Introduction
What is the impact of this round of expansion and mergers and acquisitions on Shimao's own operations?
◎ Researcher / Fang Ling, Yang Daihong, Chen Jiafeng
As a veteran real estate enterprise, Shimao once ranked in the top ten of the industry as early as 2013, but the rapid growth in the early stage also brought some problems to the development of enterprises, resulting in stagnant scale growth, and after a round of adjustment, 2017 entered a new round of expansion stage. After Xu Shitan officially took over in 2019, Shimao attracted the attention of the industry through a number of mergers and acquisitions, and the sales scale finally returned to the top ten, and in January 2020, the news that Shimao and Fusheng signed a strategic cooperation agreement for all-round cooperation pushed this attention to a higher level. This article will conduct an in-depth study of Shimao's development strategy and business status, and what is the impact of this round of expansion and mergers and acquisitions on Shimao's own operations.
01
In the process of development, we will continue to repair ourselves and lay a solid foundation to seek a higher level
1. In 2013, the first top ten in the industry, after too fast growth, there was an inventory problem (slightly)
<h1 toutiao-origin="h3" >2, crazy "buy buy buy", speed up again back to the top ten (partially omitted).</h1>
In 2017, Shimao began to accelerate again after two or three years of adjustment, and its business strategy returned to the first and second tiers from 2015, adjusting and adding opportunities focusing on third- and fourth-tier cities with high premiums. In 2017, Shimao made efforts in project development and sales, with an annual sales growth rate of 47.9%, while also actively increasing the land reserve, and the amount of new land acquired in that year increased by 167% year-on-year.
By 2019, Shimao's highlight year, after the rapid development of the first two years, the adjustment of the soil storage structure has been more optimized, the financial aspect has also maintained an excellent level, and the sales amount has returned to the top ten in the industry. At the performance meeting in March 2019, Xu Shitan pointed out that Shimao will increase the opportunity for mergers and acquisitions in 2019. During the year, Shimao successively acquired the project equity of Taihe, Vantone, Yuetai and other companies, some of which are in the sales period or can be launched within the year, helping Shimao to grow its sales scale in 2019. In 2019, Shimao achieved sales of 260.07 billion yuan, an increase of 47.6% year-on-year, ranking ninth in the industry.
<h1 toutiao-origin="h3" >3, the whole product line covers a diversified customer base, and the diversified business empowers the enterprise (slightly</h1>).
02
Contrarian mergers and acquisitions
Low-premium land acquisition barriers to boost scale growth
<h1 toutiao-origin="h3" >1, Investing opens the "acceleration key" and continues to deepen the core strategic area (partially).</h1>
Land reserves are the cornerstone of the growth of enterprise scale, and Shimao has continued to increase investment since 2017, paving the way for returning to the top ten in the industry. Entering 2019, due to the strict control of the financing end of housing enterprises, the financial pressure of small and medium-sized housing enterprises has become more and more prominent under the tightening of the external financing environment, and Shimao has just grasped the window period of "small and medium-sized housing enterprises under pressure on funds" and continued to strengthen the active investment layout of land. At the beginning of 2019, Shimao plans to use 50% of the sales proceeds, that is, 40% of the sales amount, for the whole year to obtain land, if the sales amount in 2019 is 260 billion, the land price before the 2019 Shimao plan interest is about 104 billion yuan, and the equity payment is 62.5 billion yuan.
In 2019, Shimao increased its investment efforts, taking land funds beyond the budget red line throughout the year, and the investment layout in the first and second half of the year was relatively balanced. In 2019, Shimao achieved a land acquisition amount of 155.652 billion yuan, an increase of 89% year-on-year, and the land area increased by 91.4% year-on-year to 30.9155 million square meters, and the land sales ratio was 0.6, which was much higher than the average sales ratio of the TOP10 land in the same period of 0.3. The annual equity expenditure was 90.9 billion yuan, and the land payment exceeded the budget "red line", and the enthusiasm for obtaining land was extremely high. In 2019, Shimao land was evenly good, the amount of land in the second half of the year accounted for only 49.45% of the whole year, the sales ratio of land in the period was 0.48, and the layout of investment and expansion in the first and second half of the year was relatively balanced.
<h1 toutiao-origin="h3" >2, using cooperation as leverage, leveraging scale and amortizing costs (partially).</h1>
In recent years, Shimao has adopted a diversified approach to land acquisition, and through the use of cooperation levers, it has achieved the goal of small and large, leveraging scale and sharing the cost of land acquisition. Shimao's cooperative development model mainly involves project company cooperation, through small stock trading or equity projects (mergers and acquisitions), etc., to complement the advantages of partners. For example, in April 2019, Shimao and Kunming local real estate enterprises (Kunming Bibang) cooperated to auction the Shuangfeng Village Urban Reform Project in Guandu District, the first time it entered Kunming, shimao held 51% of the project equity, and the equity expenditure was 1.257 billion yuan. For Shimao, on the one hand, local real estate enterprises have been deeply rooted in the local area for many years, have a good reputation and customer resources, and cooperate with them to alleviate the resistance to entering new cities and achieve rapid expansion; on the other hand, cooperative development can reduce the pressure of Shimao's investment, share risks and share benefits with partners.
