486 real estate enterprises apply for bankruptcy, and the winter of the real estate industry is coming
On November 7, the fourth intermediate people's Court of Beijing announced that Tibet trust had filed a lawsuit against six defendants, including Taihe Group, Huang Qisen, Fujian Zhongwei real estate and Dongguan Jinze real estate, due to a dispute over the trust loan contract. The case will open on February 11, 2020.
In 2019, 'boil' is the keyword of the real estate industry. The real estate regulation policy has lasted for nearly three years, and the slowdown in the sales of real estate enterprises has led to the slow return of funds, leading to the rising financing pressure. Especially since March and April this year, the cbcirc has frequently stressed the control of real estate financial risks and warned the real estate industry of excessive financing. In May, it issued a document to further restrict bank and trust financing. In July, the national development and Reform Commission issued a document limiting that the overseas issuance of bonds by real estate enterprises can only be used to replace the medium and long-term overseas debts due in the next year. Under the storm of domestic bonds, it is more and more difficult for real estate enterprises to issue bonds. The financing cost of overseas bond issuance is still high, and the financing of real estate enterprises is embattled.
Taihe (000732. SZ), with sales of 130.34 billion yuan in 2018, is the 20th largest real estate enterprise. Taihe was sued for trust breach, which can be described as an epitome of the overall plight of the industry.
From 15.5% of the sky high price bonds issued by contemporary real estate (1107. HK) and 9.5% - 12% of the total 6 billion yuan of perpetual bonds issued by Huaxia happiness (600340. SH) within three days to the media exposure of Rongxin China (3301. HK) private placement bonds were included in the 'no investment pool', and real estate enterprises such as Sansheng Hongye were exposed to selling financial products at high interest rates. The desperate financing reflects the struggle and self rescue of real estate enterprises under the background of high-pressure policy, industrial shift and integration.
Small and medium-sized real estate enterprises are the first among them, and the industry reshuffle is increasing. According to the author's incomplete statistics, the announcement website of the people's court shows that at least 486 real estate enterprises applied for reorganization and bankruptcy in 2019.
Real estate enterprises try various financing methods, including high-cost trust financing, high interest rate bond issuance, listing, issuing financial products, seeking ABS (asset-backed securitization) financing, establishing funds and financing companies, selling assets to alleviate capital pressure, etc. are these high-cost financing methods sustainable, which companies will become winners and which will be eliminated in the fierce competition?
trust
In this round of real estate regulation, banks tightened the loan financing for real estate under strong supervision, and trust has gradually become the new favorite of real estate enterprise financing. According to the latest data of China Trust Industry Association in September, as of the end of the second quarter of 2019, the balance of trust funds invested in real estate was 2.93 trillion yuan, accounting for 15.38%, an increase of 0.63 percentage points over the end of the first quarter of 2019, ranking second in the field of trust funds.
From the No. 23 document issued by the CBRC in mid May to the beginning of July, the CBRC carried out interviews and warnings for some trust companies with excessive increment of real estate trust business, and then to the end of July, the Political Bureau of the CPC Central Committee proposed that "real estate should not be used as a short-term means to stimulate the economy", and the real estate policy continued to be under high pressure. However, the increment of real estate trust business still maintains a certain high-speed momentum.
Figure 1: investment direction and proportion of trust assets from Q1 2015 to Q2 2019
Unit:%, 100 million yuan source: China Trust Industry Association
Fu Pengqi, co-founder of Shanghai trust network, said that the original traditional trust business mainly focused on real estate and infrastructure. Since the second half of the year, the trust business has gradually tended to state-owned enterprises and local financing platforms. He said that for the vast majority of trust companies, they are only willing to invest in central enterprises, state-owned enterprises and real estate enterprises on the top 100 list. " On the contrary, the trust financing cost of real estate enterprises has decreased. Everyone is avoiding risks. Central enterprises such as Jinmao have picked up a lot of cheap. "
The scale of real estate business in the trust industry is shrinking, but real estate enterprises are still exchanging higher rates for trust financing. According to Fu Pengqi, there is no unified standard in the industry to calculate the average increase of trust financing costs, but it can be roughly divided into three categories: central enterprises generally tend to use low-cost bank loans, and the trust interest rate is always low; The trust interest rate of leading real estate enterprises such as Evergrande and rongchuang is about 10-12%; The financing cost of real estate enterprises from top 50 to top 100 is between 12-13%. The financing cost of the top 100 is about 13-15%.
