This is Xuebei Financeoriginal article.
Author: Xi Wei.
Curator: Lao Hu.
Mr. Qiu Xiaolong, a Chinese-American, has this sentence in the preface of his reasoning** "The Death of Hongying": "Often a trivial matter leads to another and then leads to another, and the chain of cause and effect is linked one by one, and it is difficult to identify the original cause in the final result." ”
The background of this ** story is Shanghai in the nineties of the last century. The romantic narrative of prose poetry is out of step with the context of the rapidly evolving times. The metaphorical content of ** and this sentence of the author in the preface impressed me deeply. At that time, on the boiling Huangpu River, all literary works and artistic techniques were eclipsed, and only the economy was a delicate monochrome.
At the turn of the century, Xu Rongmao, who has worked in the secondary market of Hong Kong stocks for nearly 20 years, found a huge opportunity in the mainland real estate industry, he established Shimao Investment Company in Shanghai in 1999, and in one year the main listed company Vientiane Group, in 2001 the listed company was renamed Shanghai Shimao Co., Ltd. *** began to focus on the investment, development and operation of commercial real estate. Over the past 25 years, as in Hong Kong, Xu Rongmao has worked diligently for many years, and the real estate company under his command has been financially stable for many years.
On January 30, 2024, Shimao Co., Ltd. released its 2023 annual performance forecast, with an expected annual loss of 334 to 50between 100 million yuan. This is not the first time that Shimao shares have lost money, and its loss in 2022 is 453.1 billion. The audit report of the financial statements was issued by Zhongxing Cai Guanghua Certified Public Accountants with a qualified opinion with a paragraph of "material uncertainties related to going concern". As of this time, the amount of its public default has exceeded 10 billion.
The trigger for the non-standard audit opinion of Shimao's annual report is high debt and debt default. For example, in the 2022 annual report, its monetary funds are only 397.1 billion yuan, and the amount of interest-bearing liabilities is as high as 3278.9 billion yuan, of which the amount of one-year interest-bearing liabilities is 19.2 billion yuan, and the abbreviation of the listed company has become "ST Shimao". With the release of the 2023 annual performance forecast, it is conceivable that the range of its loss is comparable to that of 2022, resulting in non-standard matters in its annual report will still appear in the 2023 annual report.
Investors should note that Shimao shares have a different situation than before. According to the cash flow statement of Shimao shares in the first three quarters of 2023, the listed company has not obtained loans from any financial institution, that is, the financing has dried up, and the cash flow statement item "cash received from borrowing" is 0.
We expect its listed companies to still fail to borrow money in the fourth quarter. This is not groundless malicious speculation, just earlier on January 10, the listed company issued the "Announcement on Failure to Pay Debts on Time", and the listed company added 4$8.3 billion was not paid on time.
Of course, this state of being blocked by financial institutions, or rather, being confined did not begin in 2023. In fact, since 2021, the attitude of banking institutions towards Shimao shares has changed 180 degrees, and Shimao shares are not an isolated case, as shown in the following table The cash flow statement of major A-share real estate companies shows the scale of borrowings:
It is not difficult for us to find two points from the above table:
1) 2020 is the last good time for real estate financing: taking the data of 89 A-share real estate companies as an example, these companies received a total of 183 trillion. However, in the 2021 year, this amount was 145 trillion, and by the 2022 year the amount is 12 trillion, and in the first three quarters of fiscal 2023, the amount dropped rapidly to 084 trillion;
2) There is a clear distinction between private real estate enterprises and state-owned real estate enterprises, and the former borrowing scale is compressed to the limit, that is, it is targeted by fixed points, and it may be more appropriate to call it imprisonment.
Taking Shimao shares as an example, its borrowing scale in 2021 is still 3157.8 billion yuan, only 6.6 billion less than in 2020. However, in the 2022 year, there are only 12 for the whole year400 million, a direct shrinkage of 96%. This is not over, in the first three quarters of fiscal 2023, the amount of borrowing will become zero, and financing will be completely exhausted.
The last company to have such a "tragedy" was Oceanwide Holdings, which only borrowed 02.6 billion, and on January 27, 2024, the Shenzhen Stock Exchange received a document to terminate the listing, and more than 80,000 investors were buried.
In fact, whether it is China Evergrande's winding-up order from the Hong Kong court a few days ago, or Oceanwide Holdings, which has been delisted, investors have been easily attracted by their wonderful stories of diversification over the past few years, and often ignore or outright ignore the warnings that the cash flow statement has been closed in advance.
From the above table, we can also see that the fixed-point blasting of private real estate enterprises is simply a decapitation operation. It's not just Shimao shares and Oceanwide Holdings, which has just been delisted. The 8 A-share listed real estate companies and the 4 Hong Kong-listed real estate listed companies that will be delisted in 2023 are all targeted by the limit of financing, and they are like trees that have their roots cut off.
