indicating that the debt repayment funds are greater than the financing inflows, and its external financing environment is not good, and the company is facing certain refinancing pressure.
Net cash flow from financing.
In terms of asset quality, due to the impact of joint venture projects, Sino-Ocean Group's other receivables and other payables were relatively large, with its accounts receivable and notes receivable reaching 834 as of the end of 20229.1 billion yuan, down to 659 in mid-20235.1 billion yuan.
Overall, Sino-Ocean Group's sales were weak, its performance continued to be at a loss, and its land reserves were sufficient but its liquidity was not good. Gross profit margin has declined sharply and is at a low level, and profitability has deteriorated; The scale of debt is rising, the pressure of debt repayment is high, and refinancing is under pressure.
03Support from major shareholders In June 2023, the board of directors of Sino-Ocean Group was reshuffled, and the control of major shareholders was strengthened.
Chinese Life and China Insurance sent a joint working group to complete the investigation of Sino-Ocean Group's asset status and operating conditions, and confirmed that the company was affected by the industry, there was a phased liquidity risk, and the company's fundamentals were fine.In fact, since 2022, Chinese Life has supported Sino-Ocean Group in many aspects.
Among them, in terms of financial product subscription, Sino-Ocean Group issued a sum of 13The REITs product of 0.3 billion yuan was subscribed by Chinese Life and China Guangfa Bank.
In terms of asset revitalization, in April 2022, Sino-Ocean paid about 3 billion yuan to Chinese Life ** Beijing INDIGO Phase I Project Company; In June 2022, the 21% equity of Beijing Sino-Ocean Rui Center, located in Beijing Lize Business District, was transferred to the project partner Chinese Life, with a transaction amount of 501.5 billion yuan.
In October 2022, Sino-Ocean Group started with 2RMB3.3 billion to Beijing Wanyang Century Venture Capital Management***, a wholly-owned subsidiary of Chinese Life **, whose main asset is the Grade A office building Chinese Life Financial Center in the East Third Ring Road Business Center District, Chaoyang District.
In addition, the two sides also cooperate in the field of elderly care.
With the support of major shareholders and Sino-Ocean Group's thrift in terms of business strategy, the company completed the payment of all due interest-bearing debts and the net repayment of credit financing of 18.9 billion yuan in 2022 as scheduled, including the redemption of 12 billion yuan of ** chain ABS, gradually replaced credit financing with mortgage borrowings, and continued to optimize the debt structure.
In March 2023, Sino-Ocean Group planned to extend the current coupon of a subordinated perpetual US dollar bond of 600 million yuan, but chose to redeem a total of 20.6 million US dollars at the end of the month.