Greenland Holdings recently released the third quarter of 2021 performance report, the company's first three quarters of the cumulative operating income of 426.8 billion yuan, an increase of 33% year-on-year; attributable to the mother net profit of 11.2 billion yuan, a year-on-year decrease of 7.3%. In terms of single-quarter data, the company's revenue and attributable net profit in the third quarter increased by 29.74% and -27.12% respectively year-on-year.
Figure 1: Greenland Holdings' third quarterly report information board
Greenland Holdings through promotions to reduce, slow down the increase in reserves, the net operating cash flow from January to September 2021 reached 49.1 billion yuan, an increase of 880.36% year-on-year; the company in the first three quarters of the pressure to reduce interest-bearing liabilities of 64.5 billion yuan, debt structure has improved. As of the end of October, the company was transformed into a "yellow file" housing enterprise.
In the case of "three red lines" restricting external financing, Greenland Holdings eased the financial pressure by increasing the payables. At the end of the third quarter of 2021, the balance of the company's accounts payable and bills was 310.5 billion yuan, an increase of 65% year-on-year. Among them, the total scale of bills payable was 34.3 billion yuan, with a year-on-year growth rate of more than 150%.
Infrastructure revenue continued to outpace real estate revenue Improved cash flow was the main tone of the first three quarters
Greenland Holdings is a multinational enterprise with real estate and infrastructure as its main business, and comprehensive industries such as finance and consumption.
Looking through the financial data of the past years, it is found that the total revenue of the company's real estate and infrastructure business contributes more than 80%. In 2016, the income of real estate development business reached twice that of infrastructure business, and then the revenue of infrastructure business increased significantly, surpassing real estate development business for the first time in 2020.
Figure 2: Revenue and gross profit margin of Greenland Holdings' infrastructure and real estate business from 2016 to 2020
Continuing this trend in the first three quarters of this year, greenland Holdings' cumulative revenue from infrastructure business from January to September 2019 reached 211.4 billion yuan, an increase of 44% year-on-year, exceeding the current revenue growth rate of 33%; real estate business carry-over income reached 149.6 billion yuan, a year-on-year decrease of 3%. Due to the increase in the proportion of revenue from the infrastructure business with low gross margins, coupled with the low overall profit margin of the real estate industry, the company's revenue increased without increasing profits in the first three quarters, and its operating income reached 426.8 billion yuan, an increase of 33% year-on-year; the net profit attributable to the mother was 11.2 billion yuan, a decrease of 7.28% year-on-year.
Under the market situation in which the all-round regulation of real estate continues to be strict and tight, cash flow management has become the main tone of Greenland Holdings.
On the one hand, Greenland Holdings tried to withdraw funds through promotional dematerialization, but the effect was minimal. According to the data, the company completed a total of 230.2 billion yuan of contract sales in the first three quarters, an increase of 5.7% year-on-year; the contract sales area of 18.17 million square meters, an increase of 3.2%; but only in the third quarter, the company's contract sales and sales area fell by more than 20% year-on-year, and the performance was not as good as the same period in 2019.
Figure 3: Quarterly contract sales of Greenland Holdings from 2019 to the third quarter of 2021
On the other hand, the company slowed down the increase in reserves to control cash outflows. Specifically, in the first three quarters of this year, the company accumulated 41 new real estate project reserves, compared with 77 in the same period last year; the equity land area was 2.94 million square meters, compared with 10.53 million square meters in the same period last year; and the cumulative equity land payment was 30.4 billion yuan, compared with 73.1 billion yuan in the same period last year.
Thanks to the increased cash flow management, from January to September 2021, the net operating cash flow of Greenland Holdings reached 49.1 billion yuan, an increase of more than 880% year-on-year.
At the end of October, the rating agencies changed from "orange" to "yellow" and downgraded one after another
In 2020, the government issued the "three red lines" policy, according to the touch of the three indicators, the pilot real estate enterprises are divided into four blocks of "red, orange, yellow and green", in order to delineate the upper limit of the annual growth rate of interest-bearing liabilities when real estate enterprises are financing. As one of the pilot housing enterprises, Greenland Holdings has stepped on three indicators in a row, and debt reduction has become its first priority.
At present, there are 4 housing enterprises with total liabilities of more than one trillion yuan, followed by Country Garden, Vanke, Greenland and Poly. The scale of greenland holdings' liabilities reached the trillion level for the first time in 2019, and the asset-liability ratio remained at a high level for many years.
Figure 4: Greenland Holdings' total liabilities and asset-liability ratio since 2015
In the first quarter of this year, the company reduced interest-bearing liabilities by about 18.1 billion yuan, achieved a central bank regulatory benchmark of more than 1.0 in cash short-term debt ratio indicators, and turned "a red line" to green. On this basis, the company further reduced interest-bearing liabilities, and in the first three quarters, it has accumulated 64.5 billion yuan of interest-bearing liabilities, and the net debt ratio has declined.
As of the end of September 2021, the company's total liabilities reached 1,222.822 billion yuan, and the asset-liability ratio was 87.7%, down from the end of last year. The company's interest-bearing liabilities are about 250 billion yuan, the balance of monetary funds is 79.5 billion yuan, excluding the pre-received asset-liability ratio, net debt ratio, cash short debt ratio of 81.4%, 100.6%, 1.6 times, respectively, still in the "three red lines" classification of "orange file" housing enterprises.
Greenland Group recently disclosed in the official micro that as of the end of October this year, the net debt ratio of Greenland Holdings has dropped below 100%, and the standard has been turned green. At this point, Greenland Holdings has risen from the "orange file" to the "yellow file".
In view of the current poor financing conditions for real estate development enterprises, combined with the sales and debt maturity of Greenland Holdings, the two major international credit rating agencies Moody's and Standard & Poor's successively downgraded the company's credit rating in October this year.
Bills payable grew by more than 150% Hidden debt is worth watching
In order to hedge the external financing pressure, Greenland Holdings alleviated the financial pressure by increasing the payables. At the end of the third quarter of 2021, the balance of the company's accounts payable and bills was 310.5 billion yuan, an increase of 65% year-on-year, accounting for 181% and 135% of the net assets and contract sales of the current period, respectively. Among them, the total scale of bills payable was 34.3 billion yuan, with a year-on-year growth rate of more than 150%.
Since the beginning of this year, the problem of overdue real estate commercial tickets has received great attention. In June this year, some media reported that the central bank and other regulatory authorities included the commercial acceptance bill data of the "three red lines" pilot housing enterprises into the scope of monitoring, requiring the housing enterprises to report the commercial acceptance bill data with the "three red lines" monitoring data every month. In the future, the commercial bills of housing enterprises and even other liabilities payable may be subject to more control.
It is also worth mentioning that as of the end of September 2021, the minority shareholders' equity of Greenland Holdings was 76.697 billion yuan, accounting for 45% of the owner's equity. However, of the net profit of 15.14 billion yuan in the current period, the profit and loss of minority shareholders was only 3.975 billion yuan, accounting for about 26%, that is, the minority shareholders who held nearly half of the company's net assets only got 1/4 of the company's net profit.
This article originated from Bread Finance