Following the explosion of Yango Group Co.Ltd(000671) , Fusheng, Yuzhou, etc., Shimao Group opened the “sell sell sell” mode, and Zhengrong real estate, another 100 billion Fujian real estate enterprise, is in a panic.
On February 14, Zhengrong real estate, which had collapsed 66% last Friday, plunged 15% again. Some investors on a stock bar platform have “dared not look” and lost at least 70%. Zhengrong service, a property company of Zhengrong real estate, also plummeted by 13% after plummeting by 57%. In the morning, Zhengrong real estate issued a Clarification Announcement, saying that the report on the offshore bonds of the company and its controlling shareholder ou Zongrong was “untrue and false”, but it was obvious that the market did not buy it.
This sudden crash is not without signals!
As early as January 6, more than a month ago, Zhengrong real estate issued an announcement of “bank granted credit line”. Under normal circumstances, such non major daily business activities do not need to be disclosed separately. Zhengrong real estate has not disclosed the practice for a long time. It seems to insiders that its sudden announcement of credit granting means a little shouting “fellow villagers don’t run”. The reporter of China fund daily noted that in the five and a half years from 2016 to 2021, Zhengrong real estate has been relying on financing to maintain cash flow, and the net cash flow contributed by operating activities is negative for most of the time.
clarify the difficult decline
In the morning of February 14, Zhengrong real estate announced that the board of directors of the company noticed the decline in the transaction price and increase in the trading volume of the company’s shares and offshore bonds on February 11, 2022, “which may be attributed to several newspapers published on the Internet about the company, its controlling shareholder Mr. ou Zongrong and / or its offshore debt securities”. “The board of Directors hereby clarifies that these newspapers are untrue and false, and the company clearly reserves all rights to investigate the legal liability of the authors, media and all parties responsible for the inaccurate information,” the announcement said.
However, from the stock and debt trend of Zhengrong real estate and its affiliated companies on that day, it is obvious that the clarification has not dispelled the doubts of the market.
On the same day, Zhengrong real estate’s share price fell 15.45% to HK $1.04, plummeted 71.5% in two trading days, and the market value of real estate enterprises with more than 100 billion sales was only HK $4.5 billion. Zhengrong service, a property company, also fell 13% on the 14th, with a decline of 70% in two trading days, with a market value of only HK $1.55 billion.
In the stock bar of a stock platform, it can be said that there is a howl. Some investors lost 50% of their profits by posting to seek comfort from their companions. From the message after the post, those who cut their waist are not the worst. Some lost 60%, some lost 70%, and others lost 75%. Some netizens said, “I dare not look! At least 70%”.
Zhengrong real estate related bonds are also worse than one. For example, when the domestic corporate bond “20 Zhengrong 03” plunged 23% last Friday, it continued to fall 10% on the 14th, and the price of 100 yuan face value bonds fell from around 80 yuan to 54 yuan in two trading days, with a cumulative decline of 32%. At present, there are 11 domestic stock bonds of Zhengrong real estate, with a maturity scale of nearly 5 billion yuan.
is the curse of US dollar debt
Zhengrong real estate clarified that the “untrue and false” newspaper mentioned in the announcement refers to a rumor in the afternoon of February 11.
The rumor said that Zhengrong real estate was short of funds and could not redeem the extended US $200 million perpetual bonds as planned, and the company’s overseas bonds would be restructured. On February 10, the day before, Zhengrong dollar bonds began to fall, of which the dollar perpetual bonds fell sharply.
The US dollar perpetual bond was issued in mid June 2019, with a total scale of US $200 million and a coupon of 10.25%. Zhengrong real estate announced on January 4 that it had informed the trustee and securities holders that it would redeem the bonds on March 5, 2022. It is reported that Zhengrong real estate previously said at the investor meeting that due to the high cost after the interest jump of perpetual bonds, the coupon rate will jump from 10.25% to 15%, so it plans to redeem.
At present, most of the overseas US dollar bonds of Zhengrong real estate have fallen into a price range with the violent real estate enterprises such as huaxiangnian and China Olympic Park.
As of the press release, the “zhprhk 8.35 03 / 10 / 24” due in March 2024 has been reported at US $19.591, the “zhprhk 7 04 / 14 / 24” due in April 2024 has been reported at US $18.401, and the “zhprhk 5.98 04 / 13 / 22” due in April this year has been reported at US $24.533.
both sales and prices fell
rare announcement credit line
On the one hand, for real estate financing and real estate sales, it is not for real estate financing, but for real estate sales; On the other hand, there was no big move in financing. At the beginning of the year, a bank credit of less than 10 billion was rarely announced separately.
From the perspective of sales in recent months, the contract sales of Zhengrong in November 2021 (the group and the joint venture, the same below) was 9.926 billion yuan, down 34% from 15.039 billion yuan in the same period in 2020. In December 2021, its contract sales recorded 10.011 billion yuan, down 41% from 17.089 billion yuan in the same period in 2020, and the unit price also fell from 17400 yuan per square meter to 16800 yuan. In 2021, Zhengrong recorded contract sales of 145.6 billion yuan, only 97% of the annual target.
In 2022, the sales were even worse. The contract sales amount in January was only 7.8 billion yuan, down 30% year-on-year and 55% month on month; The sales unit price was 16100 yuan per square meter, compared with 17300 yuan in the same period last year.
At the beginning of 2022, Zhengrong real estate made a rare announcement on the new bank credit line alone. The announcement showed that at that time, it obtained a credit line of 9.14 billion yuan from Bank Of China Limited(601988) . The company’s cumulative credit was 25.49 billion yuan, of which 24 billion yuan came from the four major state-owned banks.
Why is it rare?
The reporter of China fund daily inquired that Zhengrong real estate has never made a separate announcement of non major daily business activities such as credit in four years since the listing of Hong Kong stocks in January 2018. Looking at the whole Hong Kong stock market, few enterprises (including real estate enterprises) have done so in recent years.
A senior bank loan review manager in Beijing told the fund newspaper that the bank’s credit to enterprises is generally an intentional agreement. “It can be understood that the bank formally persuades itself that it can lend the money. As for the review when it’s really time to borrow, whether the amount can be raised is another problem”.
In addition, the credit banks to real estate enterprises generally package the mortgage loans to home buyers, “if it is in the first tier cities with high house prices, several buildings may account for billions of lines”. In his opinion, Zhengrong real estate’s separate announcement of the credit line is a little shouting “fellow villagers don’t run”.
According to the financial report of another period in the past five years, Zhengrong real estate has been maintaining cash flow operation by financing. From 2016 to the middle of 2021, the net cash flow generated by its financing activities was 13.5 billion yuan, 6.34 billion yuan, 14.1 billion yuan, 21.9 billion yuan, 12.4 billion yuan and 1.463 billion yuan respectively. On the contrary, the net cash flow from the company’s operating activities was negative from 2016 to 2020, recording – 1.66 billion, – 4.24 billion, – 2.66 billion, – 14.064 billion and – 3.02 billion yuan respectively. It just turned positive in the middle of 2021, only 1.594 billion yuan.
