Recently, a small and medium-sized housing enterprise from a southern city, Fangyuan Real Estate, has attracted the attention of the public. Moody's announced a revised adjustment of its rating outlook from "stable" to "negative" and confirmed its "B2" corporate family rating and "B3" premium unsecured rating. The emergence of Moody's indicators suggests that Fangyuan Real Estate's sales and credit indicators will deteriorate in the coming year.
Before this, Fangyuan Real Estate stood in front of the people of the whole country, or because the director and supervisor Gao stepped down.
On May 11, 2021, Fangyuan Real Estate issued an announcement: Han Shuguang no longer serves as the chairman of the board of directors due to work arrangements, lin Tingfang, the former director, no longer serves as a director of the company due to retirement, and Huang Zhiwei, the former supervisor, no longer serves as a supervisor of the company due to his resignation; Mr. Fang Ming, the actual controller of the company, has served as the chairman of the company since May 10, 2021, and the directors of the company have been changed to Fang Ming, Han Shuguang and Xu Jun.
This personnel earthquake is the founder and actual controller of Fangyuan Real Estate, Fang Ming, who stood in front of the stage for the first time to preside over the work. Previously, he had been playing a role behind the scenes.
Fang Ming, born in December 1965, graduated from Sun Yat-sen University majoring in law, and worked at Guangdong Nanyue Law Firm before starting his business. In 1995, he founded Guangzhou Fangyuan Real Estate Development Co., Ltd.
Fangyuan Real Estate, a small and medium-sized private real estate enterprise headquartered in Guangzhou, is the tail of cranes of China's top 100 real estate enterprises. Around 2000, the star real estate Baiyun Golf Garden was successfully built in Baiyun District, Guangzhou, which became a hit. As of June 30, 2021, Fangyuan Real Estate had total assets of 48.849 billion yuan, and Fangyuan Building in Tianhe District, Guangzhou, was its first long-term holding of integrated commercial properties.
The investment layout is mainly in the third- and fourth-tier cities of Guangdong Province, and there are still many projects located in Qingyuan, Leizhou and other places, and the decline in the quality of saleable resources under construction will seriously restrict their future development.
In addition, since 2019, Fangyuan Real Estate has concentrated its firepower on the old renovation project, and the total investment is expected to exceed 90 billion, which is much higher than the investment scale of its own capital strength. Not to mention the long development cycle of the old reform project, the policy shift in Guangzhou alone is enough to toss the developer.
Part of the soil storage situation of Fangyuan Real Estate
More importantly, the financial situation of Fangyuan Real Estate is still fragile. The paid-in capital of the owners' equity is only 750 million yuan, the minority shareholders' equity accounts for a high proportion and many partners are investment companies, and there are signs of clear shares and real debts. In addition, there are other receivables formed by the borrowing of minority shareholders of factor companies (about 10% of total assets), external guarantees for non-real estate development joint ventures (about 17% of net assets), etc.
Damn, the financing capacity is also very average. The debt financing cost industry is high, and there is still a low degree of refinancing recognition. Not only is the scale of non-standard debt large, but the equity of many project companies is pledged to non-bank financial institutions or real estate funds; the scale of short-term interest-bearing liabilities is also large, and the pressure of debt repayment has been tightened.
Observe its last two public market financings: a 4-year small public bond of RMB918 million as at 3 December 2020 and a US$340 million bond due 2023 on the Singapore Exchange on 28 January 2021. All the money raised was used to repay or refinance old debts.
The point is that the coupon rates of these two bond issuances were as high as 10% and 13.6%, well above the industry average of 7.34% at the time. This not only means that Fangyuan Real Estate must continue to pay high interest, but also means that Fangyuan Real Estate has faced the dilemma of difficult financing when the market situation is good.
The only thing that can be lamented is that fortunately, there has been no public debt for at least two years. Maybe by then, the second spring of real estate will also come.