Yang Huiyan paid off her father's debt for 300 days
How did the father and daughter of the Yang family turn the tide?
Text | Xu Aizhi Xiaoyu
Edit | Xu Aizhi
Proofreading | Fan Bo
首发 | YOUNG财经 漾财经
Country Garden's New Year's speech was still Mo Bin. Yang Huiyan is in agreement with his father Yang Guoqiang on this point. However, Yang Huiyan's current situation is much more difficult than that of her old father, and it can be said that Yang Huiyan is paying off her father's debts and paying off her family's debts.
"Ms. Yang Huiyan speaks fluent American English, she understands the importance of strategic layout, and she can fully interpret her ideas, and like her father Yang Guoqiang, she has great ambitions and feelings, and has an international vision and international network. ”
The above is Wu Jianbin, former CFO and executive director of Country Garden, commented on Yang Huiyan, the second daughter of the Yang family, in "My 1000 Days in Country Garden". There is not much ink to describe Yang Huiyan's words. He wrote: "She spoke elegantly and was well educated. I think this is the blessing of Country Garden and the blessing of the Yang family. ”
On March 1, 2023, Yang Huiyan, who has been behind the scenes for nearly 20 years, was pushed to the front of the stage, and Country Garden announced that Yang Guoqiang would step down and Yang Huiyan would take over.
She became the new Chairman of Country Garden's Board of Directors. This means that from 1992 to 2023, the 31-year-old Country Garden will officially complete the replacement of the old and the new.
A debt mess
Yang Huiyan is a chicken, belonging to the real "rich second generation" after the reopening, and has been the richest man in China for many years. She is quite low-key and simple, and there are very few personal photos in circulation, so much so that for several years the media reported that it was a wedding headshot. There are not many rumors in the market, and the frequency of appearances only began to increase in the first few years of succession. When it came to the stage as a new family member of Country Garden, Yang Huiyan needed to deal with the mess of Country Garden, and the company had no money.
For Yang Huiyan, this is a huge contrast, the great changes and fluctuations in the real estate business, the flames and icebergs are all reflected in her. In an open letter, Yang Huiyan used the words "the family will definitely smash the pot and sell iron to support the company", and in the face of this kind of industry cycle, Yang Huiyan's pressure is difficult for others to understand.
In the first half of 2023, Country Garden incurred a net loss of about 45 billion to 55 billion yuan, encountering "the biggest difficulty since its establishment", and its priority is to "make every effort to ensure the safety of the company's cash flow".
Country Garden's 2023 semi-annual report shows that Country Garden holds cash and cash equivalents of 101.115 billion yuan on its books, and its debts due within 12 months are about 108.7 billion yuan. Country Garden's remaining cash and cash equivalents barely cover these short-term debts.
Since August, Country Garden has frequently issued announcements to update debt-related information.
On the evening of August 12, Country Garden announced that since August 14, the trading of its 11 domestic corporate bonds has been suspended, and the restructuring of domestic bonds has begun.
On August 28, Country Garden announced on the Hong Kong Stock Exchange that it would sell its 26.67% stake in Guangzhou Lihe Real Estate Development Co., Ltd. held by the company at a total consideration of 1.2915 billion yuan. It is expected that the Group will realize the pre-tax gain of about 500 million yuan from the sale, and the proceeds from the disposal are currently mainly intended to be used for the Group's construction expenses such as guaranteed delivery of buildings.
On September 5, Country Garden paid two U.S. dollar bond coupons (totaling $22.5 million) due on Aug. 7.
On September 19, Yang Huiyan completed the extension of nine onshore bonds with a total principal amount of 14.7 billion yuan.
On October 10, Country Garden announced that it had not yet paid the due debt of HK$470 million and was expected to be unable to repay the overseas debt as agreed, so it "hoped to comprehensively solve the company's current overseas debt risk by seeking an overall solution".
