Weakening sales have curbed cash flow for real estate companies.
01 Trigger the cross-protection clause.
On March 4, Shanghai Baolong Industrial Development (Group)**hereinafter referred to as "Baolong Industrial") issued an announcement on the triggering of the cross-protection clause of "19 Baolong MTN Baolong MTN001 and 21 Baolong MTN001".
Trigger. Triggering the announcement of the circumstances of the cross-protection clause.
According to the announcement, Baolong Industrial failed to repay the principal of the "20 Baolong MTN001" bond of 35 million yuan and the corresponding interest in full on February 27, 2024, which has constituted a substantial default.
At present, this matter has triggered the cross-protection clauses of "19 Baolong MTN002", "20 Baolong MTN001" and "21 Baolong MTN001".
Baolong Industrial said that the company will continue to negotiate a settlement plan with relevant bond investors to pay the principal and interest to investors as soon as possible to fundamentally protect the rights and interests of creditors.
In addition, Baolong Industrial will cooperate with the lead underwriter to hold a meeting of holders of "19 Baolong MTN002", "20 Baolong MTN001" and "21 Baolong MTN001" as soon as possible to participate in the discussion of follow-up relief measures and safeguard the rights and interests of holders.
It is worth noting that Baolong Industrial previously announced that all its bonds on the Shanghai and Shenzhen Stock Exchanges have been exempted from accelerated repayment clauses and cross-default clauses, and the failure of "20 Baolong MTN001" to pay the principal and interest in full on time will not trigger the cross-default or accelerated maturity of the company's outstanding bonds on the exchange.
In addition, this is not the first time that Baolong Industrial has defaulted, on January 29 this year"H Baolong B1"0.The $1.2 billion in principal and interest was also not repaid in full on time.
According to the statistics of "Small Debt Market", there are currently 13 outstanding bonds of Baolong Industrial, with an existing scale of 727.3 billion yuan, of which 93.1 billion yuan.
Future debt service cash flows.
In terms of overseas debt, it is mainly owned by Baolong Real Estate (01238.HK) issuance, currently 6 US dollar bonds in existence, with an existing scale of 20$7.4 billion.
At the beginning of July 2022, Powerlong Real Estate made its first exchange offer for two US dollar senior notes due in July and November of that year, but after the completion of the exchange offer, the company was unable to pay the remaining share of the US dollar bonds, constituting a default.
At the same time, Baolong Real Estate once again made a total of 4US$3.5 billion debt in exchange offer.
After the completion of the exchange offer, Powerlong Properties' latest USD debt repayment date is July 2024, and the debt repayment peak is postponed to 2025.
On February 23, 2024, Powerlong Real Estate announced on the Stock Exchange that it had made significant progress in its overall solution for overseas debt.
02 Financial deterioration According to the official website, Powerlong Real Estate was established in Macau in 1990 and has formed a pattern of coordinated development of multiple industries such as real estate, commerce, hotels, culture and art.In 2009, Powerlong Real Estate was listed on the main board of the Hong Kong Stock Exchange, and in 2019, its property management subsidiary, Powerlong Commercial, was listed on the main board of the Hong Kong Stock Exchange.
The official website of Baolong Real Estate.
From the perspective of equity structure, the controlling shareholder of Baolong Real Estate is Tianlong Holdings, with a shareholding ratio of 4359%, the actual controller of the company is Xu Health.
In 2021, Powerlong Real Estate completed contracted sales of 101.2 billion yuan, an increase of 24% year-on-year1%, entering the 100 billion club for the first time; In 2022, the company only achieved 409500 million yuan of contracted sales, down 6% year-on-year.
In 2023, Powerlong Real Estate will achieve sales of 2752.4 billion yuan, a year-on-year decrease of 3279%；Sales in the first two months of 2024 were 2.3 billion yuan, a year-on-year decrease of 571%, which shows that weaker sales have stifled the company's cash flow.
As of June 30, 2023, the total land reserve of Baolong Real Estate is 23.67 million square meters, the average cost price of the total land is 3,523 square meters, and the land reserve in the Yangtze River Delta region accounts for 642%, the total saleable value of the land reserve is about 232.4 billion yuan.
In terms of performance, in the first half of 2023, Powerlong Real Estate will achieve a total income of 1171.3 billion yuan, down 28 percent year-on-year16%；The net profit attributable to the parent company was 9422700 million yuan, a sharp decrease of 86 percent year-on-year5%。
Net profit attributable to the parent company.
From the perspective of profitability, the gross profit margin of Baolong Real Estate is 2884%, compared with the end of 2022, it continued to decline; Its net profit margin fell sharply to 237%。
Gross margin on sales.
As of the end of June 2023, Powerlong Real Estate's total assets were 2,2589.7 billion yuan, total liabilities 16362.3 billion yuan, net assets of 6227.4 billion yuan, with an asset-liability ratio of 7243%。
It is worth noting that Baolong Real Estate still has 5500 million perpetual bonds, if the perpetual bonds are adjusted to debt, its financial leverage will be pushed up.
