The report card of “final annual examination” will be announced soon. According to the “estimated score” currently released, the probability of loss of A-share real estate sector will set a record in 2021.
According to the data, as of February 14, according to the classification of Shenyin Wanguo real estate industry, 62 of the 126 listed companies in the A-share real estate sector had issued performance forecasts for 2021, of which more than 60% of the net profits had declined, and 11 of the 28 pre loss enterprises had a loss of more than 1 billion yuan.
“In order to speed up the sales collection, multiple factors such as price reduction and sale, provision for asset impairment, rising financial costs and blocked delivery projects and failure to carry forward as planned are important reasons for the decline of profits and even losses of real estate related companies.” Song Yanqing, President of Rand consulting, told the Securities Daily that there is still uncertainty about the recovery of the sales market in the second half of the year, and it will take longer for the profitability of real estate enterprises to recover.
losses of some real estate enterprises expanded
According to the data, the total loss of the above 28 pre loss real estate related enterprises last year is expected to be 79.1 billion yuan to 95 billion yuan, which is an unimaginable scale of the A-share real estate sector in the past.
The top loss is China Fortune Land Development Co.Ltd(600340) . On January 28, China Fortune Land Development Co.Ltd(600340) announced that it expected a loss of 33.1 billion yuan to 39.1 billion yuan in 2021. The company made a profit of 3.665 billion yuan in the same period of 2020. In this regard, China Fortune Land Development Co.Ltd(600340) said that the company’s liquidity has been tense since the fourth quarter of 2020, the financial debt has not been repaid on schedule, and the financing business has almost stagnated, which has a serious impact on the company’s operation and led to a sharp decline in the company’s performance.
Another real estate enterprise with a loss of more than 10 billion yuan is Sichuan Languang Development Co.Ltd(600466) , which announced that it is expected to realize a net profit attributable to shareholders of listed companies of -12.037 billion yuan in 2021. The main reason is that the debt is overdue and the capital is tight, which affects the construction progress of the projects planned to be delivered this year to varying degrees.
In addition, some real estate enterprises’ losses are caused by operating losses and the provision for asset impairment. A real estate enterprise in Central China is expected to withdraw an asset impairment provision of 2 billion yuan to 3 billion yuan. At the same time, affected by the overall downturn of the real estate market, with the company’s completion of liquidation, transfer and exit of real estate projects as soon as possible in the process of transformation, impairment has also occurred.
Not only real estate enterprises, but also downstream service listed companies in the real estate industry chain are also facing loss pressure. Shenzhen Worldunion Group Incorporated(002285) announced on January 28 that the company is expected to realize a net profit attributable to the shareholders of the listed company in 2021, with a loss of 850 million yuan to 1.25 billion yuan, and a profit of 110 million yuan in the same period of last year.
Shenzhen Worldunion Group Incorporated(002285) said that during the reporting period, the provision for impairment of some receivables of real estate enterprises had a significant impact on the performance. Among them, the capital turnover of a major customer was difficult, and the commercial acceptance bill was overdue. As of December 31, 2021, Shenzhen Worldunion Group Incorporated(002285) the balance of accounts receivable from the customer was about 1.266 billion yuan, including about 811 million yuan of accounts receivable (including about 311 million yuan of accounts receivable transferred from overdue commercial acceptance bills), about 35 million yuan of other accounts receivable and about 420 million yuan of undue commercial acceptance bills. Although the company has been actively negotiating with it to seek solutions, according to the current actual situation, Shenzhen Worldunion Group Incorporated(002285) has analyzed and evaluated the recoverability of the accounts receivable and believes that there are obvious signs of impairment. At the same time, provision for asset impairment shall be made for other non current financial assets of RMB 100 million held through investment.
In addition, Shenzhen Worldunion Group Incorporated(002285) believes that it will face the risk that accounts receivable, notes receivable and other receivables cannot be recovered in time. Shenzhen Worldunion Group Incorporated(002285) for such receivables with objective evidence indicating that credit impairment has occurred, the total amount is about 222 million yuan. The bad debt provision is withdrawn individually and the expected credit loss is recognized.
According to Guan Rongxue, an analyst at Zhuge real estate data research center, the performance losses of real estate related enterprises in 2021 are mainly due to the following reasons. First, due to the downward pressure of the market in the second half of 2021, real estate sales are lower than expected. At the same time, in order to speed up sales and fund collection, real estate enterprises often reduce prices, resulting in a decline in real estate sales gross profit, The net realizable value is lower than the cost, resulting in a loss; Second, due to the overdue debt and the shortage of funds, the project delivery process is blocked, and the project can not be delivered and decommissioned on time, which will affect the income of the real estate business; Third, the increase of financial costs of some enterprises has also increased the range of losses to a certain extent; Fourth, withdraw the corresponding inventory falling price reserves based on the principle of prudence.
multiple pressures
It is not difficult to see that the reasons for the expansion of losses are diversified, but the current situation of cold sales market, financing difficulties and tight capital chain has not been completely improved. Under multiple pressures, the A-share real estate sector still faces many difficulties.
“In the second half of 2021, the market was depressed and the real estate enterprises entered the winter.” Zhang Dawei, chief analyst of Centaline real estate, told the Securities Daily that especially for real estate enterprises whose investment layout is concentrated in the third and fourth tier cities, the price reduction has a significant impact on profits. The large-scale “price for volume” promotion has further expanded the scope of losses, and the market downturn is still continuing.
According to the statistics of China Index Research Institute, in January 2022, the sales of top 100 real estate enterprises decreased by 23.1% year-on-year, including 14 real estate enterprises with sales of more than 10 billion yuan and 31 real estate enterprises with sales of more than 5 billion yuan. In Song Yanqing’s view, the market pattern of high debt maturity of real estate enterprises in 2022, difficult financing, difficult return of sales cash and difficult asset transfer has not changed. Shrinking the balance sheet and clearing it out is still a difficult problem for real estate enterprises to solve this year, and market confidence needs to recover.
In this regard, Liu Shui, research director of the enterprise business department of China Index Research Institute, believes that since the second half of 2021, real estate sales have fallen sharply. Although the policy has improved marginally, the market has not warmed up significantly and is still undergoing in-depth adjustment. Perhaps, after the second quarter of this year, real estate sales will gradually pick up.
As for the next layout of real estate enterprises, Liu Shui further said that different types of real estate enterprises will implement different development strategies this year. For example, strong central enterprises and stable private enterprises will still actively obtain high-quality plots to reserve for subsequent development. Highly leveraged enterprises and enterprises with difficult liquidity will basically stop taking land, save expenses and ensure cash flow. The pressure on real estate enterprises this year will be greater in the first half of the year and will improve in the second half of the year. In the first half of the year, the improvement of market sales and financing was limited, and the pressure on real estate enterprises was still great. In the second half of the year, with the implementation of local policies and the recovery of the market, the pressure on real estate enterprises will significantly improve.
