Regardless of large, medium and small housing enterprises, financial risks need to be cautious.
Editor’s note: This article comes from China.com Real Estate , author: Momo, authorized reprint
On December 9, Jiangsu Zhongnan Construction Group Co., Ltd. disclosed the progress announcement on the provision of external guarantees. Zhongnan Construction provided joint liability guarantees of RMB 3.62525 billion for 10 holding companies.
In terms of guarantee projects, the amount of joint guarantee provided by Jining Zhongnan Longyue Project for financing exceeds 1.3 billion yuan. The Huizhou project needs to provide a total joint liability guarantee of RMB 600 million. The guarantees for the remaining projects are around 200 million yuan.
Previously, Zhongnan Construction has announced multiple times to provide guarantees for the financing of subsidiaries. Among them, the announcement on November 19 provided 3.387 billion yuan guarantee for multiple subsidiaries; the announcement on November 21 provided 2.7 billion yuan guarantee for 4 subsidiaries; the announcement on November 25 provided 2.5 billion yuan guarantee for many subsidiaries; 28 Announcement provided 1 billion yuan financing guarantee for 3 subsidiaries; Announcement on December 2 provided 800 million yuan guarantee for 2 subsidiaries.
As of the announcement date on December 9, the total amount of guarantee available for review and approval by the shareholders’ meeting of Zhongnan Construction was 88.176 billion yuan.
As of now, the actual external guarantee quota is 64.217 billion yuan, which has accounted for 369.10% of the company’s audited listed company shareholders’ equity.
On November 15, Zhongnancheng Investment intends to pledge 50 million company shares. The pledge is used for financing. On November 19, the major shareholder, Zhongnan Chengtou, plans to pledge 24 million company shares, and the pledged funds will be used to supplement the company’s working capital.
As of the announcement date on November 19, Zhongnan Chengtou has pledged 1.325 billion shares of the company, accounting for 65.63% of its shareholding and 35.48% of the company’s total share capital.
Along with frequent guarantees for subsidiaries and pledge of shareholders’ equity, China South Construction also continued to issue bonds in China. On November 28, a 1 billion yuan company bond issued by Zhongnan Construction was listed and issued on the Shenzhen Stock Exchange with a four-year term and a coupon rate of 7.6%.
According to media reports, as of November 22, in addition to bonds, Zhongnan Construction had about 10 receivables financing, 15 trust financings, 10 lease financings and 2 equity financings.
Data shows that the contracted sales amount of Zhongnan Construction in November increased by 36% year-on-year to 170.93 billion yuan. The single-month contract sales in November were 23.58 billion yuan, an increase of 105% year-on-year.
In November, 8 land were acquired, involving third- and fourth-tier cities such as Xuzhou, Zhenjiang, Lishui, and Wenzhou. The land price was RMB 3.631 billion. At the same time of continued steady sales, land reserves were also replenished in a timely manner.
But at the same time, the announcement said that the total amount of new engineering business contracted decreased by 20% compared with the same period last year.
The third quarterly report shows that as of the end of the third quarter, China South Construction has interest-bearing liabilities of 69.06 billion yuan, an increase from mid-2019. The total debt decreased by 0.78 percentage points compared with the end of 2018, but still as high as 90.90%. At the end of the third quarter, Zhongnan Construction held 25.45 billion yuan in monetary funds, an increase of 24% from the beginning of the year, mainly due to financing. The company’s cash inflow from financing activities in the first three quarters increased by 63% year-on-year to 48.330 billion yuan, and cash received from obtaining loans was 449.98 100 million yuan, a year-on-year increase of 61%.
58 Zhang Bo, chief analyst of Anju Guest House Industry Research Institute, told the media recently that after achieving the “100 billion” target, China South Construction has clearly demanded to increase its scale and maintain its share. External guarantees driven by financing have also been continuously improved. At present, the ratio of external guarantees to net assets has been significantly higher.
Zhang Bo further stated that no matter whether it is a “hundred billion” housing enterprise or a small and medium-sized real estate enterprise actively seeking to scale, the balance of scale and profit, the control of leverage and security, all need to be highly valued.
For real estate companies, it is more important to focus on accelerating the reduction of their own financial risks by reducing leverage, and to achieve their own quality and stable development.