Yu Jian, co-founder and President of Hanmi consulting, also classified the above three ranges, but he estimated that the trust financing costs of the three categories were slightly higher by 1-2% respectively, and the above three categories showed an increasing trend of financing costs of 12-13%, 13-15% and 15-18% respectively.
On November 5, in the offshore bond market, Blu ray development, with a debt ratio of nearly 130%, was reported to have defaulted on trust products, resulting in a drop of about two points in the price of its US dollar bonds. The company then held an investor conference call to deny relevant rumors. In response to investors, the company representative said that the financing cost of the company's trust increased by about 1% to 11% this year. Fu Pengqi said that the financing cost of Blu ray is about 12%, and the possibility of extension of its trust products exists. Trusts generally tend not to disclose that the trust loans of real estate companies have not been cashed, so as to prevent real estate companies from refinancing.
Yu Jian, co-founder and President of Hanmi consulting, told reporters that in the future, in the plate of nearly 3 trillion trust financing of real estate enterprises, large companies may get more quota and more financing from leading enterprises like real estate sales. He said that the overall cost of trust financing of real estate enterprises is rising, and the financing cost of head enterprises is about 100-200 basis points. Although the head concentration effect caused by the tightening of trust supervision does make it easier for large real estate enterprises to obtain trust financing, it also gradually shows a trend of differentiation.
Yu Jian believes that based on the consideration of reducing risk exposure, some trust companies may reduce the financing to leading enterprises such as rongchuang, Evergrande and country garden, while other trust companies may give up some small real estate enterprises and choose to cooperate only with large enterprises because they have a large volume ratio and are willing to pay relatively high financing costs, which can meet the requirements of trust institutions for interest margin. Real estate enterprises with better financial conditions, such as Vanke, CNOOC and China Resources, basically do not use trust financing because they have more low-cost financing channels, such as obtaining bank loans.
Issue bonds
Rolling bond issuance has gradually become one of the main ways for real estate enterprises to continue the capital lifeline in recent years.
In January and February 2019, contemporary real estate issued a total of US $350 million green priority notes due in 2020 at an interest rate of 15.5%. Contemporary real estate announced that the funds will be used to refinance the existing debt, and the funds in February will refinance the existing offshore debt and finance the development of onshore projects.
Mr. Wang, a fixed income analyst and trader in Hong Kong, said that after the tightening of domestic trust loan supervision, real estate enterprises will increase the scale of overseas bond issuance; Although the national development and Reform Commission issued a document in the middle of this year restricting the new overseas foreign debt of real estate enterprises to be used to replace the medium and long-term overseas debt due in the next year, real estate enterprises can still use the amount previously obtained to issue bonds overseas.
In addition, real estate enterprises have increasingly favored high-cost sustainable bonds since last year. In the second half of this year, Huaxia happiness issued at least 8.5 billion yuan of perpetual bonds with an interest rate of 9.5% - 12%. As early as 2018, Poly Real Estate (600048. SH), CSCEC International (3311. HK), Guangming real estate (600708. SH), Yuexiu group and other real estate enterprises have turned to perpetual bonds for capital supplement.
The so-called perpetual bonds are bonds that have no maturity date and pay bond interest on schedule until eternity. Most of these bonds are redeemable.
A number of professionals in the real estate industry and bond market interviewed by the author said that the cost of perpetual bonds is relatively high, and the interest rate will rise over time. Although perpetual bonds can not be included in the debt ratio in the financial report, credit institutions still classify perpetual bonds as debts within the scope of rating consideration, which affects their credit rating.
