The Logic Behind Housing Companies' Protection Of Sales: Borrowing Financing And Maintaining Stock Prices

The real estate market has come to the darkest hour.

In the past May, the national market continued to recover, basically returning to the pre epidemic level in 2019. However, from the sales figures released in recent months and the sales figures released by the housing enterprises, many housing enterprises have achieved far fewer achievements this year than last year.

Overall, it is still not difficult to increase sales in 2020. The differentiation between enterprises is aggravated, and the sales volume of some housing enterprises is relatively large. Twenty-first Century economic report reporters combed the top 50 housing prices before May sales data found that housing enterprises overdraft sales phenomenon tends to be widespread.

Zhang Hongwei, chief analyst of the Institute of strategic planning, pointed out that there are two types of Housing enterprises that need overdraft: one is high turnover enterprises, and the premise of rapid development and rapid sales is to invest quickly. If you can't keep up with the speed of sales, you can't reduce the overdraft sales. The second category is the development of relatively uniform enterprises, but the investment of enterprises is obviously weaker than sales. Now it is also more urgent to strengthen investment. Under such circumstances, housing enterprises will inevitably overdraw sales. From the 2-3 year cycle, the sustainable growth of such housing enterprises will be under pressure.

What kind of housing prices have demand for momentum?

Housing prices have been growing faster in the past few years. Since last year, the housing sector has no longer focused on growth. But before the outbreak this year, most of the housing companies still set a relatively high sales target. This will cause pressure on the completion of the housing sales target this year. At the same time, enterprises should continue to invest. If the risk of the subsequent capital chain is too big to slow down, it will probably be sold next year and the next year.

If we can compare the sale value of the housing enterprises with the rate of chemical conversion, we can see which companies have the demand for overdraft sales. Combing the top 50 housing sales data, according to the size of sales can be divided into 5 echelons; and then according to the same policy research institute data provided by the housing enterprises inventory data, it will be divided into 5 echelons, from which we can see many sales scale after ranking housing prices, inventory value does not match.

For instance, the largest inventory of Hengda stock in a tier echelon housing company, the eighth place in Shimao inventory ranked 11, and Fuli real estate inventory replaced Shimao into the top ten. Similar to Fuli real estate, the inventory of Austrian Garden Group entered the two echelon, but the sales scale was the level of the third tier; the sales scale was in the third tier of Zhongliang holding, the fourth tier level blue light development, Hua FA. Shares, the United States, the fifth tier Yuexiu real estate and several other enterprises inventory squeezed into the second echelon; sales of the fourth tier of agile, ranked 50 after the Joy City, and health inventories have entered the level of the third tier; sales scale of 50 strong in the production of Jun, Yu Chau estate, Hongyang real estate and other inventory are at the fourth, fifth tier level.

This shows that the majority of Housing enterprises exist pressure to go. Based on the three data of the debt level of the housing enterprises, the investment strategy and the sales performance are closely related, we can see that the ranking mismatch in the big rankings is related to the financing needs of the housing enterprises and the protracted war of defending the stock price.

According to the insiders, housing companies generally have a debt paying strategy by borrowing new loans and taking advantage of the old wall to make up for the West. More companies regard 2019 as a window of investment and a large number of land purchases. These two reasons lead to an increase in the level of corporate debt. With the slowdown in sales in the first four months of this year, sales are not enough to fully cover past debt expenditures. Therefore, the current debt level is higher and the debt repayment pressure is larger. Taking Fuli real estate as an example, as of the middle of 2019, the total liabilities of Fuli real estate totaled 334 billion, with a net debt ratio of 219%. But this can be found from Fuli real estate's diversified investment in recent years but insufficient revenue. For example, in 2018, Fuli real estate spent 19 billion 900 million of Wanda's 77 hotels and did not generate enough cash flow.

