Follow this month
• The government has re-emphasized the coordination mechanism for urban real estate financing, which has landed 1.4 trillion yuan
On August 21, the State Council Information Office held a series of press conferences on the theme of "Promoting High-quality Development", and at present, commercial banks have approved 5,392 real estate "white list" projects, with a financing amount of nearly 1.4 trillion yuan. Since then, Dong Jianguo, Vice Minister of the Ministry of Housing and Urban-Rural Development, said that the Ministry of Housing and Urban-Rural Development has given full play to the role of the urban real estate financing coordination mechanism, established a national, provincial and municipal coordination mechanism, and promoted the white list of eligible projects to "must enter". On the whole, there are not many directly related policies for the financing of real estate enterprises this month, mainly emphasizing the importance of the coordination mechanism for urban real estate financing and continuing to promote the financing of high-quality "white list" projects.
• The monthly scale decreased by 29% month-on-month, and the cost of bond issuance hit a new low in recent years
In August 2024, the total financing of 65 typical real estate enterprises was 38.95 billion yuan, a decrease of 29.2% month-on-month and 38% year-on-year. The cumulative total financing from January to August was 309.477 billion yuan, a year-on-year decrease of 32.2%. This month, 28.97 billion yuan of real estate enterprise bonds were issued, an increase of 92.5% month-on-month and a year-on-year decrease of 20.8%. The average financing cost of bonds was 2.54%, a decrease of 0.31 pct month-on-month and 0.6 pct year-on-year, a new low in recent years. Domestic bond issuers continued to fall this month, mainly by central and state-owned enterprises such as China Merchants Shekou, Huafa Co., Ltd., and Poly Development.
• Listings and allotments have fallen silent, and the capital market of real estate companies has less operation
This month, no real estate companies or their subsidiaries completed listings, and no companies submitted listing applications. At the same time, in terms of additional allotments, no company has completed allotment financing this month, and Rongsheng Development's additional issuance plan is still under internal evaluation, and Xiamen International Trade replied to the Shanghai Stock Exchange's inquiry on August 6. On the whole, the recent enthusiasm for listing of domestic real estate companies and their subsidiaries is relatively low, and most of the listed real estate companies in the domestic private placement is still relatively slow, such as Poly, Damingcheng and other additional issuance plans that have been agreed to be registered by the exchange have not been completed so far, and a number of real estate companies have announced the termination of private placement.
01
Bond issuance
The monthly scale decreased by 29% month-on-month
The cost of issuing bonds has hit a new low in recent years
In August 2024, the total financing of 65 typical real estate enterprises was 38.95 billion yuan, a decrease of 29.2% month-on-month and 38% year-on-year. Judging from the cumulative data of the whole year, the cumulative total financing of 65 typical real estate enterprises was 309.477 billion yuan, a year-on-year decrease of 32.2%. In terms of financing structure, the domestic debt financing of real estate enterprises this month was 38.95 billion yuan, a decrease of 25.5% month-on-month and 15% year-on-year, and no enterprises carried out overseas financing or asset securitization financing this month.
In August, real estate enterprises issued bonds of 28.97 billion yuan, an increase of 92.5% month-on-month and a year-on-year decrease of 20.8%. There were no overseas bond issuances by enterprises this month, so 28.97 billion yuan were all domestic bonds, and the scale of domestic bond issuance increased by 116.8% month-on-month and decreased by 20.8% year-on-year. Among them, the issuance of corporate bonds was 11.1 billion yuan, an increase of 50% month-on-month and 22.7% year-on-year; the issuance of medium-term notes was 10.07 billion yuan, an increase of 69% month-on-month and a year-on-year decrease of 43.6%; The issuance of ultra-short-term financing was 5 billion yuan, a year-on-year decrease of 47.9%, in addition to 2.8 billion yuan of directional tools.
