Another real estate company’s share price collapsed and fell. This time it was Zhengrong.
On February 11, Zhengrong, two Hong Kong listed companies, Zhengrong real estate (6158. HK) and Zhengrong service (6958. HK), both fell by more than 80% in the session! According to public information, Zhengrong real estate ranks among the top 20 of China’s top 100 real estate enterprises, with sales of more than 140 billion yuan in 2021.
Subsequently, some media reported that some shares of Ou Zongrong, the actual controller of Zhengrong real estate, were forcibly closed. On the day of , Zhengrong real estate replied to the reporter of daily economic news that the closing of investors did trigger the decline of share price, but it was not the actual controller. the specific situation is still being understood, and the relevant information shall be subject to the company’s announcement.
Another market rumor said that Zhengrong’s sharp fall in share price was related to the cashing of US dollar bonds reported yesterday. Zhengrong real estate responded that the company would redeem us $200 million of perpetual bonds as originally planned, and the relevant rumors were untrue. For the sharp decline in share price, Zhengrong real estate said that today, some institutions may maliciously short and buy again, and the company is further understanding the reasons for the decline in share price
is part of the shares held by the actual controller forced to close?
company’s latest response
In the past, the share price performance of Zhengrong was slightly calm at the thunder peak of the real estate industry in 2021, but it was thunderous at the beginning of 2022.
On the afternoon of February 11, Hong Kong stocks Zhengrong real estate (06158. HK) and Zhengrong service (06958. HK) both collapsed. Zhengrong real estate once fell sharply by 81.4%. Although the closing decline narrowed to 66.39%, the total market value still fell from HK $16 billion to HK $5.372 billion, market value evaporated HK $10.6 billion from yesterday!
Zhengrong service once fell nearly 85%. As of the close, its share price fell 57.7% to HK $1.73, with a total market value of HK $1.795 billion and an evaporation of HK $2.45 billion.
Meanwhile, the corporate bond “20 Zhengrong 03” issued in the mainland also fell by more than 20%, and the trading was temporarily suspended during the session.
Zhengrong fell sharply or was affected by the decline in US dollar bonds yesterday. On the afternoon of February 10, Zhengrong real estate’s US dollar bonds began to fall, among which the US $200 million perpetual bonds fell sharply by about US $30. the collapse of Zhengrong US dollar bonds initially came from a market rumor that Zhengrong would no longer redeem the perpetual bonds as planned, and the company might face restructuring.
According to the interface news, the above US dollar bonds refer to the US $200 million bonds with a coupon rate of 10.25% issued by Zhengrong real estate in June 2019, code “04596. HK”.
Earlier, Zhengrong said at the investor meeting that the coupon rate would jump from 10.25% to 15% due to the high cost after the interest jump of the perpetual bond. Therefore, it announced on January 4 that it planned to redeem its $200 million perpetual bond on March 5.
For the double killing of shares and bonds, Zhengrong real estate responded to the daily economic news that the company would redeem us $200 million of perpetual bonds as originally planned. The relevant rumors are untrue. For the sharp decline in share price, Zhengrong real estate said that today, some institutions may maliciously short and buy again, and the company is further understanding the reasons for the decline in share price.
An overseas investor told reporters that Zhengrong had privately contacted them and said that the redemption of perpetual bonds would not change, but investors hoped to hold an explanation meeting for public clarification.
Earlier today, some media reported that some shares of Ou Zongrong, the actual controller of Zhengrong real estate, were forcibly closed. According to the data of Hong Kong stock exchange, ou Zongrong currently owns 54.71% equity of Zhengrong real estate and 63.26% equity of Zhengrong service.
In response to this matter, Zhengrong real estate replied to the reporter of the daily economic news that did trigger the decline of share price due to the closing of investors, but it was not the actual controller. The specific situation is still being understood, and the relevant information shall be subject to the company’s announcement.
