Produced by 丨aotou finance (theSankei)
2021 is an extremely difficult year for the real estate industry, and the same is true for the real estate peripheral industry.
China's leading paint three trees (603737. SH) has always been an excellent student in the eyes of investors, but as a typical real estate downstream industry, after experiencing the tight capital chain of real estate enterprises and even frequent explosions in 2021, as well as the rising price of global commodities, Sankeshu's annual performance forecast alone has reached 650 million to 850 million yuan.
Why is the amount of impairment so large? To put it bluntly, the company is owed too much by real estate customers! And a considerable part of it may be difficult to recover.
The company's explanation for this is that combined with the changes in the real estate industry, the credit loss ratio of bad debts in customer accounts receivable has been increased, and at the same time, a separate impairment provision has been made for real estate customers with financial difficulties.
Since 2016, Three Trees' earnings per share have remained above one yuan, but it is expected that the company's scenery will fade when the 2021 annual report is released.
Now the problem with the three trees is that after making a huge impairment provision, is it relatively better in the next few years, and there is not so much pressure on accounts receivable?
The answer may not be optimistic, because the future of Three Trees depends to a considerable extent on the situation of the real estate market, but as a typical cyclical industry, it is generally accepted in the market that the winter of the real estate industry is just beginning.
If the skin does not exist, the hair will be attached? Three trees are probably difficult to stand on their own.
Here the author wants to explain the relationship between real estate developers and suppliers, due to the property market fever for many years, housing enterprises are very strong, and the relationship with surrounding commodity suppliers is almost no exception, there are long account periods, so building materials, decoration, and even furniture and home appliances and other industries where there is direct cooperation with housing enterprises, reflected in the statement is basically a large amount of accounts receivable.
Three trees is certainly no exception.
On December 7, 2021, Sankeshu issued an announcement that at the end of September of that year, the company's major customers included China Evergrande (03333. HK), Huaxia Happiness (600340. SH), Blu-ray Development (600466. SH) and Hengtai Real Estate's provision for bad debts from receivables totalled $267 million.
The provision for bad debts of receivables of the above four companies was 196 million yuan, 34.442 million yuan, 33.56 million yuan and 3.46 million yuan respectively, and the corresponding provision ratios were 38.75%, 80.00%, 30.50% and 10.65% respectively.
If you talk about performance thunder, in fact, when this announcement was issued on December 7, it exploded.
Earlier, in June 2021, Sankeshu had already issued an announcement that China Evergrande had 53.6372 million yuan of bills overdue.
After the announcement of this account, the three trees were immediately paid by Evergrande, and at that time, many people praised the bravery of the three trees - the first listed company to issue an announcement to Collect Debts from Evergrande was the three trees.
But at this time, looking back, although Sankeshu has a certain prejudgment that the real estate industry will be affected by the thunder, it has also made corresponding efforts, but over the years and many giant housing enterprises, the credit sales model has long been difficult to return.
From the initial paint revenue of about 600 million yuan at the beginning of the listing, to more than 3.6 billion yuan in 2020, Sankeshu has achieved rapid growth in performance by riding the express train of real estate soaring, and the stock price of the secondary market has also performed prominently, but the price of performance growth is carried out in the credit sales model.
For example, in 2016, the revenue turnover days of Three Trees were less than fifty days, and by 2020, it was more than 90 days.
In a big vernacular, the goods are sold a lot, but most of the goods that are taken back are accounts.
Sankeshu has also explained in its financial reports over the years that it gives higher credit limits and account periods to real estate customers.
As a vine attached to the big tree of the real estate industry, the risk margin of the three trees is about equal to the risk margin of the real estate industry.
However, it is intriguing that although the three trees have adopted the strategy of expanding the sales scale on credit for many years, the credit sales of the three trees have increased in 2021.
According to the forecast, the sales scale of Three Trees 2021 increased by more than 40% year-on-year.
But only the revenue looks good.
In addition, accounts receivable increased significantly, impairment increased significantly, liabilities increased significantly, net profit fell off a cliff, operating cash flow was in jeopardy, last year's fixed increase of 3.7 billion yuan of fundraising plan, there were 1 billion to supplement cash flow, in addition, chairman Hong Jie's pledge of shares continues to rise.
It can be said that at the moment when the prospects of the real estate industry are unclear, the future of three trees is also confused.
Where is the way to break through, is it to vigorously develop C-end customers, vertical development, or shrink the front line to preserve strength? The current three trees have not yet given a reassuring answer.