Stock abbreviation: Myhome Real Estate Development Group Co.Ltd(000667) Stock Code: 000667 Announcement No.: 2022-09
Myhome Real Estate Development Group Co.Ltd(000667)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Myhome Real Estate Development Group Co.Ltd(000667) (hereinafter referred to as ” Myhome Real Estate Development Group Co.Ltd(000667) ” and “the company”) was established in January 2022
On June 29, we received the letter of concern about Myhome Real Estate Development Group Co.Ltd(000667) issued by Shenzhen Stock Exchange (company department concern letter [2022] No. 92) (hereinafter referred to as the “concern letter”). According to the requirements of the letter of concern, the company has checked the following items one by one and explained them in writing as follows:
1、 Your company’s report for the third quarter of 2021 shows that your company’s net profit for the first three quarters was -574 million yuan,
The net profit after deducting non-profit is -563 million yuan. The annual performance forecast in 2021 shows that the company’s loss has increased significantly. In addition, your company’s net profit after deducting non profits has been negative for two consecutive years. Please your company: (1) explain the reason and rationality of the large loss in the fourth quarter of 2021; (2) In combination with the actual operation of your company’s various businesses, the proportion of income and net profit, industry development trend, etc., explain whether there is significant uncertainty in your company’s sustainable operation ability.
Company Description:
(1) Reasons and rationality of large losses in the fourth quarter of 2021
The main financial indicators of the company by quarter in 2021 are as follows:
Unit: 100 million yuan
Total of the project in the first quarter, the second quarter, the third quarter and the fourth quarter
The operating income is 290.46 billion yuan, 1.18 billion yuan to 2.2 billion yuan, 2.8 billion yuan to 4.1 billion yuan
Asset impairment loss — 2 billion yuan to 3 billion yuan, 2 billion yuan to 3 billion yuan
Net profit attributable to listed companies ranging from – 130 – 180 – 260 – 1.9 billion yuan to – 3 billion yuan – 2.5 billion yuan to – 3.6 billion yuan
Total of the project in the first quarter, the second quarter, the third quarter and the fourth quarter
Net profit attributable to listed companies from -130-2-240-1.7 billion yuan to -2.7 billion yuan -2.24 billion yuan to -3.24 billion yuan after deduction
Large losses occurred in the fourth quarter, mainly due to operating losses and the provision for asset impairment. After deducting the impairment loss of assets, the net profit in the fourth quarter was – 30 million to – 200 million yuan, mainly due to the operating losses caused by the prefabricated construction business that has not reached the corresponding business scale, as well as the liquidated damages expenses caused by the delayed delivery and payment of real estate projects.
The company conducts asset impairment assessment every year, calculates the impairment of various assets and accrues asset impairment
prepare During the reporting period, the company expects to make provision for asset impairment of 2 billion yuan to 3 billion yuan, mainly due to 2021
Since, due to the promotion of national environmental protection policies, the held Huizhou Luofushan project has been unable to carry out subsequent development and construction according to the expected planning, resulting in impairment. Meanwhile, affected by the overall downturn of the real estate market since 2021, with the company’s transformation process, the real estate projects have been liquidated, transferred and withdrawn as soon as possible, resulting in impairment. Please refer to the reply to question 3 for details of major impairment items.
(2) In combination with the actual operation of various businesses, the proportion of income and net profit and the development trend of the industry, explain whether there is significant uncertainty in the ability of sustainable operation.
(I) operation of various businesses
The company is mainly engaged in real estate development and prefabricated construction business. During the reporting period, the company’s operating income was 2.8 billion yuan – 4.1 billion yuan, of which the income from real estate development accounted for 77% and the income from prefabricated construction business accounted for 19%; During the reporting period, the company’s net profit was a loss of 2.5-3.6 billion yuan, of which the loss of real estate development accounted for 82% and the loss of prefabricated construction business accounted for 17%.
1. Real estate business: in the market where the sales plan achievement rate of small and medium-sized real estate enterprises in the whole industry is less than 70% in 2021
In this context, the annual contract signing target of the company is 6 billion yuan, and the actual contract signing is 4.5 billion yuan, with an achievement rate of 75%. Affected real estate
Due to the impact of the project development cycle, the settlement area and settlement income of real estate projects were less during the reporting period, and the gross profit of real estate business in this period was 370 million. However, due to the impact of strategic transformation and market downturn, the real estate business is expected to lose about 2 billion yuan to 2.5 billion yuan after the provision of asset impairment losses for real estate projects.
