**: Viewpoint.com.
Editor's note: 2023 is the first year of China's economy after three years of the pandemic, and it is under pressure from many external environments and internal developments.
At the bottom of the valley, heading up the road. Viewpoint New ** continues to plan and launch an annual series of reports - "The Year at the Bottom", in order to comprehensively and profoundly focus on the strength and tenacity of outstanding business groups in difficult times, they have encountered ups and downs, and their hearts are beautiful.
At the same time, we will continue to dialogue with a group of economists and industry leaders with global perspectives and rich knowledge to interpret the future development of China's economy and industry from their perspectives.
**: Viewpoint.com. The ancient Greek blind poet Homer once wrote, "Human beings are like leaves on a tree." The wind is blowing, and the leaves of the trees of the year are scattered on the ground, but when the earth rejuvenates, those trees will sprout and grow new leaves. ”
Against the backdrop of the year-on-year decline in real estate sales across the country, the difficulties in 2023 can be shared by every company, but their own difficulties are different.
In the face of multiple factors such as changes in the economic environment and changes in consumer demand, for Country Garden, 2023 is no longer about trying to maintain the top spot in sales, but also looking for a new location and new living space.
Although many leaves were blown off in the whirlwind that followed at the bottom of the valley, the Tao was renewed. There was Yang Guoqiang in the past, and now Yang Huiyan, the Yang family has different things in different times, and there must be new things under the new things.
Schema austerity
In 2020, when the real estate market sales and development investment were running at a high level, Country Garden implemented major adjustments in terms of organizational structure and regional structure, mainly four restructurings.
Data**: Corporate announcements, opinion index collation.
After two reductions and fissions, Country Garden has formed 104 "Little Country Gardens", each with jurisdiction over 3-5 cities and no more than 15 counties.
At that time, Yang Guoqiang said at the work conference that fission is to have the ability to do better. Mo Bin also said: "In the future, each area is equivalent to a small Country Garden, and I hope that each area will develop steadily under the condition that the cash flow can be guaranteed." ”
The fission in 2020 is to allow each region to narrow the management radius, increase penetration, sink the market, focus on deep cultivation, and then efficiently seize more share.
Country Garden requires each region to reach more than 15% of the market after deep cultivation, so it is found that Country Garden has extended from "a balanced layout from the first line to the fifth line" to the "first to the sixth line".
Over time, the real estate market has also changed its playstyle, and real estate companies are the small pieces that make up this puzzle; As the entire frame shrunk, each piece had to adapt to the change. In recent years, the organizational structure of many enterprises has begun to shift from fission to merger, including China Merchants Shekou, Yuexiu Real Estate, China Resources Land, etc., accompanied by personnel changes.
In 2023, Country Garden will "turn inward", and the first thing to usher in is the second generation of comprehensive **, and it will begin to implement a new development concept more boldly.
On the morning of March 1, Yang Guoqiang, the founder of Country Garden Group, resigned from the position of chairman and executive director of the company due to his age, along with the chairman of the company's nomination committee, chairman of the corporate governance committee, chairman of the environmental, social and governance committee, chairman of the executive committee, and members of the remuneration committee.
There were early signs of Yang Huiyan taking over, and in December 2022, Country Garden made important senior management personnel changes, arranging two relatively young group executives Cheng Guangyu and Wu Bijun to join the board of directors as executive directors.
In March, in accordance with the principle of "excellent regional presidents in charge of regions", Country Garden decided to implement the plan of concurrently serving as regional presidents, reducing the original 58 regions to 29, and the remaining regional presidents will be in charge of larger jurisdictions, and the other 29 regions will be reduced to regional executive presidents.
Data**: Corporate announcements, opinion index collation.
Yang Huiyan said that after certain adjustments at the group headquarters and regional project level, the company's organizational structure has reached a relatively stable stage overall.
The reason for the merger is that the current market environment is no longer as aimed at "becoming bigger" as in the past, and streamlining the organizational structure can make the strategy more concentrated, and it is also aimed at reducing costs and increasing efficiency; At the same time, you can focus your energy on finding new opportunities.
On May 31, market sources said that Country Garden was holding a general meeting of the national regional center, and immediately after the meeting, an internal document was issued to adjust the organizational structure.
