Jiayuan is another platform of Jiayuan Chuangsheng, and the acquisition of “snake swallowing elephant” is also not progressing smoothly.
After delaying the payment of the transaction funds for the acquisition of Zhongtian Chengtou, Jiayuan international, a listed platform of Jiayuan, also began to sell assets for blood.
Recently, Cushman & Wakefield has commissioned DTZ to sell the whole property of Hongkong Xinling 1 and the top 4 storey of Xinli 3, with an intention price of HK $1 billion 100 million.
The above property was purchased by Jiayuan international from Deng Chengbo, the “shop king” in Hong Kong. At that time, relevant persons of Jiayuan International said in an interview that the company would continue to expand in Hong Kong, look for properties or participate in project bidding.
However, less than four years later, Jiayuan international began to retreat. Dead Leung Ban said Jiayuan international will launch its own investment projects, and is committed to selling the proceeds to a more familiar market.
At the same time, the acquisition of 100% equity of Zhongtian urban investment ( Zhongtian Financial Group Company Limited(000540) real estate platform) by Jiayuan Chuangsheng, a subsidiary of Jiayuan, did not go well. On February 7, Zhongtian Financial Group Company Limited(000540) announced that it had not received the equity transfer price of the second phase and one-third of the third phase as agreed.
Sale of properties in Hong Kong
In May 2018, Jiayuan international entered Hong Kong “curvilinearly” through the purchase of ready-made properties. The shopping businesses are the two industrial buildings at No. 1 and No. 3, Xinheli, Tuen Mun, Jingjun property at No. 2, Tsing Mian path, Tuen Mun, and the success center in Kwai Chung, 26-38 TA Zhuan Bang Street, Kwai Chung, new territories. The purchase prices are about HK $1753 million, HK $272 million and HK $596 million respectively.
Industrial buildings are industrial buildings. Since 2009, the Hong Kong government has launched the policy of “activating industrial buildings” to promote the transformation of buildings over 15 years old into residential or office buildings, hotels and other commercial facilities. Xinheli No. 1 and No. 3 properties have been “activated” and transformed into office buildings and commercial buildings respectively. Jingjun property is built as residential property and supporting shopping plaza, club facilities, etc.
On July 14, 2019, the Tuen Mun Jingjun project was opened for the first time, with a total of 344 houses launched and 337 signed on the same day. In the subscription stage, the project received 12000 intention registrations, with an oversubscription of about 34 times, making it the king record of single new ticket. Shen Tianqing, chairman of Jiayuan international, said at the interim performance meeting held in August 2019: “the market in Hong Kong is still very potential.”
However, Shen Tianqing also said that she is not familiar with the Hong Kong market and is more inclined to cooperate with local developers to jointly develop projects. However, after the harvest of the above three projects, Jiayuan international has made few moves in Hong Kong. According to its 2021 interim report, the current land reserve in Hong Kong is only 26582 square meters.
The new Heli No. 1 sold this time has 10 floors, with an approved construction area of about 81500 square feet and an intended price of about HK $780 million, equivalent to HK $9570 per foot. There are 15 units on each floor of the top four floors of Xinheli 3, with a total of about 9500 square feet. The intended price of each floor is about HK $88.35 million and the intended price of the four floors is about HK $350 million.
A Hong Kong industry believes that the price of Jiayuan international is too expensive this time. “These properties in Tuen Mun District are of high quality and convenient transportation, but the intended sale price is high, which is close to the recent transaction price of Kwun Tong living chemical building. However, Kwun Tong has high potential, and the second-hand transaction price in Tuen Mun is about HK $7000.”
High pressure on maturing debt
Since last year, real estate enterprises have encountered capital problems one after another. There are many examples of mainland real estate enterprises that have recently sold properties in Hong Kong, including Evergrande, Shimao, Aoyuan and jiazhaoye. The most recent example is Yuzhou group, which sold the reconstruction project of Taijie factory building, 17 Xuri street, Kowloon, Hong Kong on February 22.
In the case of downward sales and no new financing, Jiayuan international is also facing considerable financial pressure. According to the long-term financial data, Jiayuan international currently has 8 existing US dollar bonds with an outstanding scale of about US $1.54 billion, of which 7 have a coupon rate of more than 10%, the highest one has a coupon rate of 13.75%, and the average coupon rate is close to 12%, which is far higher than the industry average. This year, Jiayuan international has three US dollar bonds due, with a total amount of US $436 million. Among them, the two imminent transactions will expire on March 11 and may 2, with the amount of US $133 million and US $103 million respectively.