Yang Huiyan attended the 2022 results announcement meeting
On December 13, Country Garden Real Estate Group Co., Ltd., a major domestic bond issuer under Country Garden, announced the results of the resale of "22 Bidi 02" bondholders, saying that the principal and interest of part of the bonds sold back had been paid in full to the bank account designated by the Shenzhen Branch of China Securities Depository and Clearing Corporation.
2023 has passed, and Country Garden's troubles continue.
According to a report by The Paper in October, documents presented by Country Garden's bondholders show that Country Garden is in the process of identifying the holders of 17 offshore bonds, and the identification process is valid until January 24, 2024. According to the filing, the 17 bonds include two ordinary convertible bonds with an outstanding amount of HK$6.9 billion on the Singapore Stock Exchange. The other 15 bonds are all US dollar bonds, with a total outstanding amount of US$9,912.69 million and a maturity date of January 27, 2024 at the earliest and January 2, 2031 at the latest. This means that Country Garden will need to deal with the maturing US dollar debt in the next month.
The real estate market is not optimistic
Country Garden has always followed the policy requirements and is working hard to ensure delivery, and the Yang family has also provided funds to Country Garden many times.
At a group executive meeting held on October 9, President Mo Bin confirmed that the Yang family was selling their private jets. One brand new, unused, offshore, private jet in Yang's name has been sold, and another in use has been listed. The cash flow generated from the sale of a private jet can support a company's operations to a certain extent.
In addition, the Yang family, to which Country Garden's founder, Yang Guoqiang, belongs, provided an interest-free loan of US$300 million to Country Garden. According to the announcement issued by Country Garden, before the $300 million loan, the Yang family had supported the company in various ways with a total of about HK$38.6 billion, and had never reduced its shareholdings.
On December 12, Country Garden announced that the company's executive directors Yang Huiyan, Mo Bin, Yang Ziying and non-executive director Chen Chong took the initiative to request a salary cut, and the annual salary of the four was reduced to 120,000 yuan a year. Among these four people, except for Mo Bin, the other three are all members of the Yang family.
It is foreseeable that the delivery of the building will become the focus of Country Garden and the Yang family in the next few years.
Mo Bin revealed in his New Year's speech that as of December 31, Country Garden has delivered more than 600,000 houses in 2023, and the delivery volume is far ahead of the industry. However, Country Garden has set a delivery target of 700,000 units for 2023, and the failure to meet the target may be related to Country Garden's difficulties in new home sales, because the decline in new home sales means less liquidity.
In the second half of 2023, Country Garden's monthly sales will fall off a cliff. From January to November 2023, Country Garden's monthly sales were 22 billion, 24.8 billion, 25 billion, 22.7 billion, 18.2 billion, 16 billion, 12.1 billion, 8 billion, 6.2 billion yuan, 6.3 billion yuan and 6.1 billion respectively, with sales below 10 billion for four consecutive months.
In the next few years, Country Garden's new home sales prospects are also not optimistic, which is related to the overall downturn in the real estate industry. Since the second half of 2021, the domestic real estate market has continued to decline. According to data from the China Index Research Institute, the total full-caliber sales of the top 100 real estate companies (TOP100) in 2023 will be 6,279.1 billion yuan, a year-on-year decrease of 17.3%. Among them, the monthly sales of the top 100 real estate companies in December decreased by 35.9% year-on-year and increased by 20.8% month-on-month.
The sluggish sales volume and the tight cash flow caused by the sluggish sales volume will drag down the pace of delivery, which will become a problem for Yang Huiyan to deal with in the future.
Some anecdotal information
Along with the debt crisis, there are some rumors, some of which were "posted on multiple online platforms with ulterior motives, causing a bad impact", which inevitably plunged the Yang family into a new turmoil.
Yang Guoqiang, founder of Country Garden, and Mo Bin, president of Country Garden, went to the second project west of Nanping Road, Beijiao, Shunde, Guangdong Province to guide the work
One of the rumors is that "the father and daughter of the founder of Country Garden may have left the country". Country Garden officials responded to this twice.