2. Prefabricated construction business: prefabricated construction business refers to EPC business
Procurement construction provides customers with a series of services such as planning and design, PC special design, prefabricated building construction, production and installation of PC components and parts, prefabricated decoration construction, bag occupancy and delivery) and PC
Business (precast concrete, precast concrete component sales business).
In 2021, the company actually signed 800 million yuan for EPC business and 500 million yuan for PC business. Through the acquired projects, continuously improve the construction technology, strengthen the construction organization ability and increase the investment in product R & D, so as to lay a solid foundation for obtaining the general contracting business in the future. During the reporting period, the prefabricated construction business achieved a total operating income of 1.2 billion yuan. However, due to the small business scale and high expenses such as early depreciation and amortization and capital cost, the loss in the reporting period was about 800 million yuan to 1.1 billion yuan, affecting the net profit attributable to the listed company of about 400 million yuan to 650 million yuan.
(II) industry development trend
After the strategic transformation and upgrading, the company gradually withdrew from the traditional real estate business and realized the comprehensive transformation to the intelligent house manufacturing business. The overall development prospect of the intelligent house manufacturing business is good.
According to the statistics released by the Ministry of housing and urban rural development, the area of newly built prefabricated buildings in China showed a rapid growth trend from 2012 to 2020. In 2020, the area of newly started prefabricated buildings in China reached 630 million square meters, and the scale of prefabricated buildings continued to expand in 2021. All localities have successively issued the “14th five year plan” for the construction industry. By 2025, the proportion of prefabricated buildings in most provinces and cities is required to reach more than 30%, some provinces and cities are required to reach 50%, and Tianjin and Shanghai are required to implement 100% of prefabricated buildings.
Assembly policy support: provincial and municipal governments at all levels further issued preferential policies to support the development of prefabricated buildings, and further strengthened their support in improving the proportion of prefabricated area, improving the assembly rate, implementing the incentives for the plot ratio of prefabricated buildings, and optimizing the pre-sale conditions.
The key areas of the company’s business, including Wuhan, Tianjin, Changsha, Chengdu, Chongqing and other places, are actively promoted or have made it clear that the construction area of the prefabricated part of the exterior wall (no more than 3% of the total planned construction area) of the project built with prefabricated construction technology can not be included in the calculation of the plot ratio of the traded plot when handling the planning approval; When handling the pre-sale permit of commercial housing, it is allowed to include the investment of prefabricated components into the total investment of project construction and include it into the measurement of construction progress; The supervision proportion of project pre-sale funds can be appropriately relaxed.
Better financial policies: in 2021, the central government, provinces and cities continued to issue regulations on the promotion of green finance, bringing the coordinated development of green buildings and green finance into the local legislative system, stimulating the development vitality of green buildings and promoting the large-scale development of high-quality green buildings. The company is expected to enjoy the support of relevant green credit policies by transforming to an intelligent manufacturing enterprise of prefabricated buildings.
(III) there is no major uncertainty about the company’s ability to continue as a going concern
The management of the company has carefully considered the operation status and capital status of the company after the balance sheet date to assess whether the company has sufficient capital sources to ensure that the company can pay off its due debts and continue to operate within 12 months after December 31, 2021. After assessment, there is no major uncertainty about the company’s ability to continue as a going concern.
1. Operating conditions
See the above description for the business operation and industry trend of the company. Under the current policy and market situation, prefabricated construction has become the general trend, and the market scale of prefabricated construction will be further expanded. At the same time, the government led urban renewal, affordable housing and rental housing market still has broad space. In 2022, the company will continue to transform from traditional real estate business to intelligent housing manufacturing business with prefabricated buildings as the core. Provide central (state-owned) enterprises, government platforms, large and medium-sized real estate developers and other units with full-cycle services such as investment consultation, operation management, marketing management, EPC and property management based on assembly projects; Planning and design, PC special design, prefabricated building construction, production and installation of PC components and parts, prefabricated decoration construction, bag check-in delivery and other services; And provide the production and sales of precast concrete components for various fabricated projects.
2. Fund status
By the end of 2021, the company’s book monetary capital balance was about 1.4 billion, and there were still 560 million mortgage loan receivables for the sold real estate projects. As the bank has not yet approved the loan, it is expected to gradually recover the corresponding amount in the first quarter and later stage of 2022.