<h1 toutiao-origin="h3" >3, "opportunistic mergers and acquisitions", financial institutions help to show their advantages</h1>
<h2 toutiao-origin="h4" > 3.1 real estate mergers and acquisitions dark horse, in 2019 significantly increased the intensity of mergers and acquisitions (partially).</h2>
In 2019, Shimao further strengthened its strategic alliance of enterprises and provided sufficient ammunition for the continuous expansion of sales scale through large-scale mergers and acquisitions. In the past, Shimao mainly relied on bidding, auctioning and listing, and the merger and acquisition gene was not deep, but in 2019, Shimao flexibly expanded the channels for obtaining land, relying on capital and financing advantages, and using large-scale acquisitions to quickly replenish soil reserves in the current land market of "expensive land and difficult to get land". In terms of the area of mergers and acquisitions, the proportion of mergers and acquisitions in 2019 was 67%, a significant increase of 36 percentage points over 2018; if the total price of mergers and acquisitions is calculated, the proportion of mergers and acquisitions achieved by Shimao increased from 14% in 2015 to 65% in 2019. In 2019, the value of goods acquired by mergers and acquisitions was about 350 billion yuan, accounting for 70% of the new value of goods in the whole year.
< h2 toutiao-origin="h4" > 3.2 strategic acquisition of Fusheng, to make up for the shortcomings of "old reform + construction" (partially omitted).</h2>
At the beginning of 2020, Shimao once again held hands with Fusheng, and the two sides formally signed a strategic cooperation agreement on January 10, led by shimao strait, to establish a new platform of "shimao fusheng", and stipulated that the entire operation and management in the future will be mainly operated by Shimao, and this strategic cooperation can be called the first "century merger and acquisition" in the 20s.
At the beginning of March, Shimao Fusheng completed the organizational structure adjustment, except for the listing platform Fusheng International and the construction sector "Fujian Liujian", the rest of the original Fusheng real estate assets have been injected into "Shimao Fusheng". The new platform consists of headquarters, Changsha, Zhengzhou and Shanghai companies, in addition to Fuzhou, Zhangzhou, Ningde, Foshan, Zhongshan, Huizhou and Dongguan projects merged into the Shimao Strait, the former Fujian Fusheng headquarters business management center by Shimao Business and Entertainment.
Shimao's entry into Fusheng basically covers all the existing projects of Fusheng, and for Shimao, there are the following complementary advantages:
(1) Quickly obtain a large amount of high-quality soil reserves. The storage value of Fusheng soil is considerable
(2) Rapid replenishment of strategic areas such as the Greater Bay Area and the Straits (Fujian).
(3) Complete the territory of the Central and Western Regions.
(4) Make up for the shortcomings of "old reform + construction", and gradually form a closed loop of the industrial chain.
<h2 toutiao-origin="h4" >3.3 "opportunistic mergers and acquisitions", Shimao-style merger and acquisition strategies (partially omitted).</h2>
Compared with Sunac, which has more than 60% of its soil reserves from mergers and acquisitions, Shimao's merger and acquisition genes are not deep, and its mergers and acquisitions are more inclined to large-scale strategic alliances with other enterprises, which is an "opportunistic merger and acquisition".
First, for the acquisition of a single project, Shimao is more inclined to strategically join forces with other enterprises to acquire part of the equity target of the project.
Second, for large-scale acquisitions at the group level, mainly Fusheng, Shimao has completed large-scale mergers and acquisitions through cooperation with AMC, which can not only restructure assets, but also alleviate the pressure on acquisition funds.
Third, the vast majority of M&A transactions are docked by financial institutions.
Fourth, the projects acquired by Shimao are all deeply rooted in strategic metropolitan areas.
Fifth, pay attention to the profit indicators of the target project.
<h1 toutiao-origin="h3" >4, after vigorous investment in soil reserve resources are abundant, the scale impact can be expected before the first seven</h1>
03
Improved operational efficiency and excellent financing capabilities helped expand
< h1 toutiao-origin= "h3" >1, the profit level is good, and the equity dilutes or reduces the net profit attributable to the parent (slightly</h1>).
