A historic moment has quietly arrived in the real estate industry at a time when highly leveraged real estate enterprises are like dominoes.
On March 11, 2022, the V-shape of A-share reversed, with Poly Developments And Holdings Group Co.Ltd(600048) rising from 2.6% to 0.43%, the market value fixed at 194.3 billion, China Vanke Co.Ltd(000002) rising from 3.88% to 0.72%, the market value finally recorded 193.6 billion, and poly surpassed Vanke 700 million to become the first brother in the market value of A-share real estate enterprises, creating a 17 year history of falling in love with each other in A-share since the listing of the two companies.
The biggest difference between the market values of the two companies was on August 16, 2016, after Baoneng attacked Vanke in 2016. At that time, the market value of Vanke was 257.8 billion, while poly was only 87.5 billion, and Vanke was 2.95 times that of poly. In less than six years, the world has changed! In fact, the changes mainly occurred in the past year, to be exact, the past seven months: Vanke's share price has fallen 48% since March last year, while poly's share price has risen 75% since August last year.
Behind this rise and fall is the comprehensive strategic division between the two companies in the past few years. One proposed to "return to the top three in the industry" in 2017 and the other shouted "live" in 2018, which led to quantitative to qualitative changes in sales, land storage, financing and management. In 2022, one company proposed to "enter three for one" in the future, while the other called out "the black iron era". In this era of profound changes, who can laugh last?
multiple indicators comprehensively exceeded
Vanke is listed in Shenzhen and Hong Kong at the same time. If the market values of A-Shares and H shares are calculated separately and summed up, in fact, the market value of Poly Developments And Holdings Group Co.Ltd(600048) exceeds Vanke by more, reaching 7.9 billion yuan.
Why did such drastic changes take place in just over half a year?
What determines a company's share price or market value is not only the absolute volume of scale or performance, but also growth. Before the market value of poly surpassed Vanke this time, it actually surpassed Vanke in terms of performance growth, sales, land storage, financing and other indicators.
On January 10, Poly Developments And Holdings Group Co.Ltd(600048) released a performance express. In 2021, it is expected to achieve an operating revenue of 285048 billion yuan, an increase of 17.2% year-on-year, and a net profit attributable to shareholders of listed companies of 27.577 billion yuan, a decrease of 4.74% year-on-year. Up to now, Vanke has not released the performance forecast or express report for 2021. From the third quarterly report, the operating revenue is 271.5 billion yuan, a year-on-year increase of 12.42%, and the net profit is 16.69 billion yuan, a year-on-year decrease of 15.98%.
In terms of sales, poly achieved a contracted area of 333302 million square meters in 2021, a year-on-year decrease of 2.23%; The contracted amount reached 534929 billion yuan, an increase of 6.38% year-on-year. Vanke achieved a contracted sales area of 38.078 million square meters in 2021, a year-on-year decrease of double digits to 14.3%, and the contracted sales amount was 627.78 billion yuan, a year-on-year decrease of 10.85%.
In 2022, the industry ushered in a dark moment amid the sound of "thunder". From January to February, poly realized a contract amount of 52.28 billion yuan, a year-on-year decrease of 30.4%, slightly better than the average decline of 34% of the top 100 real estate enterprises. Vanke achieved sales of 64.97 billion yuan in the first two months of this year, down 44.3% from 116.63 billion yuan in the same period last year.
In terms of land storage, according to Kerui data, by the end of 2020, the total land storage value of poly exceeded Vanke, reaching 2.52 trillion yuan, including 1.58 trillion yuan of equity land storage, ranking second and third in the industry respectively. Vanke's above two data are 1.88 trillion and 1.14 trillion respectively, ranking fifth and seventh in the industry.
In 2021, with the decline of private real estate enterprises, both companies maintained a good rhythm of taking land against the trend, but poly still exceeded it slightly. Poly added 399.5 billion yuan of local storage value in 2021, while Vanke added 394 billion yuan, ranking second and third in the industry respectively, which also means that the gap between the total local storage value of poly and Vanke continues to widen slightly by the end of 2021.
In terms of financing amount, since the detailed annual report of 2021 has not been disclosed, we can only get a glimpse of the leopard from the open market, and poly is still in the lead. According to incomplete statistics by the reporter of China Fund News, poly issued 14 new corporate bonds, medium-term notes and ABS in 2021, with a total amount of 20.43 billion yuan; Vanke issued 15 new projects, with a total financing amount of 16.9 billion yuan.
In terms of financing cost, Poly Real Estate backed by China Poly Group, a central enterprise, also has a slight advantage over Vanke backed by Shenzhen Metro, a local state-owned enterprise. According to the data of the 2021 semi annual report, the average financing cost of poly is 3.62%, down 1.15 percentage points from 4.77% of last year, only 2 basis points lower than that of CNOOC real estate; Vanke's average financing cost was 4.27%, also down 1.86 percentage points from last year, ranking sixth in the industry.
poly: from "returning to the top three" to "entering three for one"
If sales, land storage and financing are only tactical issues, the underlying driving force behind them is strategy, which comes from the judgment of the future trend of China's real estate industry.
