Sun Hongbin is about to go ashore
Sun Hongbin has not appeared in the public eye for a long time.
Last time, on the evening of March 29, 2023, Sun Hongbin, as the chairman of Sunac China, introduced the overseas debt restructuring plan to global investors. Because it is a live audio broadcast, you can only hear its voice, but you can't see its people. Since then, for more than eight months, Sun Hongbin has not appeared in public or spoken out.
But on the rivers and lakes, there is always a legend of Sun Hongbin. What is often mentioned by the outside world is Sun Hongbin's efforts to save himself, survive with a broken arm, and pay out of his own pocket. Since the beginning of this year, Sunac has also ushered in several good news: Sunac No. 1 Hospital, a high-end residential project in Beijing, sold 5.6 billion yuan on the first day of opening, and Sunac announced on November 20 that it had successfully restructured its debts: resolving 90 billion yuan of debt risks and reducing more than $4.5 billion in debt through debt-to-equity swaps.
It took Sunac 18 months to get to where it is today. The debt extension of several years has made Sunac breathe a sigh of relief, but this does not mean that the insured real estate company is completely ashore. Because, in the long run, Sunac's debts still need to be repaid. In the short term, 2023 is over in less than a month, and Sun Hongbin has not fulfilled what he promised in the 2021 annual report: returning to a benign and healthy development track in 2023. At least, selling houses and paying wages are still the old and difficult problems of Sunac.
On December 6, Sunac released the latest sales data: in November 2023, Sunac China achieved contracted sales of about 3.5 billion yuan in a single month, with cumulative sales of 79.28 billion yuan from January to November, while in a single month in November last year, Sunac sold 8.04 billion yuan, and from January to November last year, Sunac sold a total of 161.1 billion yuan. In November this year, both monthly and cumulative sales fell by more than half compared to last year.
On December 6, Sunac also announced the preliminary results of the debt conversion plan, and during the first conversion period of the mandatory convertible bonds, Sunac has received a conversion notice with a total principal amount of about $1.904 billion, accounting for about 69.23% of the initial issuance. At a conversion price of HK$6 per share, the Company has issued a total of 2,475 million shares to conversion holders. After this conversion, Sun Hongbin's shareholding in Sunac decreased from 38.75% to 29.98%.
"Payroll intermittent"
Although Sun Hongbin issued an order that "employees' wages will be paid as soon as they have money", today's Sunac is no longer the arrogant Sunac it used to be. Like other real estate companies, Sunac has become the norm after the thunderstorm, and lack of money has become the norm. As a result, the payment of employees' wages is in a state of differentiation. "City Boundary" understands that at present, the salary payment is generally not a problem for project employees who sell well and can generate cash flow quickly. In some third- and fourth-tier cities where it is difficult to decentralize, it is difficult to pay wages because the project is not easy to sell.
Zeng Tian has resigned from Sunac Zhengzhou Regional Company for more than a year, but she still has not received several months of salary from her old employer, as well as half a year's arrears of provident fund and social security. "If the project is sold well, it will be issued, and if it is not good, it will be owed. Zeng Tian, who is still concerned about his old club, told "City Boundary".
Song Feng, an employee of Sunac in the southwest region, has become accustomed to it. The salary cycle for him and his colleagues is usually two or three months, or three or four months. Song Feng knows very well that the company has been actively solving the problem of employee payroll, but the reality is often cruel: first, if some projects have pre-sale funds, they need to be taken to ensure delivery. Guaranteed delivery is the top priority of Sunac's current work; second, the payment of wages for some project employees also has to be negotiated with the shareholders of the project, "The shareholders do not agree to the payment, and this situation usually exists." ”
Some functional departments of Sunac are not having such a good time. The salaries of employees in these departments are paid intermittently, sometimes not for two or three months, and sometimes suddenly. Unlike the salary payment of project employees, which depends on project sales, the salary payment of Sunac's functional departments mainly relies on the income of Sunac's self-sustaining projects. For example, some cultural tourism real estate and commercial real estate projects of Sunac. "If there is money for those projects, Sunac can allocate funds. Sun Si, a former employee of Sunac, told "City Boundary".
The embarrassment of "no money" is also transmitted to Sunac's cultural tourism city project. On November 27, the owner of Kunming Sunac Cultural Tourism City reported to the media that because the developer owed nearly one million yuan in electricity bills, the Kunming Power Supply Bureau said that it would take power outage measures, involving 9 plots and the sales department and construction headquarters of the project. The developer is Kunming Sunac Urban Investment Co., Ltd., which is a subsidiary of Sunac Yungui Region. Although the relevant contact person of Sunac Yungui responded that he had communicated with the government and the power supply bureau, and there was no power outage at present, and the company would promote the resolution of the matter as soon as possible with a positive attitude, the situation of Kunming Sunac Cultural Tourism City is undoubtedly a microcosm of Sunac's current situation.
