Tension fades out of the front of R&F stage

A few days ago, R&F Properties suddenly announced that due to the need to invest more time and energy in other matters, Zhang Zhang has resigned as the company's director and chief executive officer since December 29, 2023.

R&F said in the announcement that as the co-founder of the company, Zhang Li has played an important role in managing the company for nearly 30 years and has laid an important foundation for the group. The Board would like to express its sincere gratitude to Zhang Zhang for his valuable contributions to the Company during his tenure as an Executive Director and Chief Executive Officer of the Company.

This is considered by the market to be the aftermath of the tension bribery incident. Despite resigning from his main position, Zhang Li's move is more like retreating into the background - a person familiar with the matter told the 21st Century Business Herald reporter that Zhang Zhang will still participate in the specific daily affairs of R&F as a major shareholder.

R&F is a rare "dual boss system" in China's business circles, and the founders Zhang Zhang and Li Silian hold about 28% and 29% of R&F Properties respectively. In 2022, when Zhang Li was caught up in disputes over bribery, Li Silian has been active in front of the stage, and R&F Properties' debt restructuring has also been led by him.

With Zhang Zhang stepping down as president, the identity and power structure of the two founders of R&F Properties may be reshaped.

divide and conquer

Due to the backgrounds of Zhang Zhang and Li Silian, in the early days of R&F's founding, the two founders had a relatively clear arrangement for the division of labor. Zhang Li and Li Silian have a clear division of labor. Before founding R&F, Li Silian was a civil servant in Guangzhou, and Li Silian used to work in the securities and finance industry.

Zhang Li's background gives him an advantage in land acquisition, so within R&F, Zhang Li is mainly responsible for investment, development, engineering, cost control, etc., while Li Silian, who graduated from the Department of Mathematics of Hong Kong Chinese University, is mainly responsible for corporate finance and marketing.

For a long time, due to the accelerated development of China's real estate industry, R&F Real Estate has also taken advantage of the east wind to continue to expand, and Zhang Zhang and Li Silian have maintained a good pace of cooperation. Zhang Zhang once said in public, "My partner (referring to Li Silian) and I have not blushed for ten years, and we are unique in the business world." We haven't signed a single written word between us, and we're all talking about credit. ”

Although the partnership between Zhang Zhang and Li Silian has not changed, the management styles of the two are completely different. A regional head of a real estate company who has had business cooperation with R&F told the 21st Century Business Herald reporter that Li Silian is a very regular person, and he will pay attention to details in the negotiation terms of cooperation, "but once the cooperation is finalized, Li Silian is a very trustworthy person."

Some R&F employees told the 21st Century Business Herald reporter that Zhang Li's style is "old-fashioned", but he is humane and is like "family" to the employees in the company;

This is an unavoidable problem of the "dual boss system". From the establishment of R&F to the present, Zhang Zhang and Li Silian are also interested. The Zhang Li family has another "business" outside - his son Zhang Liang also founded a real estate company called Shishi, which has received full help from Zhang Li.

In the prospectus at that time, Zhang Liang and Zhang Zhang provided co-guaranteed loans for the field at the end of 2017 and 2018 respectively, with a limit of 5.045 billion yuan and 2.85 billion yuan respectively.

All kinds of things in the past show the difference between Zhang Li and Li Silian in dealing with the world. In the past, the relationship between the two founders of R&F was able to maintain a delicate balance due to the positive market, but after the sudden accident of tension, his cooperation with Li Silian in R&F also changed.

Power tilts

In 2022, R&F successfully passed the debt restructuring at home and abroad, and was the first real estate company to complete this task. Li Silian is responsible for R&F's finances, and he has been in a front-stage and investor communication role for many years, which is also considered to be led by him.

During this time, Zhang Li was in prison.

On December 12, 2022, market sources reported that Zhang Zhang was accused of bribery in the United States. R&F later issued a statement on its official account, saying that Zhang Zhang was accused of bribery for hosting a banquet in China and providing him with hotel accommodation in San Francisco, and R&F was taking legal action against the false accusation.

