Sun Hongbin will never become the next Xu Jiayin

At the end of 2022, Sun Hongbin set a goal for Sunac: to return to a benign and healthy development track in 2023.

Now that there are only more than 80 days left in 2023, how much has Sun Hongbin's goal been accomplished?

On October 5, Sunac's overseas debt restructuring plan was approved in accordance with the order of the High Court. Earlier, the company issued an announcement that the company's overseas debt restructuring plan had been approved by the majority of creditors. As soon as the news came out, Sunac China (1918. HK) rose for two consecutive days. Sunac, which has been silent for a long time, seems to have really revitalized the financing end.

However, the capital market seems to be more concerned about the hematopoietic ability of the company itself.

At the end of August, the policy of "recognizing housing but not recognizing loans" in first-tier cities was implemented, and Sunac's advantages in betting on improving the market in first- and second-tier cities began to be highlighted, and the stock price began to warm up. At the same time, Beijing Sunac No. 1 Courtyard took advantage of the policy to collect evidence, and the subscription amount on the first day exceeded 5.6 billion yuan, and the sales office was bustling.

The financing path began to flow smoothly, and the real estate sales began to pay back, and Sunac became the first batch of enterprises to turn. Today, when Evergrande's debt restructuring has changed, Xu Jiayin has been arrested, and the real estate industry has continued to decline, participants in the market are looking forward to seeing Sunac come alive again and release more optimistic possibilities on the road of self-help and transformation of real estate enterprises.

Now, where has Sunac's funds flowed, and which links urgently need continuous blood supply? Understanding these two questions may help us look further into the real estate industry.

First, who prophets Spring River plumbing

The "bailout" policy has been wave after wave, and the cumulative number of real estate regulation and control policies issued by various places in September alone has reached 175 times. Among them, first-tier cities have begun to implement "recognizing housing without recognizing loans" and attracting the most attention from the market.

On August 30, first-tier cities led by Guangzhou successively issued "housing recognition but not loans", as soon as the news came out, the stock prices of listed real estate enterprises were boosted, and Sunac, which was jokingly known as one of the "three immortals of real estate (real estate three immortal stocks)", also felt the enthusiasm of the capital market.

Compared with the second-hand housing market, the landing of the "recognize housing but not recognize loans" policy stimulates replacement demand more in the new housing market, and many middle-class and high-net-worth people with housing replacement needs have flocked to the improved new housing market, even intermediaries, they are more inclined to take customers to see new houses.

Among them, the most benefited are Sunac, which have already invested heavily in the first- and second-tier markets, and are mostly improved housing companies. Since the New Deal, Sunac's Sunac No. 1 Courtyard project located in Beijing's East Fourth Ring Road has quickly become the hottest real estate in Beijing. But whether the seemingly hot picture can really be translated into real money transactions may have to be spoken by September's sales data.

"We should be the hottest project in Beijing."

In early September, Sunac No. 1 Courtyard's property sales confidently told "leopard change". In the sales mouth, Sunac No. 1 Courtyard has a total of 350 houses, and the total number of houses in the first three buildings opened is less than 300 sets. According to the data released by Sunac official micro, on the first day of opening on September 3, 169 sets were successfully subscribed on the spot, with a total subscription amount of about 5.62 billion yuan. If calculated according to these data, the proportion of initial subscriptions is more than half, and the data is good.

However, the pre-sale information published on the website of the Beijing Housing and Construction Commission shows that the number of approved sales units in the three buildings 1, 3 and 5 opened this time is 151, 155 and 158 sets respectively, a total of 464 sets, and this data does not include the second building that has not yet opened.

In fact, the subscription amount is not the actual amount sold. Under normal circumstances, during the sales process of real estate, there will be a situation where the source of the source is cleared because the payment cycle does not meet the requirements. As a real estate with a total price of 30 million to 40 million, the payment cycle required by Sunac No. 1 Courtyard is actually more stringent.

The property sales said that Sunac No. 1 Courtyard is a non-ordinary residence, and the down payment for the first set requires 40% of the full payment, and the entire down payment must be paid within 10 to 15 days at the latest, and the threshold is not low. Sunac's sales also admitted that some customers were indeed lost because of the payment cycle card.

In any case, Sunac No. 1 Hospital's initial subscription amount of 5.6 billion yuan is enough to inject a shot of strength into Sunac and other distressed housing companies, and at the bottom of such a long cycle, confidence is what real estate companies urgently need at this moment.

In July and August, the sales amount of housing companies almost fell to the lowest level this year. Sunac, for example, reached a peak of RMB11.18 billion in March, but then began to decline significantly, with contracted sales of only RMB4.19 billion in August. At the end of these sales data announcements, Sun Hongbin's name is written.

However, Lao Sun may also understand that the most difficult time has passed. In an exchange discussion at the end of 2022, it was found that Sun Hongbin, who had not appeared for a long time since the company's thunderstorm, had gray hair and thin cheeks. Unlike before, he did not wear glasses, his eyes were bright and his expression was relaxed.

In January of the following year, good news began to come out on the financing side.

Second, the "good popularity" of the white knight

In January 2023, Sunac's RMB16 billion domestic bond restructuring was completed, and 10 existing corporate bonds and supply chain ABS were extended as a whole. In the 2023 half-year report, the accountant also issued an unqualified opinion.

The latest piece of good news comes from foreign debt. On October 5, Sunac's offshore debt restructuring plan, which had been approved by a majority of creditors, was brought to the Hong Kong High Court for approval. On the same day, Sunac China issued an announcement that the restructuring plan will take effect after all conditions are met.

