Another super thunderbolt smashed into Country Garden.
As the largest real estate company with assets of 600 billion yuan in the past, it was valued at 0 by a well-known fund company, which is rare in history!
For a while, the wind suddenly rose, the rich man became a beggar, and Country Garden completely became an "outcast" in the market?
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China Universal Asset Management, one of the largest fund companies in China in terms of comprehensive assets, announced that it has decided to value the "Country Garden" held by its funds at HK$0 per share from June 24, 2024.
Source: China Universal Asset Management official website
The universe real estate company returned to zero overnight, speechless!
What does $0 valuation mean?
"When encountering a delisted stock, the fund gives a valuation of 0 yuan, which is because it believes that the stock has no liquidation value," said a public investment researcher.
If the stock is delisted, investors may face significant losses, so fund companies usually act in advance to protect investors' interests by lowering the valuation of the stock.
At its peak, the annual revenue of this real estate company exceeded 80 billion yuan, the market value exceeded 100 billion yuan, and it broke into the world's top 500, but in August of the same year, Sunshine City was terminated by the Shenzhen Stock Exchange.
Coincidentally, in August 2022, Huaan Fund also valued China Evergrande at HK$0.01 and Evergrande Property at HK$0.01, and everyone knows how tragic the ending was.
Previously, Country Garden started to suspend trading due to the postponement of the 2023 results announcement, and it has been suspended for nearly 3 months so far, and an important reason why the company cannot release its results is that the debt restructuring that is being promoted cannot be fully implemented.
On June 6, Country Garden announced on the Hong Kong Stock Exchange again that the Hong Kong High Court ordered a further postponement of the hearing of the winding-up petition to July 29, 2024.
At present, Country Garden's share price is 0.485, which has fallen by 97%.
Unlike the banking industry, where umbrellas are borrowed on sunny days, umbrellas are collected on rainy days. The financial game is naked, and Huitianfu Fund gave a valuation of 0 yuan on the backhand. Financial tycoons may fool each other, or they may deceive ordinary people, but there is a high probability that they will not get along with their wallets and taste their own products.
Country Garden, as a 100-billion-level private real estate enterprise that has ranked first in the sales list for six consecutive years, has ushered in a crisis moment after the launch of epic rescue policies.
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However, on June 27, Country Garden issued an announcement that it had received the resumption guidance from the Stock Exchange.
According to the resumption requirements of the Hong Kong Stock Exchange: to release 23 years of financial reports, to prove that the company has the ability to continue operations, to publish all material information to the market.
Judging from the annual report of "Difficult Birth", this certificate is not easy to open!
Before 2022, Country Garden's net profit attributable to the parent company has never been negative, and since 2022, Country Garden has turned from profit to loss, with a loss of more than 6 billion yuan, and a loss of up to 50 billion yuan in the first half of 2023.
As of the first half of 2023, Country Garden's total liabilities were 1.36 trillion yuan, equity assets were 254.369 billion yuan, interest-bearing liabilities were 257.9 billion yuan, and book cash flow was 101.115 billion yuan.
In the first five months of this year, the company achieved a cumulative contracted sales amount attributable to the company's shareholders' equity of about 21.65 billion yuan, compared with the equity sales of about 112.76 billion yuan in the first five months of 2023, a year-on-year decline of 8%.
This also puts Country Garden under great pressure in the face of the total delivery of more than 480,000 units this year.
In terms of overseas debt restructuring, Country Garden has been promoting debt restructuring for more than 10 months since August 2023. Country Garden said it is working with creditor groups, including the Coordination Committee representing bank creditors, the project team representing bondholders, and its advisers to actively explore all viable offshore debt restructuring options to move forward with a suitable comprehensive debt restructuring package.
At the monthly management meeting in June this year, Mo Bin, president of the group, said, "We must keep in mind that ensuring the delivery of housing is our political bottom line, and we must exhaust all our efforts to ensure the delivery of housing." Yang Huiyan, Chairman of the Board of Directors of Country Garden Group, emphasized the importance of ensuring the delivery of housing, and said that this year's delivery task is very arduous.
We don't know if it's credible, after all, didn't Xu Jiayin swear to say: I can have nothing, can't Evergrande investors have nothing?
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As the youngest female richest man in China, Yang Huiyan has always been regarded as the "strongest second-generation successor". Wang Jianlin ran around for Wanda, and when Wang Sicong was eating, drinking, and having fun all day long, lace news was flying all over the sky, Yang Huiyan began to help her father Yang Guoqiang take care of the Country Garden Empire.
In 2007, the domestic real estate industry ushered in a ten-year boom period, Yang Guoqiang dropped his glory from the front of the stage to the background, and praised his 26-year-old daughter Yang Huiyan as the richest woman in China worth more than 120 billion yuan. In the same year, Country Garden was listed on the main board of the Hong Kong Stock Exchange, and its market value once exceeded HK$110 billion on the day of listing.