Looking back at Fuli inventory, Fuli now has about 200 billion inventories, with a total sales volume of 144 billion 620 million yuan in 2019. Sales in the first quarter of this year were 17 billion 300 million. According to the sales figures in the previous May, Fuli sold about 38 billion 200 million, in other words, 4 sales in May and about 20000000000 in May. Insiders pointed out that this has something to do with Fuli's assurance of financing to repay high debts.

The above mentioned housing prices which are far higher than the sales scale are also present. Sales surged in 4 and May. Hongyang real estate currently has about 36 billion inventory, in the first quarter to 3 billion yuan or so. Sales from Hongyang in April were 5 billion 850 million yuan. In April, Zuki Hiroyo sold nearly 2 billion, almost flat with sales in the first quarter. Even so, sales of Hongyang in April dropped by 60% compared to the same period last year.

In order to finance the listing, the situation of Housing enterprises' advance sales is even more obvious. You can also see the behavior of overdraft sales of housing companies from the list. Recently, the list of housing companies that are going to be listed has risen from the 150 in 2019 to the fifth tier in early 2020. There are only 37 projects at different stages of development in the field. In the prospectus, the company did not mention its sales. In fact, more list shows that the amount of real estate sales in recent three years and the industry rankings are declining, and the sales ranking in 2019 has dropped to 100 strong.

Performance targets for the year are more difficult to complete.

Affected by the epidemic, the sales performance and return of the company suffered a setback, coupled with the continuous expenditure of various rigid costs and the repayment of the debt maturity, which made the capital side of enterprises begin to bear pressure.

Haitong Securities, a research report pointed out that compared to 2019 and 2020, the sales threshold of trading caliber, the threshold of the top 10 dropped from 68 billion 100 million yuan to 64 billion yuan, down 6% compared with the same period last year; the threshold of the former 20 dropped from 49 billion yuan to 39 billion 500 million yuan, down 19.4% from the same period last year; the threshold of 30 dropped from 31 billion 600 million yuan to 31 billion 600 million yuan, down from 1-5. The 50 strong threshold dropped from 19 billion 300 million yuan to 17 billion 500 million yuan, down 9.5% compared with the same period last year. The threshold of 100 strong has dropped from 7 billion 300 million yuan to 5 billion 300 million yuan, down 27.3% over the same period. Judging from the threshold value, the top 1-10 housing companies showed the strongest performance, the lowest decline, the 51-100 biggest decline, reaching 27.3%, and the 11-20 11-20 respectively. Thus, housing prices after the top 50 are not so good this year.

In May, the market accelerated. From all over the country, the second and second tier markets are obviously active. Central Plains real estate research center statistics show that as of June 5th, according to the sales data released by housing enterprises, the total sales of 30 Housing enterprises were 1-5 months, 1 trillion and 960 billion, down 1.9% compared to the same period last year, compared with 10% in 1-4 months, and overall, sales performance gradually leveled off.

Central Plains real estate chief analyst Zhang Dawei analysis, the overall housing enterprises have gradually stepped out of the impact of the epidemic, but to resume the rally is expected to take 1-2 months. By the 3 quarter of 2020, housing prices are expected to rise again year on year. As expected, the market is expected to continue to expand in June, especially after the supply is increasing, and the volume of market turnover is expected to continue. "From the perspective of future market trends, if the interest rate cut again in the second half of this year, then this round of market small spring is expected to continue."

From the different levels of cities, the average city chain continued to rise, the ring rose 20.1%, of which Beijing rose the most obvious, the transaction area rose 42.5%, up 10.5% over the same period last year.

The reason for the revival of market consumption is the pressure of currency devaluation, replacement demand, the gradual reduction of interest rates on housing loans, the increase in preferences, and the demand for a backlog of outlays to basically release the market, all of which have promoted the recovery of the national market in May.

It is worth noting that housing enterprises will directly face the second half of the year how to "recover land lost" and make up for the next year's sales value of the foundation, balance the debt and other operational problems.