On the evening of January 21, Shimao Group Holding Co., Ltd. (hereinafter referred to as “Shimao Group”) announced that Shanghai Shiying Investment Management Co., Ltd., a wholly-owned subsidiary of the company, as the seller, entered into a sale agreement with Shanghai Jiushi North Bund construction and Development Co., Ltd., which agreed to sell all the registered capital of Shanghai Shimao Real Estate Development Co., Ltd, The total cost is RMB 1.06 billion.
According to the data, the target company, Shanghai Shimao Real Estate Development Co., Ltd., established in 2014, is a company engaged in real estate development, operation and property management. As of November 30, 2021, the company’s unaudited net asset value was about 650 million yuan. The company holds a piece of land located in Huangpu Road, Shanghai, with a use right area of 4988.5 square meters. The land can be used for the development of commercial properties and offices.
The buyer, Shanghai Jiushi North Bund construction and Development Co., Ltd., is a wholly-owned subsidiary of Shanghai Jiushi (Group) Co., Ltd. (hereinafter referred to as “Shanghai Jiushi”). Shanghai Jiushi is mainly engaged in the operation of state-owned assets and government investment projects authorized by the Shanghai Municipal People’s government, which is wholly owned by Shanghai state owned assets supervision and Administration Commission.
Shimao Group said in the announcement that, based on the unaudited book value of Shanghai Shimao Real Estate Development Co., Ltd. on November 30, 2021, it is expected that the group will realize the sale income of about 270 million yuan. Before the sale, the group plans to use about 90% of the proceeds to reduce liabilities and about 10% for other general corporate purposes. After the sale, Shimao Group will no longer have any interest in Shanghai Shimao Real Estate Development Co., Ltd.
Shimao Group stated in the announcement that the reason for the sale said that since the land has not been developed and it takes several years to develop before generating cash flow, the company believes that the sale and realizing the value of the land will be beneficial to the company. Shimao Group said that as the significance disclosed in the announcement on January 11 this year, the company may consider selling some properties to reduce its liabilities.
Just last month, on December 17, 2021, Shimao Group sold 22.5% of the equity of Hong Kong Victoria Harbour exchange project and the corresponding sales loan at the price of HK $2086 million. The net proceeds from the sale are also expected to be used to repay the debt. The difference is that compared with the premium of 270 million yuan on the sale of Huangpu Road plot in Shanghai, as of December 31, 2021, the loss recognized in the sale of Hong Kong Victoria Harbour exchange project was about HK $770 million.
On December 14, 2021, Shimao Group subsidiary Shanghai Shimao Co.Ltd(600823) also transferred the property management business and related assets and liabilities involved in 29 companies including Shimao Property Management Co., Ltd. and Beijing maoyue Shengxin Enterprise Management Co., Ltd. to Shimao services, with a transaction transfer price of about 1.654 billion yuan.
Behind the frequent transfer of assets is the liquidity pressure behind Shimao. According to the annual report, as of December 31, 2020, the total liabilities of Shimao Group were 437.258 billion yuan, which increased to 463.633 billion yuan on June 30, 2021, more than twice that of 2017. Over the same period, Shimao’s total loans also increased from about 145.14 billion yuan to about 164.51 billion yuan. On June 30, 2021, the short-term loan of Shimao Group was 44.44 billion yuan, accounting for about 27%. The scale of bank loans and loans and bonds of other financial institutions under one year is 34.65 billion yuan, and the scale from one year to two years is 53.15 billion yuan.
At the end of 2021, Shanghai Shimao Construction Co., Ltd. (hereinafter referred to as “Shimao construction”), which accounted for about 70% of the performance of Shimao Group, said in response to the inquiry letter from the regulatory authorities that in order to cope with the current liquidity pressure, Shimao construction has increased revenue and reduced expenditure: set up a special asset management platform to dispose of first-line and second-line high-quality assets; Suspend the development of property held and the acquisition of new projects. And refine the staffing and reduce the cost of human resources.
Almost at the same time, on January 5, Shimao Group issued an internal announcement announcing the adjustment of the organizational structure. Cancel the investment function of regional and lower levels, including taking back the authority of the original regional companies such as investment, audit and procurement to the headquarters. In terms of regional setting, Shimao Group revoked the original Zhejiang regional company, upgraded the central China regional company, and re divided the jurisdiction of some projects of the Shanghai Soviet regional company.