At that time, Yang Huiyan was more regarded as the shadow of Yang Guoqiang. None of the media really believed that "Yang Guoqiang doesn't care about anything when he retires, and Country Garden is completely up to Yang Huiyan." No one really thinks that Country Garden's country and fame are made by Yang Huiyan, but she has won the title of the richest man for her father for ten years. What about Yang Guoqiang? He took a back seat, lived a pastoral life, paid attention to farmers and charity every day, and the fate of Country Garden was completely tied to Yang Huiyan.
In the past ten years, Country Garden's annual sales have risen from 17.7 billion yuan in 2007 to 550.8 billion yuan in 2017, a figure that has increased by 30 times.
However, behind this glory is more to catch up with the real estate boom, Yang Guoqiang left not only a huge wealth, but also an old injury and stubborn disease of real estate companies.
Initially, Country Garden bucked the general trend of the real estate bubble and became the representative of real estate companies, because of its unique strategic choices:
1. The layout strategy of "rural areas surrounding cities" in suburban land acquisition and construction of supporting cities
2. Low-interest or even zero-interest financing, a development model that achieves the goal of "high turnover" by stimulating sales
Since it has avoided competition in the luxury housing sector, Country Garden's profit model must be a short-term and fast "hypermarket" model, in the words of founder Yang Guoqiang: sell a house like a cabbage.
As a result, from financing to development to sales, Country Garden has created a development model of "high leverage, high debt, high turnover, and low cost".
Behind the rapid expansion of the company, it needs to be supported by staggering debt. In the context of the tightening of domestic real estate financing policies in the past few years, real estate companies such as Country Garden and Evergrande have become an important means to support the company's expansion by issuing US dollar bonds overseas. In order to repay the huge debts, the main methods of real estate companies such as Country Garden and Evergrande are to rely on sales to repay the old, and second, to borrow new money in the US dollar bond market to pay off the old.
Since 2018, the concentration of symptoms has begun to appear.
"Houses are for living, not for speculation." The country's tone for house attributes has made major real estate companies enter the transformation, and the sales growth is slow. Among them, in 2018, it increased by 1.3% compared with 2017, and in 2019, it increased by only 0.06% compared with 2018.
With the changes in the market environment, the expansion model that mainland real estate companies rely on to grow has begun to become unworkable, so more and more real estate companies have begun to thunder one after another.
In July last year, Country Garden announced that Yang Huiyan, the company's controlling shareholder, non-executive director and chairman of the board of directors, donated 675 million shares to Guoqiang Public Welfare Foundation (Hong Kong) Co., Ltd. for charity purposes.
Based on the share price at the time, the equity value of the donation was approximately HK$6.4 billion, or approximately RMB5.9 billion. Yang Guoqiang and Yang Huiyan's father and daughter also became the first charity in China because of this donation.
Then, in August, Country Garden's debt crisis broke out. On August 7, Country Garden broke the news that Country Garden failed to pay the coupon of two US dollar bonds that should be paid on August 7, officially declaring default, and the two bonds were listed on the Singapore Exchange, with an issue size of 500 million US dollars.
For a time, the news of Country Garden shook the entire real estate circle.
In October, there was news that Yang Guoqiang, the founder of Country Garden, sold his private jet to pay off his debts.
In addition, according to a recent report by brokerage China, Country Garden Venture Capital, a subsidiary of Country Garden, is seeking to sell its shares in Changxin Storage Technology Co., Ltd. to raise about 2 billion yuan. However, the timing of the sale is still under negotiation, and the final outcome is still uncertain.
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We know that the explosion of important real estate companies will bring a series of vicious chain reactions.
Country Garden's cooperative suppliers in 2022 will reach 33,207, and the total delivery of nearly 700,000 units in 2023 will be affected, and once Country Garden "falls", the operation of more than 30,000 enterprises and the livelihood of at least 700,000 families will be damaged.
So the real estate industry really doesn't deserve sympathy, as Cao Dewang said, isn't it just cement and bricks, how much is it worth?
The gold content is not yet discussed, let's just say that this high-leverage, high-turnover business model is playing a dangerous game of ten pots and nine lids. Loan - auction land - build a house - sell a house - hurry up to get back the money and quickly auction the land - build a house and sell it again, once there is a place in the middle of the infarction, the game is over.
In this dangerous game, the shareholders and executives of real estate companies have made a lot of money, shareholders pay large dividends every year, and executives receive sky-high annual salaries every year.
The only ones who suffer are buyers and ordinary investors who have been in debt for decades, and if they can live in it, it is a sweet burden; If the house is unfinished, it is a tired tear.
At present, real estate companies have completed the construction of houses in 25 years, and there is no doubt that the real estate industry is going downhill. The only life-saving straw is the state's plan to stabilize people's livelihood.
This plan is for the state to approve loans to major real estate enterprises, determine the special funds for the projects that have been started but not completed, and deliver the houses to the buyers within the agreed time.
With this guaranteed delivery loan, real estate companies have a chance to breathe, and home buyers can also wipe away tears.
The mountains and rivers are exhausted, and the willows and flowers are bright. I hope that the real estate giants represented by Country Garden can survive this crisis, get rid of the old diseases, show a new look, and get out of the predicament!
After all, people live for a lifetime, and they only need to have tiles to cover their heads in order to be stable for a lifetime.