The next day, R&F Properties issued an announcement to once again dissociate itself from the relationship, saying that it was aware of the relevant case involving director Zhang Li, and R&F Properties did not provide any bond for bail and had nothing to do with the company involved, so this case did not have any material adverse impact on R&F's operations and business.

This bribery incident finally came to an end in July 2023. On July 21, 2023, R&F announced that Zhang Zhang had signed a deferred prosecution agreement with the U.S. Attorney's Office for the Northern District of California for the alleged case. The signing of the agreement states that the charges against Zhang Li will not be convicted and will be dropped if the subsequent Zhang Li complies with the terms of the agreement.

Subsequently, Zhang Zhang also appeared in China. On July 31, 2023, the opening ceremony of Guangzhou R&F Hospital was held, which was attended by Li Silian, Chairman of R&F Group, and Zhang Li, Chairman and President of R&F Group. At this ceremony, Zhang Zhang did not speak, only appeared in the group photo session.

Since then, Zhang Zhang has also spearheaded the cooperation between R&F and China Merchants Shekou. On August 30, 2023, R&F Group South China Region and China Merchants Shekou South China Region held a signing ceremony for the strategic cooperation framework agreement at Guangzhou R&F Center. Zhang Zhang said at the meeting that R&F has great experience and advantages in urban renewal business, and will continue to accelerate the transformation and sales of related projects in 2022, hoping to achieve friendship, mutual benefit and win-win results through mutual empowerment between the two parties, and inject new impetus into the high-quality development of urban renewal.

However, after the signing of this agreement, there has been no further cooperation between the two parties. During this period, Zhang Zhang is still participating in R&F's daily work. After the resignation of the president, Zhang Zhang will not completely withdraw from the management of R&F Properties.

A person familiar with the matter told the 21st Century Business Herald reporter that Zhang Zhang will also participate in the company's specific affairs and daily work as a major shareholder in the future, except for his resignation as the company's director and chief executive officer, his daily work is still as usual, and other positions have not changed.

However, since R&F's current land investment has been temporarily stagnant, and Zhang Li has no advantage in the sectors it was responsible for in the past, R&F's future power structure is still worth observing.

R&F climbs

R&F, which has completed its debt restructuring, is not relieved by this.

According to R&F Properties' 2023 interim report, in the first half of 2023, R&F Properties' turnover was RMB16.416 billion, down 7.68% year-on-year, gross profit was RMB3.234 billion, gross profit margin was 19.7%, and net loss was approximately RMB4.978 billion, down 28% from the same period in 2022.

In terms of sales, according to R&F Properties, in November 2023, R&F Properties' sales revenue was about 954 million yuan, with a sales area of about 68,500 square meters, and in the first 11 months of 2023, R&F Properties' total sales revenue was about 18.78 billion yuan, with a sales area of about 1.275 million square meters.

For a long time to come, R&F Properties' core work is to ensure the delivery of buildings, but R&F Properties still admits that there is greater pressure on this. R&F Properties said that due to the uncertainty of the market has adversely affected the real estate industry, its contracted sales amount has dropped significantly, in addition, the real estate industry has declined, the decline in the scale of development investment has expanded, and the properties under development are facing completion risks due to the impact of reduced sales cash flow.

In terms of delivery, R&F has not officially disclosed unified data. At R&F's semi-annual work summary meeting in 2023, Zhang Zhang said that R&F Group attaches great importance to the delivery of buildings, on the one hand, it is trying to do a good job in ensuring the project funds, and fully guarantees the project capital needs of the delivery group by strengthening the collection of spot promotions and applying for bail-out funds, and on the other hand, it strengthens the on-site construction organization and quality control, coordinates various resources to promote the progress and procedures of the project, and goes all out to ensure the realization of the delivery commitment, and stabilize customer confidence and the company's reputation.

In terms of performance, R&F is still able to fulfill the corresponding public debt repayment obligations, but expects the sales market to improve as soon as possible.

R&F, which is mired in the quagmire, is still waiting for the founder's power to turn the tide.

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