On March 10, Orient Group Incorporation(600811) ( Orient Group Incorporation(600811) . SH) disclosed that the holding subsidiary Guokai Oriental Urban Development Investment Co., Ltd. (hereinafter referred to as “Guokai Oriental”) and Shandong TianShang Real Estate Co., Ltd. (hereinafter referred to as “Shandong Tianshang”) reached a settlement. Previously, due to the litigation matters of both parties, the assets of Orient Group Incorporation(600811) were frozen by more than 5 billion yuan.
The key point of the settlement agreement is that the relevant cooperation agreement signed by both parties in January 2019 will not be fulfilled. Guokai Oriental will return the down payment of RMB 1 billion paid by Shandong Tianshang and pay interest, with the amount of interest exceeding RMB 400 million. The announcement said that the termination of the cooperation agreement still needs to be considered by the general meeting of shareholders, and it is expected that the termination of the cooperation agreement will reduce the net profit of Orient Group Incorporation(600811) 2021 by 35.
On March 11, Orient Group Incorporation(600811) told the reporter of the daily economic news that the litigation cycle of such cases was long. Before that, the company had been frozen many important assets by the judiciary for up to three years. In order to the normal operation and development of the company, it is necessary to eliminate the adverse effects as soon as possible. In addition, Guokai Oriental itself has fallen into a loss, and the company hopes to solve the litigation related problems as soon as possible, so as to further promote the disposal of plot assets, realize the return of funds, and help listed companies “throw off their burden” as soon as possible.
paid 433 million interest to break the deadlock of 3 billion land transfer
Orient Group Incorporation(600811) and Shandong Tianshang’s transaction dates back to three years ago. Due to their different opinions, they were once called “luoshengmen” by the outside world.
In January 2019, Shandong Tianshang, as the designated company of Jinan Gao Shenzhen New Land Tool Planning &Architectural Design Co.Ltd(300778) Construction Development Co., Ltd., signed an agreement with Guokai Oriental. The two sides jointly established a joint venture (agreed that Shandong Tianshang holds 95% and Guokai Oriental holds 5%), respectively by means of equity transfer and construction in progress, The total price before and after the transfer of plot A-3 (hereinafter referred to as plot A01, A03 and A04) held by Orient Group Incorporation(600811) two secondary wholly-owned subsidiaries in Fengtai District, Beijing is about 3.05 billion yuan.
The signed agreement pointed out that since the joint venture company of both parties has not been established, Guokai Oriental obtained Shandong Tianshang 1 billion yuan after signing the agreement. Before the establishment of the target company, 1 billion yuan was used as Shandong Tianshang’s loan to the target joint venture company.
From the follow-up announcement, the cooperation between the two sides reached an impasse shortly after the signing of the agreement, but the disputes between the two sides were not exposed to investors until the end of October 2021. At that time, Orient Group Incorporation(600811) disclosed that Shandong Tianshang sued Guokai Oriental and Orient Group Incorporation(600811) for about 1.3 billion yuan, because the three plots were not transferred according to the contract. While Orient Group Incorporation(600811) held that Shandong Tianshang did not take the lead in setting up a joint venture or provide other assets to replace the collateral of plot A03.
Before filing the lawsuit, Shandong Tianshang had asked for termination Orient Group Incorporation(600811) stated that from the second half of 2019 to September 2021, Shandong Tianshang held consultations with a number of potential partners, but no cooperation was reached. Shandong Tianshang proposed to Guokai Oriental to terminate the cooperation agreement on class a three plots, but Guokai Oriental and Shandong Tianshang failed to reach an agreement on the termination.
On March 2 this year, the second intermediate people’s Court of Beijing Municipality issued the notice of assistance in execution, which imposed judicial freezing and judicial marking on all the non tradable shares of China Minsheng Banking Corp.Ltd(600016) and Jinzhou Port Co.Ltd(600190) held by Orient Group Incorporation(600811) Co., Ltd. and all the non tradable shares of listed companies held by Orient Group Incorporation(600811) Co., Ltd. for a period of three years. Based on the closing price of listed companies on March 11, the reporter of the daily economic news said that the assets frozen by the judiciary in Orient Group Incorporation(600811) terms were as high as 5.242 billion yuan, and the assets marked by the judiciary were as high as 7.694 billion yuan.
In the announcement disclosed on March 3, Orient Group Incorporation(600811) also stated that it would appeal and counterclaim; However, on March 10, Orient Group Incorporation(600811) disclosed that it had reached a settlement agreement with Shandong Tianshang, that is, it terminated the cooperation agreement with Shandong Tianshang plot and returned 1 billion yuan and interest, totaling about 1.433 billion yuan Orient Group Incorporation(600811) said that the reason was to quickly eliminate the adverse impact of the asset freeze on listed companies by comprehensively considering the needs of the company’s production, operation and business development.
real estate business delayed, resulting in annual performance loss
When the cooperation agreement is terminated, the Fengtai plot transaction project involved in the case will return to the origin.
The settlement agreement takes RMB 433 million as the interest of the first installment of RMB 1 billion. The starting date of interest is January 25, 2019, and the comprehensive interest rate is 11.92%. In this regard, Orient Group Incorporation(600811) said that from the perspective of enterprise financing costs in the whole real estate market, this interest rate level is acceptableP align = “center” Image Source: Announcement screenshot
In addition, the termination of this cooperation is expected to have an impact on the profit and loss of the consolidated statements of Orient Group Incorporation(600811) 2021 of about -433 million yuan, of which the impact on the net profit of the company in 2021 is about -356 million yuan.
According to the 2021 annual performance forecast disclosed by Orient Group Incorporation(600811) disclosure, the company expects to realize the net profit attributable to the shareholders of the listed company within the reporting period of – 1.3 billion yuan to – 1.5 billion yuan, of which the main reason for the performance loss is that the real estate business segment expects to realize the net profit of about – 1.7 billion yuan to – 1.9 billion yuan in 2021, affecting the overall profit of the listed company.
Among them, Guokai Dongfang, the protagonist of this case, can be said to have seriously dragged Orient Group Incorporation(600811) back. In addition to the potential adverse effects brought by the case, the land and commercial housing prices around the first and second level land development projects and their equity participation projects of CDB Oriental have declined. It is expected that the passenger flow will decline, the project cycle will be prolonged, and the price of building materials will rise, which will increase the development cost of the second level land development project of CDB Oriental and its equity participation projects.
Orient Group Incorporation(600811) 2021 semi annual report shows that its main business is land and real estate development, with an operating revenue of 254516 million yuan, an operating cost of 25.681 million yuan and a gross profit margin of – 0.90%.
Orient Group Incorporation(600811) told Meijing that the purpose of promoting reconciliation is also to actively dispose of the relevant plot assets of CDB Oriental in the next step. At present, CDB Oriental itself has huge losses, and the relevant plot assets will be disposed of as soon as possible, so as to help listed companies get rid of their burdens and realize capital return.