On October 11, Country Garden's official WeChat released a message, saying that the article that founder Yang Guoqiang and President Mo Bin went to the second plot west of Nanping Road in Beijiao, Shunde, Guangdong Province to guide the work, not only attached on-site photos, but also accompanied by a 20-second video.
On October 19, Country Garden issued a statement on its WeChat public account to refute the rumors, saying that the founder of Country Garden and the chairman of the board of directors of the group are currently working normally in China.
Yang Guoqiang may not have expected that the current situation requires him to appear in person to increase his confidence, not so much that Yang Huiyan needs his father's endorsement, but that Yang Guoqiang is paying off his debts for his decision-making mistakes.
According to public information, since the listing of Country Garden Services, Li Changjiang and his wife have reduced their holdings of Country Garden Services a total of 22 times, and this reduction is the largest one. After the reduction, the number of shares held by Li Changjiang in Country Garden Services decreased to 3.69 million shares, accounting for 0.11% of the issued voting shares. Since the remaining shares were actually unlisted in-kind settlement options granted under the share option plan, Li Changjiang and his spouse's reduction of holdings was also called a "liquidation reduction" by the outside world.
Another rumor came because Li Changjiang, the former president of Country Garden Services (who was still in office at the time), sold Country Garden Services shares twice in July and cashed out a huge amount of 28.25 million. Therefore, it is rumored that Li Changjiang is about to retire or resign, and the successor is a classmate of Yang Huiyan, chairman of the board of directors of Country Garden, and the rumor also says that the successor has entered the Country Garden service temporary position, but it has not yet been made public.
On December 30, 2022, Li Changjiang reduced his holdings of 1.964 million shares of Country Garden Services at an average price of about HK$18.63 per share, and on March 29, 2023, he reduced his holdings by another 2.1 million shares. The total amount of cash out of the three reductions is about 90 million Hong Kong dollars.
The resignation rumors lasted for more than two months, and Country Garden Service did not officially respond. Until October 10, Country Garden Services issued an announcement announcing the resignation of Li Changjiang as the company's executive director, president, authorized representative, chairman of the environmental, social and governance committee and agent for receiving legal process documents in Hong Kong.
Mr. Xu Binhuai, 44, President of Country Garden Service Group, graduated from Fudan University with a major in polymer materials and engineering in July 2002 and obtained a master's degree in business administration from the University of Hong Kong in November 2016
Yang's father-daughter donation turmoil
July 30 is the 152nd day of Yang Huiyan's tenure. Country Garden Services announced that Yang Huiyan will donate 675 million shares of Country Garden Services to Guoqiang Public Welfare Foundation (Hong Kong), and the donated shares will be used to support public welfare purposes such as science, education and culture, health and youth growth, disaster relief and rural revitalization in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area. The donated equity represents 20% of the issued shares and is valued at approximately HK$6,443 million based on the share price at the time of donation.
In the announcement, Country Garden Services said that Yang Huiyan and her family have been committed to the development of philanthropy for many years, and her family, holding company and foundation have participated in social charity donations of more than 10.5 billion yuan.
At the interim results conference of Country Garden Services held on August 29, Country Garden once again explained the donation, and Huang Peng, Chief Financial Officer and Joint Company Secretary of Country Garden Services, responded:
Chairman Yang and his family have insisted on a long-distance public welfare run of more than 10 billion yuan for 26 years, and even donated half of their net worth 10 years before their first company went public. ”
Founded in 2013 and listed in Hong Kong in 2018, Country Garden Services is completely independent and isolated from Country Garden Group in terms of personnel, finance, assets, etc. Country Garden Services will not provide any guarantee or loan to Country Garden Group, nor will it use its cash deposits as security for the debts of related parties. Country Garden Services mainly relies on stable property management fees and value-added service income to achieve profitability, and is not affected by the fluctuations of the real estate market. Therefore, even if there is a debt crisis or bankruptcy risk of Country Garden Group, it will not have a material impact on Country Garden Services.
