Following the Hong Kong project and the Bund plot in Shanghai, Shimao Group continued to sell assets at a fast pace. This time, it was Guangzhou Asian Games City, once the “king of the country”.
On January 24, Shimao Group announced that it would sell 26.67% of the equity of the joint venture company of Guangzhou Asian Games City Project at the price of 1.844.5 billion yuan. 80% of the proceeds would be used to reduce liabilities, and the successor came from CNOOC real estate, a central enterprise giant. At present, the Guangzhou Asian Games city project still has an area of more than 1.8 million square meters to be developed. Even if a small part of commercial property is considered, the value of the above equity counterpart of Shimao Group is at least more than 10 billion yuan.
On January 21, Yajule, the former “five tigers in South China”, also announced that it would sell its 26.66% interest in Guangzhou Asian Games city to CNOOC real estate, with a total price of 1.844 billion yuan. After the completion of these two acquisitions, plus the original equity, the equity proportion of CNOOC real estate in Guangzhou Asian Games city project will rise to 73.33%
over 10 billion goods changed hands
On the evening of January 24, Shimao Group, which had just sold the core plot of the Bund in Shanghai, announced that it had sold 26.67% of the equity of the joint venture company of Guangzhou Asian Games City Project at the price of 1.844.5 billion yuan. Shimao said that it is expected to realize the sale income of about 716 million yuan. About 80% of the proceeds from the sale is intended to be used to reduce liabilities and about 20% for general corporate purposes. On January 25, the acquirer CNOOC real estate also announced the transaction.
Public information shows that the “Big Mac” project of Guangzhou Asian Games city has a history of 12 years since the transfer of the plot. In December 2009, the project was won by R & F, Yajule and country garden with a total land price of 25.5 billion. It was once ranked as the “national land king”.
In June 2010, Shimao acquired 20% of the equity of Guangzhou Asian Games city project by taking shares. Since then, after the change of CNOOC’s acquisition of CITIC and R & F’s exit, the project is held by CNOOC, Yajule, country garden and Shimao, with shareholding ratios of 20%, 26.6%, 26.7% and 26.7% respectively. According to Kerui data, in 2021, the project achieved a sales amount of 9.223 billion yuan, and has won the sales crown in Guangzhou for five times.
According to the announcement of CNOOC real estate, the total construction area of Guangzhou Asian Games city is about 5.85 million square meters and the site area is about 2.521 million square meters. On the date of announcement, the construction area of 4016000 square meters of the project has been developed into residential and commercial units and parking lots. The remaining construction area of about 1834000 square meters is still under construction and is expected to be completed by the end of 2025. On the date of the announcement, about 3.473 million square meters of the building area of the complex (including residential and commercial units and parking spaces) has been sold.
According to the data of Guangzhou fangtianxia, at present, the price of the latest residential project in Guangzhou Asian Games city is about 28000 / m2. Based on this rough calculation, the corresponding value of 26.67% equity of Shimao Group is about 13.7 billion yuan. Even considering the slightly lower price of some commercial properties (accounting for less than 10%), the corresponding value of this part of equity of Shimao Group is at least more than 10 billion yuan.
Of course, the follow-up development of CNOOC real estate still needs to invest a certain cost, but it is still an extremely cost-effective business. A former senior project manager of one of the top ten real estate enterprises told the China fund news that the “direct fee + indirect fee” of all construction and installation costs is about 7200 yuan per square meter, including capitalized interest, sales management property, various taxes and surcharges, income tax, etc
agile is also “sold”
Together with Shimao Group, Yajule group, once one of the “five tigers in South China”, sold this time. On January 24, Yajule group announced that Guangzhou zhenran Investment Co., Ltd., an indirect wholly-owned subsidiary of the company, plans to sell about 26.66% of the equity of Guangzhou Lihe Real Estate Development Co., Ltd. to Guangdong Zhonghai Real Estate Co., Ltd., an indirect wholly-owned subsidiary of China overseas development, at a total price of about 1.844 billion yuan. It is expected that after the completion of the transaction, the company will record an estimated revenue of about 699 million yuan.
Guangzhou lihefangkai is the joint venture company of Guangzhou Asian Games city project. The equity proportion and consideration sold by Yajule are almost exactly the same as that of Shimao Group. In this way, after the completion of the acquisition, CNOOC real estate will hold 73.33% of the equity of the joint venture, and the remaining minority equity will be in the hands of country garden, the “cosmic real estate enterprise”.
Under the cruel reality of frequent defaults of real estate enterprises in 2021 and even the explosion of enterprises, the “broken arm survival” of real estate enterprises has become the norm. Similar to Shimao Group, since the second half of 2021, Yajule has also faced problems such as sales pressure and increased debt repayment pressure, and accelerated the pace of cash out by selling assets.