In addition to submitting a sealed copy of the approval order and formally signing the deed of commitment, etc., the conditions also include that more than 75% of the creditors participate in the vote, and at least half of the creditors vote at the meeting.

As early as September 18, Sunac issued an announcement that the company's overseas debt restructuring plan had been approved by most creditors. Although the final good news has not yet arrived, the capital market has already heard the news soaring: on October 5 and 6, Hong Kong stock Sunac China rose by 6.31% and 10.05% respectively.

For real estate companies that have always been asset-heavy, the most important source of funds is not sales, but financing. As early as March this year, Sun Hongbin said that there are only two requirements for the restructuring of foreign debt: first, fast, which is the basis for resuming normal operations, and second, the plan must be systematic and comprehensive, which can support the company to truly recover and get out of trouble. This time, Lao Sun did not break his word.

At the end of August, some media released news that Sunac would end the dual-headquarters model at the end of October and withdraw from Beijing to its Tianjin base camp. This is seen as a signal: Sunac will bid farewell to the previous development model, preserve its strength, and slowly return to blood.

Sunac used to be the king of mergers and acquisitions, and Sun Hongbin also likes to be a "white knight". Sunac No. 1's morale-boosting project was received from Oceanwide. If you want to wait for the hanging land to hang out such a good land located in the core area of the East Fourth Ring Road, and then grab it, time and cost are big problems.

However, in the market downcycle, these projects have a high probability of becoming thunder.

Fortunately, Sunac, which is keen to do "AMC", finally ushered in its own AMC. According to previous public information, Sunac introduced Orient Asset, Shaanxi Jinzi, Bank, CITIC Trust and other funders, and jointly revitalized projects including but not limited to Wuhan Taohuayuan Project, Xianyang Senyu City Project and Shanghai Dongjiadu Project. In the meeting that attracted much attention from the outside world at the end of 2022, Sun Hongbin also met with Wuhan Urban Construction. Sunac official Weibo revealed that representatives of the two sides signed a cooperation agreement on relevant matters.

According to data from the China Index Research Institute, in the first half of 2023, Sunac China's delivery scale ranked second only to Country Garden, with the number of deliveries reaching 118,000 sets. This may also include the efforts of AMCs.

Third, the corner where the wind is not warm

However, behind the 118,000 deliveries, there are still a large number of properties that are mired in delays.

This link has obviously not been fully opened. For example, Sunac Royal Palace located in Tianjin, Sunac's base camp. In mid-September 2023, the 545 owners who purchased the project issued a "declaration of war" to Sunac, saying that the information they received when buying a house in 2020 was that it would be completed and moved in in two years, but since the end of 2021, the project has been extended indefinitely and has never resumed work.

At the same time, Sunac's delivery period for real estate for sale is also long. For example, the just-opened Beijing Sunac No. 1 Courtyard will be pre-sold in 2023 and the delivery time will be in 2026, which reserves a long enough period for delivery.

It is not only the owners who are implicated because of the collapse of the real estate, but also the people who are struggling in the financing and construction chain. For example, the Tianjin Xingyao Wuzhou project, which is also stalled. Among the cases involved in the litigation shown by Tianyancha, there were 227 construction contract disputes related to this project, and 1,979 disputes over commercial housing pre-sale contracts.

Another example is Kefei, a trust holder who bought the Zhongrong-Cheng'an No. 75 pooled fund trust plan in April 2021. The underlying asset of this project is Star Glory Five Continents.

Xingyao Wuzhou is located in Balitai Town, Jinnan District, Tianjin, with residential accounts for more than 86%. In a mixed-use project, the higher the proportion of residential projects, the more stable the payment collection situation is generally considered. Because after the project opens, it can be quickly pre-sold and repaid. But Star Glory Five Continents seems different, it was acquired by Sunac in 2017 but failed to revitalize.

According to the trust plan management report, from the fourth quarter of 2022 to the second quarter of 2023, the construction of buildings almost stagnated at "16#, 18# and 24# plot structure capping and secondary structure construction; 19#, 20# plot main structure construction" stage, there is no more obvious progress. In the first half of 2023, a total of 34 houses were sold in this project, with a transaction amount of 65.38 million yuan. In 2022, 263 houses were sold, with a transaction amount of more than 400 million yuan.

In May 2022, Kefei found that only part of the proceeds that should have been fully distributed had been distributed, and then simply stopped paying them altogether. Until mid-2023, 5 million and 30,000 were paid, but in the form of principal redemption. In Kefei's view, this is a means to pay less interest in the future.

It is always said that "the prophet of the spring river water heating duck", for the people on the shore, the recovery always comes more slowly.

"When people mention it (Sunac), they generally talk about its overseas part, but the default of domestic debt seems to be rarely mentioned, and it is also mentioned in commercial papers." Kefei felt that investors like himself seemed to be forgotten.

Sunac's onshore bonds did roll over, but Kefei and other investors bought trust products with real debt. The risk control measures column in the promotion materials are clearly marked: land mortgage, group difference compensation and liquidity support, the latter two are all backed by Sunac Group's capital liquidity, while the risk control measure of land mortgage actually relies on the assessed value of land.

In the current market environment, land plots are constantly depreciating, and investors' hearts are also falling to the bottom. People firmly believe that the warm wind blowing to Sunac will eventually shine in every corner of the upstream and downstream of the industrial chain, but when is it? 

(At the request of interviewees, the text can fly as a pseudonym)