This time, it independently split real estate and three other business segments, and set up two major industrial groups of real estate and technology construction and two major sectors of new business and innovation investment division below the holding group. The change is mainly to cooperate with the strategy of "one body, two wings", and iteratively upgrade the organizational structure of "strong real estate attributes" to a new structure that adapts to the coordinated development of diversified businesses.
With the adjustment of the organizational structure, Country Garden has made personnel adjustments again.
According to the arrangement: Mo Bin serves as the president of Country Garden Holding Group and the chairman of Science and Technology Construction Group. It has been reported that in addition to the science and technology construction group, Mo Bin will still strategically coordinate the real estate group as the president of the groupCheng Guangyu is the Executive Vice President of the Holding Group and the CEO of Country Garden Real Estate GroupWu Bijun was promoted to President of the Holding Group and General Manager of the Financial and Capital Center.
In order to have more funds to repay its debts, Country Garden chose to take the initiative to reduce executive salaries and corresponding benefits such as travel and car distribution.
It is understood that the company has made many adjustments to the executive compensation in the past two years, including the vice president of the company's headquarters, the general manager of the functional center and above, and the regional president. According to the data, executive compensation in 2023 will be 86% lower than in 2021.
Among them, Mo Bin's salary was reduced from 15 million yuan to 3 million yuan, and then to 120,000 yuan;Yang Ziying's salary was reduced from 10 million yuan to 2 million yuan, and then to 120,000 yuanAs the co-chairman, Yang Huiyan's salary has been 370,000 yuan for a long time, and this time it has also been adjusted to 120,000 yuan.
According to the latest financial report, Country Garden's total administrative expenses in 2023 have been significantly reduced compared with previous years, falling to 32 in the first half of the year$1.9 billion, lower than the same period in the past six years, and more than half of 2020.
Data**: Corporate announcements, opinion index collation.
Earlier, Country Garden's employee welfare expenses in 2022 (not included in the part of properties under construction) increased from 268 in 20215.3 billion yuan fell to 178$5.7 billion, of which wages and salaries increased from 2533.4 billion yuan fell to 1666.7 billion yuan.
Measures such as salary cuts, canceling senior executives' car allocations and welfare benefits are all ways for Country Garden to save itself at this critical moment.
Invest in a change of direction
In the sales environment of the real estate market in 2023, which is still at a low ebb, Country Garden has lost its top sales position.
According to the research results of the opinion index "Sales Performance of Real Estate Enterprises from January to December 2023", the total sales amount of equity realized by the top 100 real estate enterprises in December was 328.8 billion yuan, a year-on-year decrease of 375%, up 174%；From January to December, the top 100 real estate companies achieved a cumulative equity sales amount of 4,014.9 billion yuan, a year-on-year decrease of 20%.
Against this backdrop, Country Garden recorded a year-on-year decline in both equity and full-caliber salesAmong them, equity sales 1722400 million yuan, ranking sixth;Full caliber aspect 2136900 million yuan, sliding to seventh place.
Data**: Corporate announcements, opinion index collation.
In fact, after 2018, due to the large base, Country Garden's sales growth has slowed down significantly compared with the previous peak. Since 2022, Country Garden's equity sales in the month have turned negative year-on-year, and it has continued for a long time.
In July 2023, sales deteriorated again, with a monthly sales scale of 12.1 billion yuan, a year-on-year decrease of 60%, and less than 8 billion yuan after August, which is also related to the overall real estate sales under pressure in the second half of 2023.
In terms of contracted sales by region, Country Garden's attributable contracted sales outside Guangdong Province accounted for % and 82% of the total sales from 2020 to 2022, while Guangdong Province accounted for a slight ** to 21% sales in the first half of 2022.
In the first half of 2023, 37% of Country Garden's sales revenue will come from first- and second-tier cities, 63% will come from third- and fourth-tier cities, while from 2020 to 2022, 3% and 60% of its sales revenue will come from third- and fourth-tier cities, respectively.
However, since 2022, the oversupply of the real estate market in some third- and fourth-tier cities has been more obvious, and housing prices have been under pressure and facing the problem of destocking. Faced with the problem of shrinking sales in third- and fourth-tier cities, Country Garden took the initiative to increase the layout of first- and second-tier cities.
Data**: Corporate announcements, opinion index collation.
In the first half of 2023, the top 100 projects in the first half of 2023 showed that Shaoguan and Zhengzhou tied for the first place in terms of the number of projects, followed by Foshan, Liaocheng, Luoyang and Suzhou.