On January 10, Yajule group announced that it had sold 14 non core properties in the second half of 2021.
Specifically, during the period from July 1 to December 31, 2021, Yajule has entered into a number of property subscription letters and / or property purchase and sale contracts for the sale of 14 non core properties (including 5 hotels (including hotel land), 2 shopping malls, 3 sales departments, 3 community commercial facilities and 1 apartment), with a total price of about 2.8 billion yuan. Among them, the total amount of deposit and sales payment is about 1.149 billion yuan, which has been collected in 2021.
According to the data, in 2021, the pre-sale amount of Yajule together with the joint venture and associated companies and Yajule projects totaled 139.01 billion yuan, with a year-on-year increase of only about 0.6%; The corresponding construction area was 9.719 million square meters, a year-on-year decrease of 5.18%; The average price is 14303 yuan per square meter. Thus, in 2021, Yajule only achieved 92.67% of the sales target of 150 billion yuan
stocks and bonds
investment logic “the rest is the king”
Similar to the situation of “one sale, one bottom reading” in the M & a market, the attitude of investors towards different types of real estate enterprise stocks and bonds in the secondary market is also clear-cut. The trend of Shimao Yajule and Zhonghai poly can be described as “ice and fire”.
The share price of Shimao Group has dropped from the highest of HK $35.4 in August 2020 (former restoration of rights, the same below) to the lowest of HK $4.06 recently, with a decline of 88%, which is basically in the state of ankle chopping. The domestic corporate bond “19 Shimao 01” of Shimao Group fell to 31 yuan in five months from 100 yuan, and only 50 yuan has rebounded recently; “19 Shimao 03” has dropped from the lowest around 100 yuan to 35 yuan, with a single day decline of more than 50% on the last day of 2021; “20 Shimao 02” also fell 48% yesterday, and the bond price of 100 yuan face value was only 43 yuan. The price of overseas US dollar bonds is similar. Recently, the price has fallen from the face value of US $1 to 89 cents to the range of 30 to 50 cents.
Yajule group’s share price fell from a high near HK $12 in April 2021 to a recent low of HK $3.46, with a maximum drop of 72% and a basic knee cut.
In contrast to China’s overseas development, the stock price reached a minimum of HK $13.71 at the beginning of 2021, while the stock price recently reached a maximum of HK $24, with a year-on-year increase of 75%, while the price of corporate bonds has remained stable above 100 yuan.
On January 12, CNOOC enterprise development, a subsidiary of CNOOC real estate, just issued the first phase of medium-term notes in 2022, with a total amount of 1.8 billion yuan, and the issuance interest rate was as low as 2.88%, 82bp lower than the one-year market benchmark interest rate LPR of 3.7%.
Another real estate leader of central enterprises Poly Developments And Holdings Group Co.Ltd(600048) has a similar situation. Since reaching the low of 9.03 yuan at the end of July 2021, it has reached 17.08 yuan in half a year, an increase of 90%, just one step away from the historical high of 17.8 yuan.
China Merchants Securities Co.Ltd(600999) Zhao Ke’s team of real estate recently published a research report that the investment logic of follow-up real estate should follow the “leftovers are the king”, and self blood making companies with stable cash flow structure and guaranteed payment collection growth should be preferred (within the top 100 or less than 10%).
It is suggested to continue to pay attention to “Zhaobao Wanjin Zhonghua dragon” ( China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) , China overseas development, China Resources Land and Longhu group), and pay attention to those with marginal changes: OCT, Yuexiu real estate, Greentown China, etc. The second stage of fundamental bottoming can focus on some flexible private enterprises with business model characteristics. Some regional companies have certain game space, but it is difficult to have holding value. The cash flow is hidden or always depends on debt turnover. It is not recommended to allocate it.
Guosheng securities also believes that since October last year, the central government has made a clear policy shift and continued to increase its efforts. Recently, it has made a continuous voice to maintain the stable development of the real estate market, support reasonable housing demand and meet the reasonable financing demand of the real estate market. The policy recovery is expected to accelerate the arrival of the bottom of fundamentals. The current favorable policies have not yet reached the peak. It is expected that the follow-up policies will continue to be favorable, and the real estate enterprises with good credit qualification, abundant liquidity, sufficient soil reserves and high quality, especially the state-owned central enterprises, will benefit more.
Its suggestions include: A-share Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , China Vanke Co.Ltd(000002) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , Huafa Industrial Co.Ltd.Zhuhai(600325) , Seazen Holdings Co.Ltd(601155) ; H-share China overseas development, green city China, China Resources Land, Longhu group, China Jinmao, Xuhui holding group, China Overseas Hongyang.