In fact, in order to change the current status quo, Sun Hongbin has done a lot of things. In addition to personnel optimization, Sunac also moved its headquarters back to Tianjin a few months ago to achieve the purpose of reducing costs and increasing efficiency. "When the financing environment is convenient, it is a good idea for real estate companies to expand the scale of their headquarters and govern urban projects across the country. However, when the financing environment is not good, it should be light headquarters and strong projects. Yin Jun, the former head of Sunac Southwest Cultural Tourism Planning, believes that the headquarters does some functional management, hands over the power to the city and the project, and lets them play, which is conducive to Sunac's collection.
"Old Sun, slow down"
After the thunderstorm, Sunac's pace had to slow down. "At least some of our existing homes are slowly being sold. Not as radical as it used to be. It's a steady state now. Song Feng told the "City Boundary". This is not consistent with Song Feng's impression of Sunac. "In the past, Sunac has been expanding, has been acquiring land, and solving the cash problem by exchanging price for volume. ”
Some media have calculated that Sunac's opening cycle has been shortened from 6 months in 2019 to about 4 months in 2020, and then to less than 3 months in 2021. "Fast" is also reflected in Sunac's sales known for its wolf nature, "the purpose is to collect money quickly and with a high payment rate." "Sunac has maintained a high sales collection rate of nearly 90% over the years, and the collection rate in the first half of 2021 is as high as about 100%.
One of the ways to do this is to increase the proportion of the full payment. Sunac will require customers to pay in full for some good houses, or sell them in full at a lower average price than the surrounding ones. Sunac Zhengzhou's Xianghu No. 1 Phase II opened at a price lower than the surrounding market price of 3,000 yuan/square meter, requiring customers to pay for the house in full. Such an operation method made this project basically sold out in a short period of time after the opening. However, today, 18 months after the Sunac explosion, everything is going to the route of refined development.
"City Boundary" also learned that after Sunac divided the southwest into Yunnan-Guizhou and Chengdu-Chongqing, the main assets of some core cities were all divided according to the city. After the division, on the basis of this year's task of ensuring the delivery of buildings, Sunac will first revitalize the good regional projects. Recovery varies between cities and between different regions within cities. In the southwest, for example, some cities are recovering faster, while others are worse, such as Bishan, Chongqing, in the Chengdu-Chongqing region, "It originally had a lot of projects, about 10 or so." Projects in the urban area have been sold for a long time, but no one has bought projects far away from the city. For such a large-scale project, the de-conversion period will be very long. Song Feng told the "City Boundary".
In order to adapt to the new situation of real estate sales in the post-regulation era, Sunac's workflow and hierarchical management have also been further reduced. In the eyes of many current and former employees of Sunac, most of the leaders of Sunac have no shelf, and Sunac's management is relatively flat. After the thunderstorm, this change became more and more obvious, "The communication efficiency is more efficient, and everything can be directly reflected to the leader." This is also one of the reasons why Song Feng still stays in Sunac. For Sunac's sales, the era of shouting "wolf nature" every day is gone. Take the Beijing market as an example, "the sales team must fight, how can there be performance if you don't fight?" But now it will not be like before, you will give as many bonuses as you sell a set. Generally, as long as the project is stable, the sales are also stable. Sun Si said.
There is also a stable core team of Sunac. "City Boundary" learned that from the decision-making level, Sunac's No. 123 people are still Sunac's chairman Sun Hongbin, Sunac's executive director and chief executive officer, Wang Mengde, and Sunac's executive director and executive president Jing Hong. Wang Mengde is a veteran who has accompanied Sun Hongbin, from Shunchi to Sunac for more than 20 years. It is said that Sun and Wang's personalities are very complementary. Sun Hongbin is radical and has a distinct personality, while Wang Mengde is calm and rational. Jing Hong joined Sunac in 2002 and joined Sunac in 2007.
Since his statement in March this year, Sun Hongbin has no other public news, but this does not mean that he has not taken action, "Lao Sun is mainly to save the company." Yin Jun classified what Sun Hongbin is doing into three things: one is strategy, the second is financing, and the third is internal management. For more than a year, in addition to "tears and tears" at the beginning of this year, Sun Hongbin will follow his veterans Shang Yu and Chi Xun for many years, and win the positions of the head of the southwest region and the head of the north region respectively, Sun Hongbin also led Sunac to resolve the debt risk of 90 billion yuan. It can be said that the successful debt restructuring is Sun Hongbin's greatest achievement in the past year.