It doesn't matter exactly when fate is decided. The most typical feature of China's real estate industry is that it is capital-intensive, and without the supply of funds, no matter how huge the whale is, it will only die of thirst.
Shimao's losses are typical of China's private real estate enterprises. The performance of each real estate company has declined, and although the scale is very different, the reasons are the same. For example, since 2022, Shimao has not improved its sales decline, and only 70 contracts have been signed in 2023600 million yuan, ** more than 20% year-on-year.
Inventory impairment and fair value change losses of investment real estate are the fatal obstacles brought by the current environment to the profit statements of real estate companies.
In particular, investors should note that the vast majority of listed real estate companies in AH shares adopt a fair value model for the subsequent measurement of investment real estate. This is actually a bullish Chinese economic option, which means that when the economy is good, housing prices rise steadily, self-owned properties have a very active open market, and the value-added part can thicken the income statement, which is also a common means used by many listed companies to whitewash and beautify the income statement.
However, when the economy is sluggish, the best mechanism will fail, the open market will be dead and generally no longer active, and there will be a decline in fair value, and the direct change to the performance statement of real estate enterprises is the destructive damage to the income statement.
Among all listed real estate companies, the rare exception is Vanke. Unlike the vast majority of listed real estate companies, it adopts a cost model for the subsequent measurement of investment real estate, which means that even if the assets ** decline, the impact on its financial data is small, because in the past years, the company has not used accounting standards to whitewash the income statement through investment properties.
Through the above table, we will also find that in addition to Shimao shares, the targeted private real estate company also has Jinke shares, which only borrowed 1. in the first three quarters of 2023$6.1 billion; Even Zhongnan Construction only borrowed 209.8 billion yuan, Rongsheng Development only borrowed 145.9 billion yuan.
But in the case of their stock of interest-bearing loans, which are often in the tens of billions, these financings are not even enough to pay interest. At present, the stock prices of these four private listed real estate companies have also fallen to the limit. According to the ** price on January 31, ST Shimao's share price is 112 yuan, Rongsheng Development share price 155 yuan, Jinke shares share price 15 yuan, Zhongnan Construction's share price is 1$14.
In the face of debt default, plummeting revenue, and on the verge of bankruptcy and reorganization, these four private real estate companies will have to win the battle of 1 yuan in stock prices in the next month. The last Oceanwide Holdings that was required to be delisted was announced in advance for 20 consecutive trading days with a share price of less than 1 yuan.
Back to Shimao shares, it is not as diversified as Evergrande and Oceanwide, in fact, Shimao shares are very focused on the main business. But he was suddenly beheaded by the bank and turned away, resulting in the drying up of financing, which is of little significance to find the reason behind the listed company.
The reason for being able to be shut out by banks at the same time is often not the company itself. You must know that Chinese banks have strict risk control for individuals, but for enterprises, the attitude of the best often represents the ultimate risk control. Xu Rongmao, the actual controller of Shimao shares, was a frequent visitor to the Hurun Rich List, and he himself has also held various official and semi-official titles with great gold content for many years.
Recently, the housing and financial regulators ordered the creation of a white list of real estate projects eligible for bank loans, which also clarified the bottom line, that is, to save the project but not the company. For real estate companies that are in extreme predicament, there should be no more luck thinking.
According to the detailed rules issued by some local housing and urban-rural development departments, we can peek that the regulatory authorities have changed their strategy and no longer drip irrigate funds to real estate companies, and have begun to realize that even high-quality real estate companies have poor projects, and it is not a good way to flood and irrigate stable real estate companies, and they choose to drip irrigate funds to specific real estate projects more accurately.
For example, Chongqing has screened out the first batch of 314 real estate projects to form a "white list", and has sent the list to 28 major banks, including large banks, joint-stock banks, non-local city commercial banks and three municipal corporate banks. The core of this policy is to ensure the delivery of the building, and the rights and interests of buyers are put first.
For real estate companies that have not yet been delisted, we can speculate that the CSRC's attitude towards listed private real estate companies is very clear, that is, they should retreat as much as possible. Whether it is the first arrow or the second arrow of the real estate policy, at least there is no trace of benefiting in the announcement disclosed by Shimao shares, which should also attract the attention of investors.
History of the Ming Dynasty. Sejong Honki records a special method of death invented by the emperor, namely death by scably. This method of death refers to throwing prisoners into a dark prison, deprived of food and drink, ignoring disease, and leaving them to fend for themselves. Like plants, they wilt and die due to lack of sunlight and nutrients.