The real estate analyst of a domestic head rating company analyzed to the author that the financing cost of domestic perpetual bonds is about 100 basis points higher than that of medium-term bonds with the same period. Although perpetual bonds are an ideal financing method, the way of issuing bonds is not smooth. Many perpetual bonds of real estate enterprises could not be issued because regulators and multiple stakeholders (companies, accounting firms, etc.) could not agree on the terms.
The disadvantages of issuing bonds at high interest rates of real estate enterprises are gradually emerging, and the debt repayment pressure will be particularly great in the next two years. China Index Research Institute According to the data of (China Index Institute), the scale of bonds to be repaid by the real estate industry in 2019 is 499.45 billion yuan. By 2020, this scale will rise to 651.34 billion yuan and close to trillion yuan in 2021. There are constant rumors that private placement bonds are overdue and listed in the no investment pool. On November 5, fengcaixun reported that three private placement bonds issued by Rongxin China were included in the no investment pool (that is, the bonds that do not comply with the investment rules are classified into the prohibited investment pool), and the company's loans are overdue and the actual controller is interviewed. Rongxin China subsequently issued a clarification statement denying the above rumors. At the end of October, Guangdong Yihe real estate was exposed, and the two private placement bonds of '17 Yihe 01' and '17 Yihe 04' issued failed to pay part of the principal and interest in full on schedule, which constituted a material breach of contract.
Huang Xinhui, a global rating credit analyst at S & P, said that in 2020, nearly US $3 billion of overseas bonds and nearly US $6.5 billion of domestic RMB bonds will mature in Chinese real estate. She believes that based on the larger market demand and investors are more optimistic about the industry prospect of China's real estate market, there should not be too much risk for the maturity and payment of overseas US dollar bonds next year.
Chart 3: maturity of onshore and offshore RMB bonds of Chinese real estate companies from 2020 to 2022
Unit: USD 1 billion source: S & P global rating
However, Huang Xinhui believes that due to the fact that there is no sign of deregulation, the maturity is relatively large and the number of developers involved is relatively large, there will be some pressure on the domestic bond repayment of real estate enterprises next year.
list
Anhui is a local real estate enterprise, and Sanxun group is rushing to go public. According to the prospectus submitted by Sanxun group to the Hong Kong Stock Exchange on October 17, Sanxun group ranked 173 in national real estate sales in 2018, with a sales area of 125, and its main market is in Anhui Province. According to the prospectus, as of June 30, 2019, the operating income of Sansun group was only 562 million yuan, cash and cash equivalents were 164 million yuan, and the total current liabilities were 1.083 billion yuan. The capital pressure can be seen. The prospectus also shows that in just two months from June 30, 2019 to August 31, 2019, Sanxun's total loan increased from RMB 1.42 billion to RMB 2.004 billion.
The second half of 2019 ushered in another climax of the listing of real estate enterprises. Xinli Holdings (2103. HK) officially went public on November 15. In addition to Sanxun, small and medium-sized and even Mini real estate enterprises such as China Tianbao, Aoshan holdings, Hong Kong Dragon real estate, helenberg real estate, wanchuang international, Huijing holdings and Jingye Mingbang also collectively rushed to Hong Kong stocks and waited for the regulatory authorities to review whether they meet the listing conditions.
A US investment banker who specializes in listing real estate enterprises on Hong Kong stocks said that at present, the real estate enterprises listed are generally small in scale and highly leveraged, which restricts their financing. " If there had been a company of a certain scale and operated well, it should have been listed 3-5 years ago. "
The vast majority of real estate enterprises that rush to the last bus of listing in 2019 show the characteristics of small scale, high debt, low profit, tight cash flow and regional concentration.
This wave of listing climax occurred when the overall valuation of Hong Kong stocks was at the bottom of history and the market was not very friendly to domestic housing stocks. In the first half of the year, only Zhongliang Holdings (2772. HK), Dexin China (2019. HK) and Yincheng International Holdings (1902. HK) were successfully listed