Debt-to-asset ratio.
The analysis of the debt structure of "Small Debt Market Watch" found that Baolong Real Estate is mainly based on current liabilities, accounting for 64% of the total debt.
As of the same reporting period, the current liabilities of Baolong Real Estate were 10552.7 billion yuan, mainly other current liabilities, and its short-term debts due within one year totaled 130800 million yuan.
Compared with the pressure of short-term debt, the liquidity of Baolong Real Estate is extremely tight, and its cash and cash equivalents on its books are 894.7 billion yuan, a further decrease from the end of 2022, and the cash short-term debt ratio was 068. The company's short-term debt repayment pressure is greater.
In terms of reserve funds, as of the end of 2020, the total credit line of Baolong Real Estate Bank was 97.3 billion yuan, and the unused credit line was 6744.9 billion yuan, on the surface, its financial elasticity is acceptable.
Bank credit. In addition, Baolong Real Estate also has 580$9.6 billion in non-current liabilities, mainly long-term borrowings, with a total of 478 long-term interest-bearing liabilities3.9 billion yuan.
On the whole, Baolong Real Estate has 609 rigid debtsRMB1.9 billion, mainly long-term interest-bearing debt, with an interest-bearing debt ratio of 37%.
From the perspective of financing channels, Baolong Real Estate has diversified financing channels, in addition to bond issuance and borrowing, it also finances through equity, equity pledge, trust and non-standard channels.
However, in 2022, Powerlong Real Estate's net financing cash flow turned from a net inflow to a net outflow for the first time, and the indicator in 2022 and the first half of 2023 was -1255.2 billion and -370.7 billion yuan, which shows that the company's financing channels are not smooth and it is facing greater refinancing pressure.
Financing cash flow.
It is worth noting that due to the soaring interests of minority shareholders, Baolong Real Estate has been questioned about the existence of "clear shares and real debts".
In 2021, the minority interests of Powerlong Real Estate increased from 150 at the end of 2020600 million yuan increased to 2119.4 billion yuan, but the profit and loss of minority shareholders increased by 267.1 billion fell to 130.6 billion, the proportion of minority shareholders' interests and profit and loss does not match.
In terms of asset quality, Baolong Real Estate's other receivables are nearly 30 billion yuan, and accounts receivable are 310.3 billion yuan, not only the formation of a certain occupation of funds, but also the most risk.
Under the pressure of weak sales and financing obstacles, Baolong Real Estate repaid its debts by disposing of assets, but it was only a drop in the bucket compared to the maturing debts.
Overall, Baolong Real Estate's sales were weak, and its performance and profitability declined sharply; The debt burden is heavy, liquidity is tight, and the debt repayment pressure is greater in the short term.
03 "North Wanda South Baolong".
Xu Jiankang was born in a family of Confucian doctors in Jinjiang, Fujian Province, and when he was a teenager, he chose to "inherit his father's business" and began to study medicine.
After becoming an adult, Xu Jianxing followed his friends to work hard in Macau, working as an unlicensed small trader on the street side of Hac Sha Wan, relying on the momentum of Quanzhou people to "love to fight to win", accumulated his first savings, and opened the first umbrella company in his life.
Xu Jianxing is very business-minded, and later successively founded factories such as clothing and umbrellas.
In 1990, Xu Jianxing and his friends joined forces to raise 56 million Australian dollars to establish Macau Powerlong Group, which opened the door to wealth.
Xu Jianxian, Chairman of the Board of Directors of Baolong Group.
With accurate entry time, 10 years of rich business experience in Macao, and tacit cooperation with entrepreneurial partners, Baolong has emerged in less than a year and has become a rising star in Macau's real estate industry.
Subsequently, Xu Health entered the jewelry, finance, entertainment, construction, property and other industries, and his career was booming.
In 1992, Xu Jianxing came to Xiamen to inspect and enter the mainland real estate market, he spent 75 million yuan to win 4 plots of land in Xiamen, and built Baolong Center, Baoyuan Garden and other projects.
In the following decade, Powerlong Real Estate mainly developed residential properties, and only began to develop and operate comprehensive commercial real estate projects after 2003.
In October 2009, Powerlong Real Estate was listed on the main board of Hong Kong, becoming the first real estate company in Xiamen to issue H shares, and the first commercial real estate company listed in Hong Kong in the true sense of the word.
The following year, Xu Jianxing moved the headquarters of Powerlong Real Estate from Xiamen to Shanghai, and proposed a new strategic plan to deepen the first-tier cities centered on Shanghai.
At that time, there were in the industry"North Wanda, South Baolong"said.
In 2013, Powerlong Real Estate clearly put forward the development strategy of "taking Shanghai as the center and deeply cultivating the Yangtze River Delta".
According to the 2021 Forbes Global Rich List, the Xu family ranks 986th on the list with a wealth of $3.1 billion.
However, under the cold winter of the industry, the once crazy expansion of private real estate enterprises has broken out one after another, and Baolong Real Estate cannot escape the fate of default.
