Sale of overseas assets again! How long can Country Garden ＂sell iron in a saucepan＂ resist？

In the coming January, 2024, the former "Cosmic Housing Enterprises" publicly sold about 5 billion assets and put more overseas projects on the "shelves".

According to Caixin. com, Country Garden is selling the only project in the UK, Ailsa Wharf, and has invited agents to bid.

On October 10, 2023, Country Garden released inside information, officially announcing debt default.

In December of the same year, Yang Huiyan, Chairman of Country Garden Board of Directors, said that "the family will definitely sell iron to support the company" and announced a voluntary salary reduction with three other senior executives.

Nearly four months after the accident, how strong is Country Garden’s "selling iron in a pot"? Can it survive?

01

Housing enterprises in danger were "shabu-shabu" by the market.

Image source | Middle Finger Research Institute (thank you)

The Central Finger Research Institute released the Sales Performance Ranking of China Real Estate Enterprises in January 2024. In terms of sales, Country Garden ranked 10th, with sales of 7.62 billion yuan. Country Garden ranked third in sales area.

This is related to Country Garden’s strategy of sinking into third-and fourth-tier cities, but its monthly sales are less than 8 billion, which is really terrible compared with previous data.

It is also the list released by the Central Reference Institute: In January 2022, Country Garden’s sales amounted to 49.45 billion yuan, ranking first in the industry; In January 2023, Country Garden’s sales amounted to 27 billion yuan, ranking third, which was overtaken by Poly Development and Vanke.

Poor performance, of course, is closely related to the real estate industry environment.

In January this year, the total sales of the top 10 real estate enterprises were close to 120 billion yuan, down 33% compared with last January; The sales of the top 100 real estate enterprises decreased by 33.3% year-on-year, which was 47.7% lower than that in December last year.

However, compared with the same period of last year, Country Garden’s performance not only halved, but fell by 72%. As a real estate enterprise in danger, some property buyers will inevitably have concerns about it. ……

02

How much iron did Country Garden sell?

Mi Jie appreciates the attitude of Country Garden and its management, but to be honest, their self-help came a little late.

In 2022, Country Garden’s revenue decreased by nearly 18% year-on-year, but the net profit returned to the mother fell sharply, down by nearly 123% year-on-year. With the annual revenue of 430.4 billion yuan, the net profit returned to the mother was 6.052 billion yuan.

To put it simply, Country Garden was already in crisis in early 2023.

However, the news of centralized asset sales did not appear in its announcement until August 2023.

On August 10th, 2023, Country Garden issued a profit warning, with a pre-loss of 45-55 billion yuan (actual net loss of 48.93 billion yuan) in the first half of the year.

Image source | Oriental Fortune Network (thank you)

On August 25th, 2023, an announcement was issued to sell 26.67% equity interest of the associated company, with a total consideration of 1,291.5 million yuan.

In December of the same year, it issued an announcement to transfer its stake in Zhuhai Wanda Commercial Management for about 3.069 billion yuan.

But this is a loss-making business, probably just to get blood back. According to the announcement, compared with the initial investment cost of Country Garden, it is expected to record a comprehensive loss of about 160 million yuan.

In January this year, Country Garden accelerated the speed of "selling iron".

First, the media reported that Country Garden would sell its Australian projects at a discount. Country Garden’s Australian subsidiary, Risland Australia, plans to sell the remaining land in Sydney for 240 million Australian dollars (about 1.138 billion yuan). The purchase price in 2017 was about A $400 million.

Second, the website of Guangzhou Property Rights Exchange shows that Country Garden plans to transfer 5 assets for 3.818 billion yuan. Including hotels, Grade A office buildings, commercial properties, office buildings and apartments.

Third, British media reported that Country Garden is selling its London-based project Ailsa Wharf. In 2018, Country Garden joined forces with a fund to acquire the land for more than 80 million pounds (about 770 million yuan).

If the first two transactions are successful, it is expected to return more than 5.1 billion yuan.

03

There is good news, and there is more pressure to pay off debts and sell.

In January, there was also a lot of good news for Country Garden.

Since the beginning of the year, first-and second-tier cities have frequently rescued the market. For example, Shanghai singles who meet the requirements can buy a house, Guangzhou has liberalized the purchase restriction, and Suzhou has completely cancelled the purchase restriction. ……

And more direct impact: official news, the "white list of real estate project financing" is expected to land in the near future and strive for loans.

At the end of last year, Country Garden also participated in the "Bank-Enterprise Symposium on Supporting the Reasonable Financing Needs of Real Estate Enterprises" held by Guangfa Bank. In the future, it is not surprising that some of its projects will enter the financing white list.

But the pressure of debt repayment and sales is still great.

In October last year, Country Garden had nine domestic corporate bonds with an extension plan of about 14.7 billion yuan, which was a relief.

However, the restructuring of nearly $10 billion in overseas debt has not yet been completed.

According to The Paper, Country Garden still has 17 overseas debts: 15 of them are US dollar debts, with a total deposit of about 9,912.69 million US dollars; Two ordinary convertible bonds circulating on the Singapore Stock Exchange, with a duration of about HK$ 6.9 billion.

The mid-year report in 2023 revealed that by the end of June, Country Garden had a total interest-bearing debt balance of 257.91 billion yuan and a total cash balance of 130.569 billion yuan (restricted cash was about 29.454 billion yuan).

Enterprise alert shows that among Country Garden’s US dollar debt, the US dollar debt due within one year is about US$ 1 billion; About 5 billion dollars of debt will expire in the next 1-3 years, accounting for the largest proportion; Bonds with a maturity of 5-10 years, totaling about $2 billion.

According to financial reports, Country Garden has two bonds due this year:$965 million debt due on January 27, 2024 and $537 million debt due on April 8.

Previously, Mo Bin, a veteran of Country Garden, said that "without sales, there would be no hematopoiesis", but judging from the performance in January, it was quite difficult.

In 2024, Country Garden listed the key tasks as "ensuring delivery, operation and credit".

A long way to go.