From January to August 2024, the financing cost of 65 typical real estate enterprises added bonds by 3.01%, a decrease of 0.59 percentage points from the whole year of 2023, of which the financing cost of overseas bonds was 4.18%, a decrease of 3.86 percentage points from the whole year of 2023, and the financing cost of domestic bonds was 2.98%, a decrease of 0.49 percentage points from the whole year of 2023. In a single month, the financing cost of real estate enterprises in August was 2.54%, a decrease of 0.31 pct month-on-month and 0.6 pct year-on-year, hitting a new low in recent years. Domestic bond issuers continued to fall this month, mainly by central and state-owned enterprises such as China Merchants Shekou, Huafa Co., Ltd., and Poly Development.
In terms of specific corporate performance, the largest bond issuance in August was China Merchants Shekou, which issued two corporate bonds totaling 5 billion yuan. A total of 14 companies issued bonds this month, an increase of five compared to the previous month. From the perspective of the maturity of the bonds, Xiamen ITG issued a corporate bond with a maturity of up to 10 years, which is the longest bond issued this month. From the perspective of bond issuance interest rate performance, the interest rate of an ultra-short-term financing issued by Poly Development is 2.02%, which is the lowest among all bonds issued by real estate companies this month.
02
Maturity and default of bonds
40.2 billion yuan due this month
R&F defaulted for the second time
A total of 26 bonds matured in August, about 40.2 billion yuan after excluding the part that had been redeemed in advance, an increase of 51% month-on-month. In advance, 24 bonds will mature in September 2024, which will be about 35.1 billion yuan after excluding the part that has been redeemed in advance, a decrease of 13% from the previous month.
In terms of debt default, no new real estate companies have defaulted on their debts for the first time this month, but R&F announced on the 11th that it failed to pay the relevant interest on some of the offshore senior notes within the grace period, constituting a second default. On the whole, as the financing of real estate companies is still relatively sluggish recently, coupled with the fact that real estate sales have not yet fully recovered, there may still be more real estate companies exposed to debt defaults in the future, and some real estate companies that have been out of danger will even default twice, and liquidity problems still need the attention of the industry.
03
IPOs and additional issuances
The listing and allotment of shares have fallen silent
The capital market of real estate enterprises operates less
This month, no real estate companies or their subsidiaries completed listings, and no companies submitted listing applications. On the whole, Hong Kong's capital market has been more cautious about the listing and financing of domestic real estate-related enterprises recently, and the listing enthusiasm of domestic real estate enterprises and their subsidiaries is relatively low.
In terms of additional allotments, no company has completed allotment financing this month, and Rongsheng Development's additional issuance plan is still under internal evaluation, and Xiamen International Trade replied to the Shanghai Stock Exchange's inquiry on August 6. On the whole, since the China Securities Regulatory Commission issued the "third arrow" of equity financing for real estate enterprises on November 28, 2022, many real estate companies have announced share allotment plans. However, the private placement of most listed real estate companies in China is still relatively slow, such as Poly, Damingcheng and other additional issuance plans that have been approved and registered by the exchange have not been completed, and a number of real estate companies have announced the termination of private placement.
04
Stock price movements
The performance of real estate stocks in the two cities was relatively average throughout the month
More H-share property stocks ushered in a sharp rise
The performance of real estate stocks in both cities this month was relatively average, with 20.4% of A-shares rising for the whole month and 30.3% of H-shares. In terms of H-shares, the newly listed Jingfa Property last month was the largest increase in real estate-related stocks this month, and the company's share price gained more than 10% in many trading days in August, and finally rose by 144.67% for the whole month, mainly because of the relatively bright performance of the company's interim report. In addition to Jingfa Property, there are also a number of better-performing property companies such as Xinyuan Service, Zhong'an Smart Life, and Dongyuan Renzhi Service, whose stock prices have risen sharply.
In terms of A-share real estate companies, Gemdale Group rose significantly this month. The company's stock price rose sharply from the beginning of the month to the middle of the month, and there was a correction from the middle of the month to the end of the month, until the last trading day of the month ushered in a daily limit, and finally the whole month rose by 11.39%.
(Source: CRC Research Center)