<h1 toutiao-origin="h3" >2, the structure is streamlined and incubated super regional companies, and the per capita efficiency is accelerated (slightly).</h1>
<h1 toutiao-origin="h3" >3, strong financial stability and strong financing capabilities, providing sufficient ammunition for mergers and acquisitions (partially).</h1>
Shimao Real Estate in 2006 Hong Kong stock listing success, the following year Shimao shares in the A-share backdoor listing successfully, becoming a rare dual-platform listed real estate enterprises in the industry, in terms of financing, dual-platform listing naturally has many conveniences, its domestic and foreign financing channels are relatively smooth, through corporate bonds, medium-term notes, perpetual bonds, overseas notes, US dollar bonds, and dual-currency syndicated loans and other financing methods to raise funds, and close ties with financial institutions to help them grasp the financing window. In addition, through a variety of innovative financing to enrich their own financing channels, some financing products have created a precedent for domestic real estate enterprises, such as the establishment of Boshi Capital - Shimao Tiancheng Property Asset Support Special Plan in 2015 and Boshi Capital, which is the first property fee ABS approved product in China.
Domestic and foreign dual-platform financing and financing innovation make Shimao's financing cost advantage prominent. The average borrowing cost of 1H2019 decreased by 0.2 percentage points from the end of 2018 to 5.6%, while the TOP20 housing enterprise 1H2019 was 6.34%, and the financing cost of Shimao was at a lower level for enterprises of the same size.
4. Large-scale mergers and acquisitions or hidden debt worries (omitted)
04
If you want to wear a crown, you will bear its weight
Aggressive expansion may be potentially risky
...... Partially...
In general, since 2017, Shimao has pressed the "acceleration button" again and has maintained a more active investment rhythm, especially in 2019, Shimao seized the opportunity of the capital chain of many housing enterprises due to tightening financing, and closed the M&A market against the market. At the beginning of 2020, Shimao and Fusheng formally signed a strategic cooperation agreement, the project coverage is mainly in Guangdong, Fujian, including the Guangdong-Hong Kong-Macao Greater Bay Area old reform project, this strategic cooperation is known as the first "century of mergers and acquisitions" in the 20s, which can effectively make up for the shortcomings of Shimao's "old reform + construction" and formally form a closed loop of the industrial chain.
2017-2019 is three years of rapid development of Shimao, but while the scale and profitability are realized, there are also potential risks:
(1) In terms of urban layout, increase the size of the three or four lines, dematerialization or risk.
(2) In terms of cooperative development, the leverage of cooperation is greatly used, or the net profit attributable to the mother will be diluted.
(3) Mergers and acquisitions. Large-scale mergers and acquisitions not only replenish a large number of high-quality soil reserves for the group, but also bring operational risks.
(4) In terms of financing, the proportion of foreign debt is too high, and the risk exposure or risk is at risk.
Typography 丨 Yang Yan
★ For the full version of the special purchase, please consult: 021-60867863 Manager ★ Wu
Topic
directory
Analysis of the Strategy of The Newly Promoted Merger and Acquisition of Wang Shimao
First, in the process of development, constantly self-repair, consolidate the foundation and seek a higher level
1. In 2013, the first top ten in the industry, after the rapid growth, there was an inventory problem
2, crazy "buy, buy buy", once again speed up back to the top ten
3. The whole product line covers a diversified customer base, and diversified business empowers the enterprise
Second, mergers and acquisitions against the market, low premium land to build barriers to boost scale growth
1. Invest in the "acceleration key" and continue to deepen the core strategic area
2. Take cooperation as leverage to leverage the scale and amortize the cost
3. "Opportunistic mergers and acquisitions", financial institutions help to show their advantages
3.1 Dark Horse of Real Estate Mergers and Acquisitions, significantly increasing the intensity of mergers and acquisitions in 2019
3.2 Strategic acquisition of Fusheng to make up for the shortcomings of "old reform + construction"
3.3 "Opportunistic Mergers and Acquisitions", Shimao-style mergers and acquisitions strategy
4. After vigorous investment, soil storage resources are abundant, and the scale impact can be expected before the first seven
4.1 The value of soil storage is abundant to meet the settlement needs of the next 5 years
4.2 Driven by mergers and acquisitions, the scale is expected to impact the top seven
Third, the improvement of operational efficiency and excellent financing capabilities to help expand
1. The profit level is good, and the equity is diluted or reduced
2. Streamline the structure and incubate super regional companies, and accelerate per capita efficiency
3. Strong financial stability and financing ability, providing sufficient ammunition for mergers and acquisitions
4. Large-scale mergers and acquisitions or hidden debt concerns
Fourth, if you want to wear the crown, you must bear its weight, aggressive expansion or potential risks
The copyright of this article belongs to the Kerry Research Center Please do not reprint it without authorization
Reprinted with source: Cricyjzx Real Estate Research (cricyjzx) Thank you for your cooperation!
Research Center Thematic Card Program
Systematic housing enterprise intelligence customization program
Predict the trend and warn the risk to provide reference
More than 50 selected topics in 10 categories
Tailor-made professional services
Business Consulting 021-60867863
Media cooperation 021-60867824
Typography 丨Yang Yan, Li Yueyao
Crest Real Estate Research | Cricyjzx
Professional research department of E-House Enterprise Group
Focus on real estate industry research and enterprise exploration
For 12 consecutive years, the sales ranking of housing enterprises has been released