According to the encyclopedia's classification of cities, nearly half of the cities with more than one project in the top 100 projects in equity sales are from third-tier cities, while the sales performance of Zhengzhou, Foshan, Suzhou and Xi'an in the new first-tier cities is more significant.
More than 60% of the projects obtained pre-sale certificates in 2021, which means that these projects were acquired in the same year or earlier, while the sales of projects that have obtained pre-sale certificates in the past two years are not very good.
Data**: Corporate announcements, opinion index collation.
In 2023, Country Garden will still maintain low investment and expansion efforts.
At the beginning of the year, Country Garden began to restart land acquisition, and participated in public bidding, auction and listing activities in Beijing, Nanjing, Chengdu, Hangzhou, Hefei, Shanghai and other places, and the number of land plots registered for auction and lottery reached 20, until April and May, four sons were successively landed in Hangzhou and Taiyuan.
After the change in sales thinking, it was transmitted to the logic of land acquisition, and the amount of equity land acquisition located in the third, fourth and fifth lines further shrank.
Previously, Country Garden's internal meeting revealed that one of the ways to do a good job in the deterministic market and deterministic projects is to move closer to the more certain first- and second-tier cities, and gradually increase the investment amount and land reserve proportion of the first- and second-tier cities.
The land acquisition situation in 2023 is the embodiment of the above policy.
In the first half of 2023, the expected gross floor area of the land acquired by the equity owners of Country Garden Company is approximately 64350,000 square meters, with a total cost of about 69300 million yuan, compared to 60 million in the first half of 2022900 million yuan has increased, and the average land price is 10,766 yuan square meters.
As of 30 June 2023, Country Garden, together with its joint ventures and associates, has contracted or delisted Chinese mainland interests with approximately 170.98 million square meters of buildable floor area, of which 79% is located outside Guangdong Province.
At the same time, the task of ensuring the delivery of buildings has not decreased, and Country Garden has always ranked first in the national real estate enterprises in terms of guaranteed delivery since 2022, with a scale close to the sum of the second to fourth places.
From January to December 2022, from January to June 2023, and from January to December 2023, Country Garden delivered 640,000 units and 2780,000 units and 600,000 units, and the guaranteed delivery of buildings has also increased the pressure on cash expenditure.
On December 8, 2023, Country Garden Group held a monthly management meeting. Yang Huiyan said that in the next 12 months, the delivery challenge will enter the deep water area, and the delivery volume of Country Garden is expected to exceed 400,000 units in 2024, which is still huge.
In addition, most of the top 100 projects in the first half of 2023 will be completed in 2025, which means that the delivery pressure will continue for several years.
If the matter is urgent, it will be slow, and if it is slow, it will be round", and choose to postpone the land acquisition under the sales blockage, even if the cash flow is tight, it will still actively ensure the delivery, in order to relax the market financing channels and perhaps find new opportunities.
Financing is shifted
After the curtain came down on the highly leveraged model, real estate financing hit a new low in recent years in 2023, and the growth rate continued to be negative; In the face of the downward trend of the fundamentals of the real estate industry, many real estate companies are in the process of shrinking their balance sheets.
According to the 2023 interim results, Country Garden's total assets fell to 162 trillion yuan, and the total debt fell to 136 trillion yuan, a year-on-year decrease of95%, continuing the trend of balance sheet reduction since 2021.
From the balance sheet, Country Garden's total interest-bearing liability balance fell to 25790.5 billion yuan, compared to 2713 at the end of 20220.7 billion yuan, a decrease of 1340.2 billion yuan, down 49%, down since 2020; Contract liabilities 6035$8.8 billion, accounting for the majority of total liabilities; ** and other payables 44854.5 billion yuan.
Among interest-bearing liabilities, bank and other borrowings accounted for the largest proportion, with 1561The scale of 7.6 billion yuan accounted for 6056%, compared to 1,625 at the end of 2022400 million yuan has been reduced; The total scale of senior notes, corporate bonds and convertible bonds was 10172.9 billion yuan, accounting for 3944%。
Data**: Corporate announcements, opinion index collation.
From the perspective of cash flow, the overall net cash flow was negative from 2020, of which the net cash flow from financing activities was -54.1 billion yuan, -12.9 billion yuan and -58.7 billion yuan respectively, and the liquidity pressure has been seen since 2020.