There are still "hard goods" in hand
In addition to Sun Hongbin's sincerity and the efforts of Sunac's team, another reason why creditors agree to debt restructuring is that Sunac does have some high-quality assets in its hands, which is Sun Hongbin's capital for his comeback. A person familiar with the matter told the "City Boundary" that the value of Sunac's unsold land reserves is still 1.38 trillion yuan, 7% of which are in first- and second-tier cities, and the unsold value of Sunac No. 1 Hospital, Shanghai Dongjiadu Project, Shanghai Yalong Project, and Shanghai Future Financial City Project in Beijing alone is about 150 billion yuan.
Sunac No. 1 Courtyard in Beijing's East Fourth Ring Road is one of the most blockbuster projects in the Beijing market in 2023, and it is also the seventh product of Sunac No. 1 Courtyard in Beijing. The real estate opened on September 3 this year, and on the first day of opening, 169 sets were successfully subscribed on the spot, with a total subscription amount of about 5.62 billion yuan, and the subscription ratio was more than half. This project to boost Sunac's morale was received from Oceanwide. After the thunderstorm, Sunac introduced Huarong's funds and continued to sell. In addition to the advantages of being close to Chaoyang Park and Sunac's luxury house genes, the reason why Sunac No. 1 Courtyard is selling well is also due to the scarcity of land in Beijing and the demand that the project has accumulated for two or three years.
In addition, "the sales of No. 1 Hospital are generally Sunac elderly, and there are many high-end customers in hand. Some high-end customers are fans of No. 1 Hospital, and after buying a set of No. 1 Courtyard in Haidian, they will also sell one set in the east. Sun Si told "City Boundary" that there are many real rich people in the owners of Sunac No. 1 Hospital, and you can't imagine how rich these people are. Sunac No. 1 Hospital is currently in the stage of smooth sales, with a little more than half of the goods sold, and there are still billions of yuan in remaining value. "City Boundary" learned that at present, there are Chaoyang Villa, Chaoyang No. 1, Sunac No. 1 Courtyard, and Chang'an Yuexi for sale in Beijing, with a total value of 20 billion to 30 billion yuan.
The site of Sunac No. 1 Courtyard is also equipped with tens of thousands of square meters of office buildings, with a value of about 20 billion yuan. Sunac wants to sell the office building as well, but there is no conclusion on whether the whole sale or the bulk sale is not yet conclusive. "Now we are in the demonstration stage, first sell the residence, and then combine the market environment to see how the office building is sold. It's a painful process. Sun Si said. In any case, Sunac has high hopes that the sales "miracle" of Beijing Sunac No. 1 Hospital can be replicated in other projects of Sunac.
For example, Shanghai Dongjiadu, Huangpu Yalong, and Shanghai Future Financial City three projects. According to the previously disclosed information, Sunac has introduced China Huarong and other strategic investors to inject capital into the Shanghai Dongjiadu project, and the Shanghai Yalong project has also reached a financing cooperation with Huarong. "Shanghai Dongjiadu and Huangpu Yalong projects, these two projects will enter the market one after another. The Dongjiadu project will be a little earlier. A source familiar with the matter told the "City Boundary". The Huangpu Yalong Project is in the process of clarifying and resolving existing debt issues, which is a prerequisite for China Huarong's borrowing.
On November 27 this year, Sunac announced that the company's non-wholly-owned subsidiary Shanghai Haoxuan, wholly-owned subsidiaries Shanghai Sunac and Hangzhou Xiao entered into an agreement that Hangzhou Xiao agreed to transfer 15.625% of the equity and debt of Zhejiang Qilong Industrial Co., Ltd. through a restructuring arrangement, at a consideration of about 2.5 billion yuan, of which about 2.4 billion yuan will be offset by existing claims and debts, and the remaining about 100 million yuan will be repaid by Hangzhou Xiao on behalf of Shanghai Haoxuan to repay the debt owed to Xinhu Zhongbao. Zhejiang Qilong Industrial Co., Ltd. indirectly holds the Shanghai Yalong Project, mainly engaged in the development and construction of the Shanghai Yalong Project.
These assets are not unqualified. Sunac No.1 Courtyard is famous for its good location and high-end products, and the Shanghai Dongjiadu project is located in the core area of the Bund in Huangpu District, Shanghai, with 3 plots to be developed, covering a total area of 99,800 square meters. The Yalong project is located in the core area of Shanghai, in the middle of the west corner of the old town of Huangpu District, with a total saleable area of about 228,000 square meters. The reason why Yin Jun is confident in these projects is because Sunac's marketing system can still be played.