The 2021 interim report disclosed that by the end of June 2021, Jiayuan international had 10.511 billion yuan of cash and cash equivalents and 22.882 billion yuan of interest bearing debt, including 8.128 billion yuan of short-term debt due within one year and 14.754 billion yuan of long-term interest bearing debt.
Weak sales and obvious decline in performance growth may make debt a heavy burden for Jiayuan international. The monthly sales briefing shows that from October last year to January this year, except for the year-on-year flat in November, its sales fell by 26%, 30% and 33% year-on-year respectively in October, December and January this year. Previously, a senior real estate enterprise pointed out that “the sales in February is expected to be worse than that in January.” The financing end and the sales end have been blocked one after another, and most real estate enterprises have to choose to sell the project to recover their blood.
It is worth mentioning that three years ago, Jiayuan international suffered a stock price plunge due to the debt default storm. On the afternoon of January 17, 2019, due to the rumor that two senior notes totaling US $350 million could not be repaid on the maturity date, Jiayuan International’s share price fell 89% to HK $1.40 to HK $2.52, down 80.62% from HK $13 the previous day, and the company’s market value shrank from more than HK $30 billion to more than HK $6 billion. Subsequently, Jiayuan international responded that the stock price diving was a short selling organization that used public opinion to release false news, but its stock price was difficult to repair and had been floating up and down at HK $3.
At present, quick cash back and avoiding default are important reasons for Jiayuan International’s sale. The above-mentioned Hong Kong insiders also told times finance that recently, mainland real estate enterprises have relatively large intention to sell properties, which may have relatively large financial pressure. The land they hold is generally of high quality. If they are willing to reduce the price, they will have the opportunity to sell it. After all, many funds in Hong Kong want to receive high-quality properties.
Jiayuan’s acquisition of 8.9 billion yuan has caused waves
At the same time, Jiayuan Chuangsheng, another platform of Jiayuan, has also made bad progress in the acquisition of “snake swallowing elephant”.
On August 30, 2021, Zhongtian Financial Group Company Limited(000540) signed an equity transfer framework agreement with Jiayuan Chuangsheng, planning to transfer 100% of the equity of its real estate platform Zhongtian Urban Investment Group Co., Ltd. to Jiayuan Chuangsheng at a transfer price of 18 billion yuan. On December 2, Zhongtian Financial Group Company Limited(000540) announced that the equity transfer price was finally adjusted to 8.9 billion yuan, half of the previous transfer price.
However, on January 5 this year, Zhongtian Financial Group Company Limited(000540) announced that it had received a deposit of 1.58 billion yuan from the transferee, but had not received the second phase equity transfer price of 2.959 billion yuan that the transferee should pay according to the agreement. On February 7, Zhongtian Financial Group Company Limited(000540) issued another announcement that it had not received the equity transfer price of the second phase and one-third of the third phase. After sending a reminder letter to Jiayuan Chuangsheng on January 19, the latter proposed a payment plan on January 29, and the corresponding payment time was postponed to March 28 and June 28, 2022.
Jiayuan Chuangsheng is another real estate platform of Jiayuan department. The actual controller is Shen Tianqing, who holds 98.83% equity of Jiayuan Chuangsheng. In July 2020, Jiayuan Chuangsheng will transfer its equity of five-star electric appliance. After the transfer, its core business is only real estate business, and the land reserves are mainly concentrated in first and second tier cities such as Hangzhou, Jiaxing, Qingdao and Chongqing.
According to the data, in 2019, 2020 and the first half of 2021, Jiayuan Chuangsheng’s operating revenue was 25.81 billion yuan, 25.87 billion yuan and 8.49 billion yuan respectively, and the net profit attributable to the owner of the parent company was 1.87 billion yuan, 1.47 billion yuan and 390 million yuan, showing a downward trend year by year. In addition, with the gradual expansion of funds occupied by real estate development business, Jiayuan Chuangsheng’s net cash flow from operating activities has also been decreasing in recent two years, which may face the risk of fluctuations in cash flow from operating activities in stages.
According to the semi annual report of Jiayuan Chuangsheng corporate bonds, from June to September 2022, Jiayuan Chuangsheng had four corporate bonds due, with an amount of about 2 billion yuan.
The industry continues to be in a downward trend. Some people in the industry believe that there are still variables whether the transaction between Jiayuan and Zhongtian can continue to be completed. “This transaction amount is not small for the volume of Jiayuan. In addition, the overall environment of the industry is not optimistic. It is difficult to say whether the fair will continue.”