As of June 30, 2023, Country Garden's net cash from operating activities, net cash from investing activities and net cash from financing activities were 338.6 billion yuan, 672.3 billion and -3734.9 billion yuan.
As at June 30, 2023, Country Garden's cash and cash equivalents and restricted cash were 1305$6.9 billion, up from $1,475 on December 31, 2022500 million yuan, a decrease of 169$8.1 billion. Among them, cash and cash equivalents are about 1011$1.5 billion, restricted cash of about $2945.4 billion yuan.
Correspondingly, the debt due in 12 months is 10870.3 billion yuan, cash and cash equivalents held were 1011$1.5 billion cannot fully cover short-term maturing debts.
As a leading domestic real estate company, Country Garden's every move will be amplified by the market, which in turn will trigger risk public opinion, starting with the failure to pay the coupon of two overseas US dollar bonds in August.
According to Guanxin**, the two bonds are listed on the Singapore Exchange, with an issue size of US$500 million and a maturity of 55nc3.5 and 10NC5 with maturity dates of February 6, 2026 and August 6, 2030, respectively.
On August 11, Country Garden said that it had encountered the biggest difficulty since its establishment, and the available funds on the books continued to decrease, and there was a phased liquidity pressure; The next day, it was announced that its 11 domestic corporate bonds would be suspended from the opening of the market on August 14.
According to statistics, the total balance of the 11 bonds reached about 1570.2 billion yuan, the earliest maturity date is "16 Biyuan 05", which is September 2, and the balance is 390.4 billion yuan; Also due in September are "20 Bidi 03" and "21 Bidi 04", with a balance of 143.5 billion yuan and 2 billion yuan.
At that time, a person familiar with the matter revealed that Country Garden proposed to extend the "16 Biyuan 05" due on September 2 for 36 months and pay it in installments.
In September, Country Garden successfully completed the coupon payment of two overseas bonds; Subsequently, except for "22 Bidi 02" and "22 Bidi 03", the remaining 9 bonds were all extended, involving a total principal of about 14.7 billion yuan.
Country Garden is still in the process of raising funds to pay off the two bonds, as Yang Huiyan said at the monthly management meeting, the family will definitely sell iron to support the company, and the company will try to explore an effective way to resume normal operations as soon as possible.
Data**: Corporate announcements, opinion index collation.
The withdrawal from Zhuhai Wanda Commercial Management is an example, and Country Garden has the funds to pay the principal and interest of "22 Bidi 02" and use it for overseas restructuring.
In addition, Country Garden has brought in CICC and Houlihan Nuoke as financial advisors, and Sidley Austin as legal counsel to assist in debt restructuring.
Among them, "restructuring expert" Houlihan has served as a financial advisor for Fantasia, Evergrande, Sunac, Kaisa, Xinli and other companies; CICC is also one of Evergrande's advisors, while Sidley was involved in the restructuring of Fantasia, Kaisa, and Sunac.
On the whole, since 2023, real estate companies have carried out debt restructuring of domestic and foreign defaulted bonds, and extended them through exchange offers.
Since the end of 2022, the financing policies of credit, bonds, and equity to support real estate enterprises have been implemented one after another, which is known as the "three arrows".
In November 2023, market sources said that regulators were drafting a "white list" of real estate developers, which could cover 50 large-scale real estate companies, including Country Garden.
In addition, Country Garden also participated intensively in the symposiums held by Industrial and Commercial Bank of China, China Guangfa Bank and China Everbright Bank.
Data**: Corporate announcements, opinion index collation.
Although the capital market once rumored on August 1 that Country Garden would raise about 23HK$400 million was used to repay debts, which was subsequently clarified by Country Garden.
Compared with 2022, the financing channels of real estate enterprises will be further under pressure in 2023.
Combined with the situation of the whole year of 2023, Yang Huiyan and her family actively adopted management measures in the face of the trough environment, including the operation of the balance sheet, income statement and cash flow statement, and carried out relevant internal operating arrangements in accordance with the guidance of available funds, reduced non-operating expenses and revitalized various assets, etc.
Indeed, as Mo Bin said in his New Year's speech, the extreme cold is the solstice, the beginning of the yang, and hope has been conceived in suffering.
Although Country Garden has lost a lot of branches and leaves in the wind, the haze will eventually dissipate and new leaves are ready to regenerate.
A year at the bottom |At the bottom of the valley, heading up the road.