In 2022, according to the company’s strategic transformation deployment, the real estate business will quickly de convert the remaining real estate stock projects through a variety of marketing measures to accelerate the comprehensive liquidation and payment collection of the projects; In terms of prefabricated construction business, in 2022, through the strategy of grasping nodes and ensuring delivery, the company actively organized the construction of each project according to the progress required by Party A, kept an eye on the contract nodes and handled settlement in time; PC component business obtains sales orders through active market strategy, speeds up the transformation and supply of signed orders, increases supply, and timely handles supply settlement and collection with customers.
At the end of 2021, the balance of interest bearing liabilities of the company to financial institutions decreased by 47% compared with the end of the previous year. Real estate project loans are managed in a closed manner in accordance with the principle of “special account management, fund review, progress monitoring and proportional recovery”, with the sales return of the corresponding underlying project as the repayment source, and the loan is repaid in proportion according to the sales return; According to the repayment time node, the loan of smart manufacturing plant construction project will communicate with relevant financial institutions in advance, and take measures including but not limited to loan replacement, negotiation and extension to properly solve the pressure of financing repayment.
The company’s real estate projects are developed in batches, sold in batches and continuously invested in a rolling cycle until the project is completely completed. At present, most of the projects under development and about to be sold belong to national standard A-class prefabricated buildings. The pre-sale nodes are significantly ahead of traditional buildings, and the capital pressure is relatively small. In 2022, the company plans to deliver about 800000 m3 of projects, of which 210000 m3 has obtained the completion Filing Certificate as of the date of this report. Under the agent development business (SEPC) mode, the company will no longer need large land acquisition expenditure, only need to invest a low proportion of project working capital, and there is no pressure of large capital expenditure.
EPC business controls the balance of funds from the contract signing stage, and matches the payment terms with professional subcontractors and material purchasers according to the collection terms with the project employer. At the same time, during the actual execution of the contract, the company allocates funds according to the principle of “fixed expenditure based on revenue”, and makes external payment only after receiving the project payment paid by the project employer, so as to ensure the balance of revenue and expenditure of EPC project funds.
By the end of 2021, all the 9 PC factories invested by the company in the early stage had been successfully put into operation or trial production, and the peak of factory construction capital investment has ended. After the factory is put into operation, it will accept external orders. According to the collection node commonly used in PC sales contract, it will charge 10% – 20% advance payment after signing the general order. After starting to deliver components, it can charge 60% – 70% progress payment of last month’s delivery every month, and 10-20% settlement payment after supply. According to the above collection node, it can realize the operational capital balance of PC factory and have a slight surplus.
In 2022, the company strengthened the management and allocation of investment cash flow of various investors, and closely monitored the capital situation of the group from the two dimensions of collection and payment. Each business segment has formulated the business plan according to the strategic objectives, and prepared the corresponding business budget and cash flow budget to facilitate the overall planning and overall planning of funds. At the same time, the company has also established a monthly capital rolling plan system. Each business segment formulates the payment collection task every month and evaluates the completion on a monthly basis. At the end of each month, each business segment and city company will count the fund payment plan and report it to the group’s financial and capital department for the record, so as to ensure the timely payment of all rigid payments and ensure the smooth delivery of all projects.
To sum up, the company will rely on the rapid centralized and prefabricated intelligent manufacturing business of real estate projects under construction and sale, and reasonably plan the investment and development rhythm and capital arrangement of each project on the premise of ensuring the loan repayment, project payment and various daily expenses of financial institutions, so as to ensure the safety and stability of the company’s liquidity and ensure the long-term sustainable development of the company. There is no major uncertainty about the company’s sustainable operation ability.
[accountant’s verification opinion]:
Our audit of the financial statements of Myhome Real Estate Development Group Co.Ltd(000667) 2021 is still in progress, and the final audit opinion has not been formed. The verification is described as follows:
1. Our verification procedures
(1) Understand the reasons for the large loss in the fourth quarter of 2021 from the management and preliminarily evaluate its rationality;
(2) Analyze the composition of the loss in the fourth quarter, the rationality of the gross profit margin of each business segment and the change of expenses during the period, and understand the reasons for the impairment of large assets, the impairment test method and basis, as well as the basis and calculation method for the provision of liquidated damages;
(3) Understand the management’s evaluation process and response measures for the company’s sustainable operation ability, including the procedures followed by the management for evaluation, the assumptions based on and the future response plan.
2. Verification opinions
After verification, the company incurred a large loss in the fourth quarter of 2021, which was affected by the assembly business, large impairment of assets, payment of liquidated damages, etc
