A shares are welcoming the next year’s reporting season, and major real estate enterprises have also announced their own business conditions. In recent years, under the policy tone of “three red lines” and “no speculation in housing”, the real estate development market tends to be stable. How to deleverage smoothly and reduce financing costs has become a difficult problem for the majority of real estate enterprises. From practical experience, state-owned real estate enterprises can often enjoy lower financing interest rates with the endorsement of state-owned assets and steady operation.
Recently, the state-owned real estate development enterprise Financial Street Holdings Co.Ltd(000402) ( Financial Street Holdings Co.Ltd(000402) . SZ), located in the capital, released its annual report for 2021 and continued to give answers to the capital market in the image of low financing cost. According to the contents of the annual report, from the beginning of 2021 to the disclosure date of the report, the company issued 10 corporate bonds and medium-term notes, with a total issuance scale of 12.9 billion yuan. Including 8 corporate bonds, with an issuance scale of 11.03 billion yuan; Two medium-term notes were issued, with an issuance scale of 1.87 billion yuan.
Specifically, the eight corporate bonds issued by the company are all five-year, with an average issuance interest rate of 3.40%, 90BP lower than the average coupon rate of 4.30% of corporate bonds in the real estate industry in the same period Among them, the issuing interest rate of the fourth phase of corporate bonds (21 golden street 04) is only 3.08%, which is the lowest coupon rate of AAA rated corporate bonds of the same period from 2021 to the time of issuance. In addition, the average interest rate of the two medium-term notes issued by the company was 3.56%, 57bp lower than the average coupon rate of corporate bonds in the real estate industry of 4.13% in the same period.
Even if the interest rate is low, the bonds issued by the company are still “snapped up” by the majority of institutions. The average number of securities companies and insurance companies participating in the market is nearly 30 times, including the average number of bonds subscribed by banks and insurance companies.
Thanks to this, the company’s deregulation and deleveraging were also carried out smoothly during the reporting period. The company achieved an annual operating revenue of 24.155 billion yuan, a year-on-year increase of 33.30%, the growth rate reached a new high since 2013, exceeding the expectations of market institutions. By the end of the period, the company’s book short-term loan was 20 million yuan, a significant decrease of 99.20% compared with the beginning of the period. Therefore, the cash short-term debt ratio continued to meet the standard. After excluding advance receipts, the asset liability ratio and net debt ratio continued to improve.
Some analysts pointed out that the “three red lines” and other strong regulatory policies introduced for the real estate industry in recent years are actually both challenges and opportunities. When other real estate enterprises are busy reducing liabilities and deleveraging, real estate enterprises with low financing cost can calmly take land and layout high-quality areas in the future because of low debt repayment pressure and stable finance. In 2021, Financial Street Holdings Co.Ltd(000402) acquired 8 projects in Shanghai, Wuxi, Tianjin, Jiaxing, Kunshan and Gu’an, with a planned construction area of 954000 square meters and an equity investment of about 6.53 billion yuan.
The company said that in the future, it will continue to adhere to the two-wheel drive strategy of “development and sales + asset management” and the regional strategy of “deeply cultivating the central cities of the five major urban agglomerations and expanding the satellite cities / regions around the one-hour traffic circle of the central cities of the five major urban agglomerations”, orderly reduce the scale of interest bearing debt, continuously optimize the asset liability structure, and strive to achieve the steady development of business performance.