At the end of 2017, song Guangju, then chairman of Poly Real estate, put forward the goal of "returning to the top three".
Before the rise of country garden, Evergrande and rongchuang in recent ten years, poly, together with China Merchants, Vanke and Jindi, was called "Zhaobao Wanjin", forming the first echelon of China's real estate industry. For many years, Zeng Baoli has been the "top three" in China's commercial housing market for a long time, but it has almost no common growth with the central enterprises in 2013. At the general meeting of shareholders in December 2017, song Guangju made it clear that the company would return to the top three in the industry in the next two to three years. That year, poly was hit and surpassed by dark horse finance, and fell to the fifth place.
Where does poly's confidence come from?
At the shareholders' meeting after the third quarterly report of 2019, the reporter of China fund news had in-depth exchanges with poly's senior management.
On how to view the current situation and future of China's real estate industry, song Guangju said that "if the urbanization rate is increased to more than 80% according to the standards of western developed countries, the real estate market will still be optimistic in the next five to ten years", but "there may be fluctuations in this process and will be disturbed by many factors".
As for the development planning of Poly Real estate, song Guangju said that poly has been taking its own steps and firmly optimistic about the development of the industry. At the same time, it does not rush forward. It still focuses on provincial capital cities and increases strategic investment in developed regions. In addition, many attempts have been made in internal management and operation mechanism. As a state-owned enterprise, it has also done equity incentive and follow-up investment. In terms of talent strategy, young cadres are selected and allocated to the reserve echelon for systematic training, so as to pave the way for the development of talent team in the next decade.
Unfortunately, poly's goal of returning to the top three failed to be achieved during the term of office of this meritorious figure in Poly Developments And Holdings Group Co.Ltd(600048) history.
On July 29, 2021, Poly Developments And Holdings Group Co.Ltd(600048) announced that song Guangju resigned as chairman and director of the company due to her age, and general manager Liu Ping took over the post. Kerry data show that in 2021, poly ranked fourth in the industry regardless of full caliber or equity caliber, including rongchuang, Vanke and country garden in front of equity caliber, and Vanke, Evergrande and country garden in front of equity caliber.
However, with the fall of Evergrande, there is no doubt that poly will return to the top three in 2022, and the new chairman Liu Ping has put forward a new goal: keep the central enterprise first, continue to become the leader in China's real estate industry, and strive for one in three. The reporter of China fund daily learned from insiders of poly that Poly Developments And Holdings Group Co.Ltd(600048) promoted more than ten general managers of post-80s branches at the beginning of 2022, boldly used young cadres, and adjusted the organizational framework accordingly, showing an enterprising side in the cold winter of the industry.
Vanke: from "living" to "black iron era"
Unlike the Poly Developments And Holdings Group Co.Ltd(600048) senior management, who are relatively optimistic and seek progress while maintaining stability, Vanke under the leadership of Yu Liang seems more conservative in recent years.
Strong risk awareness seems to be the tradition of Vanke. As early as 2007, Wang Shi, then chairman of Vanke, threw out the "inflection point theory", which aroused thousands of waves. Since then, there has indeed been a global financial crisis, which has also had an impact on China's real estate industry. But since then, the "four trillion plan" has enabled China's real estate industry to recover overnight and develop at a high speed for five or six years.
However, in 2014, the inventory of the whole industry was high, and the market began to be confused. Wang Shi once again threw out the conclusion that the golden age of the real estate industry ended and entered the "Silver Age". However, since then, the supply side structural reform and the monetization of shed reform have led to another wave of rapid development of the real estate industry.
With the failed attack of Baoneng, Wang Shi stepped down as chairman of the board of directors at the shareholders' meeting in July 2017 and officially handed over the stick to Yu Liang. The successor from Vanke seems to be more cautious than his predecessor. Just over a year after taking office, the autumn regular meeting of Vanke was held in Dameisha, Shenzhen on September 28 and 29, 2018. The words "live" on the screen and side wall of the venue were eye-catching. At that time, when the industry was still in full swing, it really scared the peers.
As a matter of fact, "Vanke's goal is to carry out the monthly review in the middle of September." in fact, it is called "Vanke's goal to live in the middle of September". In hindsight, Yu Liang's judgment can also be called forward-looking. Perhaps based on this judgment, Vanke slowed down its pace.
In 2022, Yu Liang became more pessimistic. His speech at the 2022 meeting of Vanke Group in February this year spread. In this speech, Yu Liang threw out a new conclusion: the industry has reached the "black iron era".
Yu Liang said that 2022 is a year for the group to overcome difficulties and fight back, and it is also the beginning of a new era. Yu Liang said bluntly that the reduction of the table in 2022 is a battle of life and death, "die or live", and there is no middle state.
Culturally, Yu Liang stressed that the company should save money, reduce waste and create a "wartime atmosphere" of frugality. Yu Liang also cited an example, "my assistant won't buy first class when booking a ticket for me. If I have time to get close to the flight, I will buy which one is cheaper. How much money can be saved is not the most important. The signal conveyed is very important".
In this era of great changes not seen in a century, how will the fate of the two state-owned real estate giants evolve in the future? Only time can give the answer.
