Produced by: Sina Finance Research Institute of Listed Companies

Author: Dayan Lou Guan/Zhu

In the first half of this year, Rongsheng Development Due to the planned acquisition of new energy enterprise Rongsheng Mengguli It is widely concerned that entering new energy is also seen as one of the transformation attempts of real estate enterprises. However, in just over half a year, the incentive effect of new energy, a popular track, on stock prices has continued to fade. Not only has the acquisition progressed slowly, but there is no new progress information disclosure. At the end of 2023, there are indeed several more announcements about executives' resignation, litigation and other related announcements. How the future company will respond is worth paying attention.

The first is the resignation of company executives, which is more like "transfer" from the perspective of announcement. Lin Hongbo, the vice president of the company, applied to resign as the vice president because of another appointment of the company. The announcement did not mention what the new position was, which needs to be disclosed by the company later.

Judging from the litigation announced in December, the plaintiffs of the two cases announced in early December were China Construction Investment Trust Co., Ltd. and China Huarong Asset Management Co., Ltd. Hebei Branch, involving about 362 million yuan and 390 million yuan, respectively. The reasons for the litigation were related matters of subsidiary loan contracts and issues related to subsidiary debt; The plaintiff of the case announced on December 30 was China Resources Shenzhen International Investment Trust Co., Ltd., with an amount of about 180 million yuan. The reason for the lawsuit was that the subsidiary failed to fully perform its obligation of repaying principal and interest in the loan contract. In the above litigation cases, the company provides joint and several liability guarantee for related subsidiaries.

For details of the company's debt situation, please refer to articles such as "How feasible is it for Rongsheng Development to enter into new energy when its debt pressure is still high?". These three lawsuits also reflect the greater debt pressure faced by the company more clearly.

Borrowing from related parties may be a way for the company to ease the financial pressure. On the evening of December 29, the company said that it would respectively propose to borrow no more than 1 billion yuan from the controlling shareholder Rongsheng Holding and its subsidiaries for a period of no more than 24 months; Borrow no more than 500 million yuan from Rongsheng Construction, the second largest shareholder, and its subsidiaries for a period of no more than 24 months. The purpose of borrowing is to ensure the capital demand for the company's business development. As of the end of September, the gap between the Company's monetary capital and short-term borrowings and non current liabilities due within one year has reached about 10.907 billion yuan. It is doubtful how effective the 1.5 billion yuan of related party borrowings will be.

It is worth noting that the loan announcement did not specify the specific borrowing interest rate, nor did it give a borrowing interest rate range, which also made the company's financing costs more uncertain. The relevant terms show that the comprehensive borrowing rate will be determined through negotiation according to the cost of capital. Through sorting out the company's announcement, compared with the terms of loans to related parties disclosed on April 30, 2022, the comprehensive borrowing rate is limited to no more than 10%, so why the interest rate is not clearly stated in this borrowing is questionable, and whether the subsequent determination of interest rate is fair remains to be seen.

However, if we want to alleviate or solve the debt pressure to a large extent, restoring the hematopoietic capacity is still the fundamental way. As of the end of the first half of the year and the end of the third quarter, the inventory scale of the company is still at the level of 100 billion yuan, and the total balance is declining compared with the same period last year. However, if we look at the medium-term inventory details, the scale of the developed products, namely houses for sale, in the first half of the year is still growing by about 7.6% year on year, and the pressure of degenerating still exists. In 2023, the effect of the Company's housing stock reduction will be disclosed in the annual report.

Also related to Rongsheng Holding and Rongsheng Construction, the company updated the situation of the freezing of the shares held by shareholders in the company on the evening of December 29, and the cumulative freezing and marking of the two accounted for 17.19% of the total share capital of the company. Although the controlling shareholder said that the execution case that led to judicial re freezing and waiting for freezing had reached an execution settlement with the relevant parties; Rongsheng Construction also said that it was actively communicating with relevant parties, but this also reflected the pledge risk of the company's equity to some extent.