In the face of the “double killing of shares and bonds” for many days and market rumors that the company needs to extend its bonds, Longguang holdings announced on March 7 that it is currently facing a certain short-term liquidity problem.
Longguang Holdings said that since mid January 2022, affected by the overall changes of the industry and emergencies such as the downgrade of Longguang group by overseas rating agencies, the lending of banks and other financial institutions has stagnated, the company’s cash resources are limited, and the company has a certain debt repayment pressure in the short term due to the peak repayment period. However, Longguang holdings stressed that as of the date of this announcement, the company’s production and operation activities had been carried out in an orderly manner. The company has always focused on the real estate development business focusing on residential development. It has not carried out diversified layout, issued any private financing products, or external commercial ticket financing.
Recently, “19 longkong 04”, “20 longkong 01”, “21 longkong 01”, as well as the shares and overseas bonds issued by Longguang Group Co., Ltd. (hereinafter referred to as “Longguang group”, code 03380. HK), the indirect controlling shareholder of the company, have experienced abnormal fluctuations, mainly due to the continuous and in-depth adjustment of the real estate industry as a whole, Longguang group, the indirect controlling shareholder of the company, was downgraded to BB -, ba3 and BB – respectively by Fitch, Moody’s and standard & Poor’s, which led to the obvious deviation of the transaction price in the secondary market from the reasonable value. The company has conducted self-examination on the above situation. As of the date of this announcement, the company has actively raised funds to deal with short-term liquidity pressure, and its business activities are normal.
In this announcement, Longguang holdings responded to the previous market rumors about the company’s large-scale layoffs and management changes, saying that as of the date of this announcement, the online news about the company’s large-scale layoffs and management changes had no factual basis. Since the second half of 2021, the land for bidding, auction and listing in the real estate market has decreased, and the company’s organizational structure has been streamlined and adjusted to a certain extent, but the core management has remained stable.
In addition, for the “guarantee of US dollar bonds” concerned by the market, the issuer is not involved in the guarantee of US dollar bonds. The specific situation and amount of guarantee of Longguang group shall be subject to the audited periodic report of Longguang group. The online transmission of “Ping An Trust Matters” is a collateral financing applied by the company’s subsidiary to Ping An Trust. At present, the financing balance is 1.18 billion yuan. The company has maintained friendly communication with Ping An Trust, and both parties are still promoting it in accordance with the relevant terms of the contract and the agreement of both parties.
In addition, in March 2022, the maturity scale of Longguang holding’s maturing and resale bonds, or asset securitization products as the difference replenisher, totaled 5.299 billion yuan. Up to now, the company has cashed 1.133 billion yuan through its own funds. For subsequent bond cashing, the company will actively raise funds through various ways.
In terms of debt repayment, Longguang Holdings said it would take the following measures to actively raise funds and fulfill its debt repayment obligations. Including speeding up the collection of sales. At present, the company has obtained 65 billion yuan of evidence projects, and the sales value of evidence will be about 200 billion yuan in the future, so as to speed up the de commercialization of sales. Reduce operating expenses. On the premise of focusing on ensuring delivery, the quantity of projects under construction is reduced from 26 million square meters to 17 million square meters, so as to save engineering expenses. In addition, the company is carrying out asset revitalization to increase the source of funds.
Longguang Holdings said that since January 2022, the company has actively connected with state-owned enterprises and financial institutions and has carried out asset revitalization and disposal. At present, the company has sorted out three types of projects: separate issuance of assets, urban renewal and property held. The company will accelerate the progress of asset revitalization, strive to make substantive progress in the first half of 2022, recover funds and improve liquidity.
In addition, the company will actively communicate with regulators and financial institutions, revitalize the funds of pre-sale regulators, and speed up the approval and lending of development loans and mortgage loans.
In terms of sales, the unaudited equity contract sales amount of Longguang holdings in the first two months of 2022 was about 137 billion yuan, a year-on-year increase of 18%. Among them, Guangdong, Hong Kong and Macao Dawan area accounts for about 55%, the Yangtze River Delta area accounts for about 15%, the southwest area accounts for about 15%, and the Chaoshan area accounts for about 15%. The sales area of equity contract is about 7.91 million square meters. The overall collection rate of the company in 2021 is about 80%. By the end of 2021, the company had a total of about 120 real estate development projects, and the land reserves were mainly located in the core cities of Guangdong, Hong Kong, Macao, Dawan District, the Yangtze River Delta and other regions. Longguang Holdings said in the announcement that 85% of the company’s soil reserves are distributed in core cities such as Dawan district and the Yangtze River Delta, with rich and high-quality land reserve resources. Although the company is faced with liquidity difficulties in stages due to external financial situation, changes in industry sales and centralized maturity, the company is determined and confident to properly solve the liquidity problems faced in the short term.
As of the closing on March 7, Longguang group reported HK $2.2 per share, down 2.22%.