"City Boundary" learned that the marketing management department of Sunac Group is mainly composed of multiple teams such as market research, brand planning, project operation, and cultural tourism projects. In Yin Jun's view, the replicability of Sunac's core marketers is not strong. "Sunac's marketing system is different from Longfor, in Sunac, the group's control over marketing is relatively weak, and more marketing authority is placed in regional groups. Sunac has gradually formed a model of direct management of key project groups, combination of regional control and project marketing management. ”
"Each region of Sunac has full decision-making power. For example, the Northern, Southeastern, and Southwestern regions all have different marketing strategies. Yin Jun said that Sunac's marketing executives and marketing talents have a larger proportion of training and growth in their own system. Many of the company's executive presidents and city presidents are also served by people trained by the marketing line. "Sunac's marketing system focuses on channels and execution, and constantly adjusts its strategy in action to ensure sales opportunities. ”
But that doesn't mean Sunac will be able to go ashore completely.
Lao Sun is still under a lot of pressure
In the view of a number of Sunac employees contacted by the "city boundary", Sunac is not the same as some real estate companies that have taken risks. The biggest difference is the boss's behavior and handling style.
Song Feng believes that although Sun Hongbin is radical, he is quite righteous. More importantly, since the Sunac explosion, Sun Hongbin has tried all kinds of ways to save the company from dire straits.
For example, selling assets, such as betting on all your net worth, etc. The reason why Sunac introduced a central enterprise like Huarong as a bailout party and became the first real estate company to successfully restructure its debt is not unrelated to Sun Hongbin's personal charm. "Lao Sun is the first to take out his own money to save the company, but also to reflect on his own problems first, and lead everyone to solve the problem first. Song Feng said that Lao Sun's behavior and style of doing things affect Sunac's every move. This is also what the public sees Sun Hongbin.
At present, Sunac has always taken the delivery of the building as the top priority. In 2022, Sunac completed the delivery of 180,000 residential units, and in the first 10 months of this year, Sunac completed the delivery of 205,000 units. From the current point of view, Sunac has many advantages: it has some high-quality assets, spares no effort in ensuring the delivery of buildings, and the debt restructuring has successfully alleviated short-term debt pressure. However, in the eyes of the outside world, it is not so easy for Sunac to completely go ashore.
Sunac has completely turned over, relying on three aspects: the policy side, the market side, and its own efforts. The policy side is well understood, and it is nothing more than the financing environment. From the current point of view, compared with the difficult previous years, since the end of last year, the financing environment of real estate companies has improved a lot. A series of policies at the national level, such as the "Three Arrows", have also been implemented. Since the second half of this year, the six major state-owned banks have also held symposiums to actively express their support for the financing of real estate enterprises. However, judging from various indications, although the policy proposes to treat all kinds of real estate enterprises equally and meet the financing of all kinds of real estate enterprises, for real estate enterprises within the "three red lines", banks should still take risk control as the minimum standard and carefully consider their repayment ability after financing.
In the eyes of the industry, there is nothing wrong with this practice of banks, after all, no one wants to lend money that cannot be recovered. Therefore, the fundamental solution of real estate risks for real estate enterprises lies in restoring their own hematopoietic ability - sales collection. This also means that Sunac still needs to "rely on the sky to eat". A person from a real estate company told the "city boundary" that from the market side, it is indeed not in a clear recovery stage, and under a wave of favorable policies such as recognising houses and not recognising loans, the market short-term stimulus has a wave of driving the market, but it soon fell into a dull situation. "Sunac's debt will mature sooner or later, and if the positive cash flow does not come back, the pressure will always exist. "Compared with first-tier cities, this pressure is more present in low-energy cities, such as the Sunac Chengdu-Chongqing area.
At present, the most urgent task for Sunac is, of course, the task of ensuring the delivery of the building. There is less than a month left before the end of 2023, Sunac completed 205,000 units of guaranteed delivery in the first 10 months of this year, and 95,000 units are still from the task of 300,000 units of guaranteed delivery this year, and Sun Hongbin still has a lot of pressure.
There are many people who believe that Lao Sun left behind, such as Wang Nan, a current employee of Sunac. After Sunac's thunderstorm in 2021, if Wang Nan chose to change jobs at that time, he could get an offer from another company, but he didn't do that, but stayed and retreated with Sunac. Although Zeng Tian has not yet received Sunac's repaid salary, she told "City Boundary", "I hope he (Sun Hongbin) is okay! ”
(The characters in the article, Song Feng, Sun Si, Zeng Tian, and Wang Nan are pseudonyms.) ）
Author | Tao Ting
Edit | Sun Chunfang
Operations | Liu Shan