Taihe is using its practical actions to complete its management shortcomings.
After more than a year of active adjustment, Taihe Group on the road of “de-leveraging” handed over a clearly improved score of the senior high school entrance examination.
On the evening of August 30, Taihe Group released the semi-annual report for 2019. The biggest point of the financial indicators is that the interest-bearing liabilities have been greatly reduced, repaying 33.8 billion yuan in half a year, and the net asset size has steadily expanded to 36.76 billion yuan, up 15.3% from the previous month. At the same time, the net operating cash flow has continued to increase substantially. 202.2 billion yuan.
There are indications that through a series of forward-looking strategic adjustments, Taihe Group is gradually shifting from “expansion” to “effectiveness”. “Consolidating quality”, this is almost the only way for every 100 billion-level housing enterprise to develop sustainably.
Net assets and net profit achieve “quality growth”
In the past two years, the total assets of Taihe Group have continued to grow steadily. Since the total assets exceeded 200 billion yuan in 2017, as of June 30, 2019, the total assets of Taihe were 238.64 billion yuan. Among them, the net asset size that best reflected the quality of growth reached 36.76 billion yuan, an increase of 15.3% from the previous month, and the net assets of the mother returned to 21.69 billion yuan, an increase of 17.5% from the previous month.
The steady growth of net assets means that Taihe Group continues to operate steadily and grows steadily. Its scale and industry status are more closely matched. In the face of industry cycle volatility, anti-risk capability continues to increase.
In terms of revenue, the growth rate of Taihe’s revenue in the first half of the year was significant. Operating income increased by 14.3% year-on-year to 14.51 billion yuan; net profit increased by 15.2% year-on-year to 1.57 billion yuan; EBITDA was 2.73 billion yuan, up 13.1% year-on-year.
In the first half of the year, Taihe’s profitability remained stable, with a net interest rate of 10.79%, up 0.08 percentage points year-on-year, and basic earnings per share of 1.2543 yuan, up 58.8% year-on-year, weighted ROE7.75%, up 1.98 percentage points year-on-year.
Another highlight data is that in the first half of the year, Taihe’s net profit was 1.56 billion yuan, up 58.8% year-on-year. This is due to the fact that in the first half of the year, the company carried out project cooperation, carried out the equity transfer of some projects, realized the profit in advance, and on the other hand, the more important reason is that the stable growth of sales revenue played an important supporting role.
According to industry insiders, the first half of this yearSince the beginning of the year, Chairman of the Taihe Group, Huang Qisen, repeatedly stressed at the company’s internal meeting that Taihe should change from “extensive management” to “fine management” as soon as possible, and pursue “profitable return” to achieve “quality growth”. .
According to the actual situation, Taihe has indeed undergone a major change in business ideas in the past year or more. Instead of blindly pursuing scale expansion, it has paid more attention to sales return, cash flow security and income profit growth. Extrusion of water and the consolidation of 100 billion yuan have become the decision-making consensus of Taihe management.
Interest-bearing liabilities have decreased significantly, repaying 33.8 billion yuan in half a year
“Liabilities” is a topic that has been controversial in Taihe. In the process of rapid expansion in the past few years, Taihe’s large-scale acquisition of first- and second-tier cities in Beijing, Shanghai and Shenzhen was the main reason for its high debt. However, after entering 2018, with the downturn of the real estate industry, Taihe stepped on the brakes in time. Decisive de-leverage. It can also be seen from the financial report data in the first half of this year that this effort has achieved remarkable results:
The asset-liability ratio decreased by 2.28 percentage points from the end of 2018 to 84.60%; interest-bearing liabilities decreased significantly, at the end of 2018, it was 137.62 billion yuan, and in mid-2019 it was 110.40 billion yuan. In the first half of the year, debt repayments reached 33.8 billion yuan.
According to informed sources, by the end of this year, Taihe’s debts due to be repaid have actually been reduced on a large scale, and it is sufficient to respond according to the company’s current sales and returns.
Another indicator, the gradual increase in net cash, can also see the continued improvement in the financial security of Taihe. Among them, the net operating cash flow was -520 million yuan in the middle of 2018, and increased significantly to 13.93 billion yuan at the end of 2018, and 20.22 billion yuan in the middle of 2019; the cash interest protection ratio was 4.19, an increase of 314.48% over the same period of last year, and 1.01 in the same period of the previous year.
The continuous increase in net operating cash flow reflects the steady increase in the rate of return of Taihe and the steady growth period. On the other hand, it also shows that Taihe’s cash flow is safe and controllable, and its hematopoietic capacity is steadily increasing. .
Improve 100 billion to achieve sustainable growth
Although some industry insiders are not worried, Taihe will release a large amount of equity cooperation in the first half of this year, which will lead to a decline in the saleable resources and affect the company’s future development. However, in the financial report data of the first half of the year, it can still be seen that Taihe’s land reserve is full of enthusiasm:
At present, there are 8 development projects in Taihe, with a land area of 207,200 square meters, a building area of 2.0925 million square meters, 64 projects under construction, a land area of 9,846,300 square meters, and a building area of 16.70 million square meters. One. The company currently has more than 90 projects in 29 cities across the country.
According to people familiar with the matter, the current development and sales rhythm of Taihe, the value of the existing reserveIt is also enough to develop for three years.
It is understood that in order to ensure the company’s future sustainable development, in addition to continuing to digest the current value of goods, Taihe will also restart the new land investment in the third quarter of this year.
In 2019, the overall downturn in the real estate industry has become a consensus. The regulation continues, the price limit is topped, sales are weak, and financing is even worse.
In response to the industry cycle dilemma, Taihe took the initiative to make strategic adjustments a year ago, which is reflected in the following major actions:
One is to stop large-scale land acquisition, adopt a prudent land investment strategy, and comprehensively sort out some of the acquired projects that do not meet the company’s development requirements.
The second is to optimize the debt structure, focus on more than 100 cooperative financial institutions, and finally determine more than 20 long-term strategic partners through debt replacement.
The third is to increase the sales of project sales, appropriately release the concentration of rights, and take out part of the project equity, attracting the joint operation of well-known housing companies such as Shimao Group.
In addition, management upgrades and talent development are put on the company’s important strategic agenda. Huang Qisen is fully aware that the rapid development of the enterprise and the lag in the construction of the talent team have significantly slowed the pace of Taihe’s progress. Therefore, the first management task he set for himself is “seeing people and employing people” and vowed to “attract first-class talents with first-class salary and create first-class performance”.
From the relevant data in the above-mentioned semi-annual report, it is not difficult to see that with a series of measures to increase revenue and reduce costs and increase efficiency, the situation of Taihe funds that has been worried about public opinion has been fundamentally reversed. Taihe is using its practical actions to complete its management shortcomings.