Core view:
On December 4, Xlinmen Furniture Co.Ltd(603008) transferred 40% of Henan Evergrande’s Xlinmen Furniture Co.Ltd(603008) shares held by Evergrande to offset Evergrande’s commercial ticket of RMB 80 million. After this transfer, Evergrande’s “real estate + home” cooperation model since 2016 has also ended here.
Home furnishing enterprises and Evergrande mainly form a highly related cooperation model through joint venture subsidiaries. The production and operation of the joint venture is mainly in the charge of household enterprises, while Evergrande is responsible for the plant construction and product sales of the industrial park. Most of the household products produced are supporting Evergrande’s hardbound house project. Due to Evergrande’s liquidity crisis, it owes a huge amount of receivables, and the cooperation between household enterprises and Evergrande has come to an end.
Evergrande pays its debts with shares, which has both disadvantages and advantages for household enterprises. However, on the whole, Evergrande has a great impact on the performance of cooperative household enterprises. On the one hand, it is due to Evergrande’s large-scale receivables, on the other hand, it is difficult to fill the reduced orders after the termination of the cooperative relationship with Evergrande.
Although the current risk events of individual real estate enterprises may change the bulk development trend of some household enterprises, most enterprises in the household industry will also develop bulk businesses. However, the cooperative relationship between home enterprises and real estate enterprises will change. Home enterprises will prefer excellent real estate enterprises with the background of state-owned and central enterprises. At the same time, it will reduce customer concentration, strengthen order collection, reduce the generation of accounts receivable, and have a more equal relationship with real estate enterprises.