According to informed sources, ou Zongrong Pledged Shares once in 2018. At that time, ou Zongrong pledged 440 million ordinary shares of Zhengrong real estate, accounting for about 10.67% of the total share capital.
the debt due within one year is as high as 20.3 billion yuan
discount sale instead of “borrowing new for old”
According to the reporter of the daily economic news, there are currently 11 existing bonds of Zhengrong holding, with a survival scale of 5.944 billion yuan, of which the maturity scale within one year is 1.677 billion yuan.
By the end of June 2021, Zhengrong real estate (06158. HK) had current liabilities of 1497.7 billion yuan, mainly trade payables and notes payable, and its short-term debt due within one year was 20.34 billion yuan.
The toughest is clearly dollar debt. According to the data, up to now, Zhengrong real estate has 15 US dollar bonds, with a survival scale of US $3.703 billion, of which US $2.22 billion will expire within one year, which is under great pressure of centralized cashing. The debt is basically due in 2025
overseas bond issuance of Zhengrong real estate
From the perspective of equity structure, natural persons ou Zongrong, Ou Guoqiang and Ou Guowei indirectly hold 54.6%, 4.99% and 4.97% shares of Zhengrong real estate respectively. Ou Guowei and Ou Guoqiang are the sons of Ou Zongrong. The three persons act in concert and are the actual controllers of the company.
Overall, the rigid debt of Zhengrong real estate is 71.33 billion yuan, mainly long-term interest bearing debt, accounting for 71%, and the interest bearing debt ratio is 35%.
However, for the moment, the refinancing channels of the real estate industry are relatively tight. Zhengrong real estate’s move of “borrowing the new to repay the old” may not work in the short term.
According to the interface news, in this context, Zhengrong began to sell off the equity of the project in January this year. On January 30, Zhengrong (Xiamen) Real Estate Co., Ltd. transferred 49% equity of Xiamen Ronglu Real Estate Co., Ltd. and Ping An Trust Co., Ltd. took over the offer. In the same period, Chengdu Zhengrong real estate also pledged the amount of equity of 15.3 million yuan of Chengdu ronghuiyu. The project is Zhengrong Runjin house, which obtained the pre-sale license last October.
Recently, Zhengrong real estate released unaudited business data in December 2021. In December 2021, the cumulative contract sales amount of Zhengrong real estate together with the joint venture and associated companies was about RMB 10.011 billion. From January to December 2021, the cumulative contract sales amount of Zhengrong real estate together with the joint venture and associated companies was about RMB 145.643 billion, the contracted sales construction area was about 8802600 square meters, and the average contract selling price was about RMB 16500 per square meter.
It is reported that Zhengrong real estate’s sales target in 2021 is 150 billion yuan.
According to public information, Zhengrong group, founded in 1998, is a national comprehensive investment holding group headquartered in Shanghai, China, ranking among the top 50 private enterprises in China. Founder ou Zongrong was born in 1964 in Putian, Fujian Province.
Zhengrong real estate, a subsidiary of the group, was established in July 2015 and listed on the Hong Kong Stock Exchange in 2018. It is a large comprehensive real estate developer in China, focusing on the development of residential properties, as well as the development, operation and management of commercial and comprehensive properties. Its comprehensive strength ranks among the top 20 of China’s top 100 real estate enterprises. at present, Zhengrong real estate has invested in six economic regions: the Yangtze River Delta, the Bohai Sea, the central, western, Haixi and the Pearl River Delta, involving 36 major cities across the country and about 200 development and operation projects. As of December 31, 2020, land reserve area has reached 28.45 million square meters.
It is worth mentioning that a few days ago, securities companies were particularly optimistic about Zhengrong real estate in the research report. According to the Huaxia times, on February 8, Haitong international also released an industry research report, specially recommended Zhengrong service in the research report, pointing out that it adopted a cautious attitude in related party transactions. The company did not place shares and had healthy cash flow. in addition, Haitong International Research Report maintained Zhengrong service better than the market rating, with a target price of HK $8.09/share. Today, the share price of Zhengrong real estate is only HK $1.23.
