Vanke, what will happen
Original Liu Xiaobo
Although the positive continues, the real estate industry is still facing difficulties, and the situation is no less severe than when Evergrande thundered.
After sweeping a number of private real estate companies, the bears are trying to hit mixed-ownership real estate enterprises and even state-owned real estate enterprises.
Looking at the stock trends of Vanke and Poly, it is clear at a glance. The chart below shows the trend of Vanke's A-shares:
Since the beginning of this year, the price of Vanke's A-shares has been close to halving, with a maximum decline of 42.6%. Recently, Vanke's stock price has not only fallen to a higher level, but its bonds have also been shorted and fluctuated violently.
Vanke is not only recognized as an excellent real estate enterprise, but also a leader and representative of mixed-ownership real estate enterprises.
The power of "shorting all real estate companies" is not only trying to shake Vanke, but also beginning to short the leader of central enterprises, Poly Development.
The chart below shows the trend of Poly Development's A-shares, which is strikingly similar to Vanke, and the recent stock price has also dropped to a new level:
The stock prices of the two stocks are close, the price-earnings ratio is close (about 7 times), the price-to-book ratio is close (0.5 to 0.6 times), and the total market value is also similar (close to 130 billion yuan).
At present, everyone is not worried about Poly, but the number of people who are worried about Vanke has increased, because Poly is a central enterprise and Vanke is a mixed-ownership enterprise. Almost every day, fans ask me backstage what will happen to Vanke.
To be honest, I don't know how to answer, there have been so many shocking things in the past two years.
For the double kill of stocks and bonds, Vanke has made an emergency response through the investor exchange and interactive platform:
Vanke emphasized that in terms of cash flow, the company has maintained positive operating cash flow for 14 consecutive years, and it remained positive after covering the land premium expenditure of 37 new projects in the first three quarters. As of the end of the third quarter of this year, the company had 103.7 billion yuan of funds in hand, and the coverage ratio of short-term debt was 2.2 times. During the year, the company had no overseas financing due, and the domestic credit debt to be repaid was only 380 million yuan.
However, investors are worried about forward debt, such as Vanke's two long-term US dollar notes maturing in November 2027 and November 2029.
This reflects the pessimism of some investors: they believe that the downturn in real estate is too long to imagine, and even that there is no future for real estate.
In fact, the economy has cycles, and so does real estate. Real estate is the most important industry to maintain the normal operation of finance, and it is a pillar industry in any country and at any stage of development. Even in the "post-urbanization" era of the United States, the main source of revenue for local governments is still real estate, and when the Fed printed money, one-third of the money went directly to the real estate industry (buying MBS).
Today, the Financial Associated Press, a subsidiary of Shanghai Poster Industry Group, released an exclusive news: next Monday, that is, tomorrow (November 6), the relevant leaders of Shenzhen State-owned Assets Supervision and Administration Commission and Shenzhen Railway Group will communicate with financial institutions together with Vanke's senior management on Vanke's operation and recent bond performance.
In fact, this news was circulated as early as Friday and Saturday, and now it has finally been confirmed by the regular media.
When the market is facing confusion, it is very necessary for Vanke's senior executives and their major shareholders to come out together to communicate with financial institutions and investors.
In the economic downturn, no matter how strong a company is, once it faces unfavorable rumors, it needs to be clarified in time. Otherwise, there may be a situation in which everyone is struggling with money and accumulating and destroying bones.
In psychology, there is the so-called "Murphy's Law", which is simply summarized as: "If there is a chance that something will go bad, no matter how small the likelihood, it will happen".
This is actually the domino effect of strong psychological cues. Everyone knows that real estate is sluggish, and real estate companies are more sad, since every family is falling, then Vanke's possibility seems to be not small. When everyone is worried, it will naturally affect its stock price, bond prices, home sales and refinancing, and may eventually push a normal business into a vortex.
At such a time, it is crucial to break Murphy's Law and end the domino effect of the continuous fall of real estate companies. This is not only the responsibility of Vanke's executives and major shareholders, but also the responsibility of the regulatory authorities.
A week ago, Xin Jie, chairman of Shenzhen Railway Group, Vanke's largest shareholder, was elected vice chairman of Vanke's board of directors, which means strongly supporting Vanke. Of course, Xin's statement is even more obvious:
In fact, the original title of my article was "Who will raise Vanke".
My point of view is that at such a time, there should be institutions to raise their cards and increase their holdings in Vanke and Poly, which is not only to support leading enterprises, but also a necessary move to stabilize the economy and expectations.
On November 2, the official WeChat account of the Ministry of State Security published an article titled "Be a Staunch Guardian of Financial Security". It warned four types of people who "vainly tried to trigger financial turmoil in the mainland", namely: "bears", "shorts", "shorts", and "hollowers":
Previously, Central Huijin Company increased its holdings in the four major banks and bought ETF funds, which played a positive role in stabilizing the stock market.
In fact, for Vanke and Poly, which are currently very low in price-earnings ratio and price-to-book ratio, the "stock market national team" or "local team" can increase their holdings or even raise their cards.
The above chart shows the list of Vanke's 10 largest shareholders as of September 30, 2023. Among them, Central Huijin, the most important member of the national team in the stock market, holds 185 million shares of Vanke, accounting for 1.55%; China Securities Financial Corporation holds 133 million shares, accounting for 1.11%. Theoretically, they could all increase their holdings in Vanke.
Vanke's largest shareholder, Shenzhen Metro, a local state-owned enterprise in Shenzhen, holds 27.18% of the shares, and theoretically has the option to increase its holdings.
Vanke's current price-to-earnings ratio is only 7 times and its price-to-book ratio is 0.53 times, so Vanke's H shares are cheaper.
For a long time, the share prices of Vanke's A-shares and H-shares were very close, with a difference of less than 10%. But now, Vanke's H shares are only 7.59 Hong Kong dollars, which is equivalent to 63% of A shares when converted into RMB. This also tells us that the main force of this wave of Vanke's double kill of stocks and bonds comes from overseas.
According to the data released by Vanke, from January to October this year, Vanke achieved a total contracted sales area of 20.184 million square meters, a year-on-year decrease of 5.5%; The contracted sales amount was 312.44 billion yuan, down 9.9% year-on-year.
The total sales of the TOP100 real estate companies from January to October decreased by 13.1% year-on-year, which shows that Vanke outperformed the market.
According to the "Sales Performance Ranking of Chinese Real Estate Enterprises from January to October 2023" released by the China Index Research Institute, the top five real estate companies in terms of sales in the first 10 months of this year are Poly Development, Vanke, China Overseas Real Estate, China Resources Land, and China Merchants Shekou, which has changed significantly compared with the top five in the same period last year (Country Garden, Poly Development, Vanke, China Overseas Real Estate, and China Resources Land).
Poly and Vanke are the two leading companies in terms of sales, but their stock prices have both fallen recently and have been shorted, which is worth paying attention to and understanding carefully.
If these two leading real estate companies are successfully shorted, the impact on economic and financial security will be very large. At that time, there will be no real estate companies that are not suspected and worried, and new home sales across the country will come to a standstill; The financial industry, which is closely related to real estate, will be affected: loans related to real estate in the banking system account for nearly 40%...