The asset liability ratio of a large number of real estate enterprises is close to 90%. How to support the market becomes a problem
(By Ma Yuecheng)
One of the reference data for people to judge whether the property market is good or bad is that the developer's financing ability, if the developer's financing ability is strong, the land market will be more popular. On the contrary, if the developer enters into debt repayment, the developer's ability to take land will be reduced, and the property market will enter a downturn. If the property market is depressed, the price of the whole market will be threatened. The decline of house prices means that the assets of real estate enterprises will shrink.
The developers' assets shrink, which means that the developers' assets are not hard currency, but variable. To be more frank, many of the developers' assets are bubbles. However, the developer's debt is a real loan, which cannot be underestimated. Therefore, when the developer's debt remains unchanged, the developer's debt ratio will rise in a straight line as long as the property market bubbles.
In order to prevent this from happening, developers always seek financing channels. In this regard, the government is also actively cooperating. In fact, it is also the meaning of stabilizing housing prices. Many people do not understand it, and some people have proposed that the goal of stabilizing housing prices should be at the level of housing prices in 2016, because in some regions, housing prices doubled in 2017, which is too absurd.
Although the house price in 2016 was already very high and unacceptable, the house price after 2017 is even more unbearable. However, we found that housing prices in some hot areas have declined. However, when the housing prices in 2016 were far away, the relevant parties and some experts were worried. They could not rise or fall sharply, which was put forward in this context. Because house prices are falling, I don't know how many developers will be insolvent and forced to go bankrupt.
In order to avoid this situation, developers must try their best to produce a good figure. All kinds of financing channels must be used, sometimes without cost. Since this year, the government has also introduced special bond financing, bank reserve ratio reduction and other measures, which are also a channel for developers to solve the current crisis. As for how long this method of using bubbles to cover bubbles can last, it is still unknown. However, the reality that bubbles are accumulating more and more should be thought-provoking.
According to statistics, 25 of the top 50 domestic listed real estate enterprises in terms of sales have asset liability ratios of more than 80%. In 2018, among the top three leading real estate enterprises in the sales ranking, Country Garden achieved a sales performance of 728.69 billion yuan in the whole year, up 32.3% year on year, ranking first since 2017. Vanke and Evergrande also achieved year-on-year growth of 14.5% and 10% respectively, reaching 606.95 billion yuan and 551.34 billion yuan respectively.
Although Country Garden is still firmly at the top of the list, its asset liability ratio has also hit the highest annual value since its listing in 2008. As of December 31, 2018, the total assets of Country Garden were 1.63 trillion yuan, the total liabilities were 1.46 trillion yuan, and the net assets were 173.4 billion yuan. The company's asset liability ratio was 89.36%, up 0.47 percentage points from the end of 2017.
Although Vanke's sales growth exceeded Evergrande's, from the perspective of asset liability ratio, 2018 was a year when Vanke added leverage. Data shows that Vanke's asset liability ratio reached 84.59% at the end of 2018, climbing to the highest level in the same period since its listing. At the end of 2018, the asset liability ratio of Rongchuang China was 89.80%, slightly down from 90.27% in the same period last year. By the end of 2018, the net debt ratio was 149%, down 53 percentage points year on year. The debt ratio of Greenland Holdings, which ranked sixth in sales, remained high. At the end of 2018, the net asset liability ratio of Greenland Holdings reached 171%, and the asset liability ratio was 89.49%.
Many real estate enterprises are in prison, but it is also a difficult outcome. Wanda is much more relaxed after selling its cultural and tourism assets. At the end of last year, Country Garden also proposed to give up real estate and switch to structural adjustment of AI and high-tech agriculture. All prove that developers have a hard time. The asset liability ratio of Taihe Group, which has recently been trapped in the tight vortex of capital chain, is also high at 86.88%.
Since last year, Taihe has fought price wars for many times, which is also an effort to reduce its debt level. However, it still faces great pressure. From the perspective of net debt ratio, in 2017 and 2019, the net debt ratio of Taihe was 475% and 384% respectively. The net debt ratio can better reflect the real debt situation of real estate enterprises. The net debt ratio=(interest bearing liabilities - monetary funds)/net assets. Generally speaking, it is safe to control the net debt ratio below 70%. If it exceeds 200%, it is very dangerous. This is why developers should make great efforts to withdraw funds at the end of each year. [This article was released by the "Ma Yuecheng" account 20190518]