After the announcement of the donation, some articles similar to the press release attempted to explain Yang Huiyan's donation behavior, including that the shares donated by Yang Huiyan were Country Garden Services and not Country Garden Holdings, that Yang Huiyan's actual control over Country Garden Services remained unchanged after the donation was completed, and that the donation was not a temporary initiative and that a plan had been made a year ago.
These explanations do not completely dispel market doubts.
Prior to the final donation, Country Garden had a large amount of debt that was about to be repaid, which meant that Yang Huiyan made the donation despite knowing that there was a risk of defaulting on the debt. This inevitably makes people suspect that it is misleading, and sends a signal that Country Garden's debt problem is not big. In fact, less than half a month after the donation, Country Garden announced the news that its domestic corporate bonds would be restructured.
Whether Yang Huiyan's donation decision is correct or not, others cannot evaluate, but it is obviously difficult to say that it is mature, and the inertia of the eldest lady is very obvious. After the announcement of the donation, Country Garden's share price fell by more than 50% in more than ten days.
However, the donation is not without its benefits, as Hong Kong law allows shares donated to charities to be tax-exempt and there is no need to disclose the relationship between the donor and the donee. In this way, Yang Huiyan can avoid paying high stamp duty and income tax, and at the same time, she can also avoid being held accountable for any legal responsibilities or obligations. In addition, the founder of the recipient Guoqiang Public Welfare Foundation (Hong Kong) is Yang Huiyan's sister Yang Ziying.
Ms. Yang Ziying, Executive Director of Country Garden Group
What will Yang Hye-yeon do in the future?
In fact, people and business are products of the times.
In a recent conversation, Wu Jianbin described the "madness" of the real estate market back then:
"In the past 30 years, the development of real estate companies is to make two financings for a piece of land, one is to make a financing from the bank through sales: people buy houses and finance from the bank, and give the money to real estate developers, so real estate developers have such a rapid development momentum, so the rate of return of real estate companies can be dozens of percent. For a period of time, real estate developers have a piece of land that spends 10%-20% of the funds, and they may come back in seven or eight months, which is equivalent to no money. ”
Country Garden is the leader of these real estate companies, and Wu Jianbin recorded the "madness" of Country Garden in "My 1000 Days in Country Garden". "Country Garden requires the realization of 456, that is, the fast turnover model: land acquisition/delisting will start construction, 4 months from land acquisition to opening, 5 months of capital return, and 6 months to obtain new plots. In general, only third- and fourth-tier cities are likely to be delisted and construction can start immediately."
In the rising period of the real estate industry, the power figures follow the tide, take advantage of the momentum, things are done, money is easy to make, there is always some pride in words and deeds, in Wu Jianbin records, Yang Guoqiang was very proud of the model of Country Garden, and will attribute it to his own ability:
"Our business model is so unique that no one else can learn what they want to learn. We acquire land at low cost, rapid development, supporting facilities in place, low-cost opening, fine decoration and delivery, and we focus on third- and fourth-tier cities. Take the land, the area should be large, the payment should be in installments, the land should be taken at the same time, the design should be basically completed, the construction must be started within three months, and the funds can be recovered in the fourth and fifth months; the follow-up development depends on the progress of market sales. Others can't do this kind of speed, and others can't do this kind of control, but I, Yang Guoqiang, can do it. ”
Mr. Wu's record also suggests that Country Garden had a chance to avoid the current situation. Until March 2015, there was a debate within Country Garden about whether to expand land purchases or control its debt ratio.
In 2014, after Wu Jianbin arrived, the well-known prudent Wu Jianbin set a debt red line for Country Garden, requiring Country Garden's net borrowing ratio to be less than 70%, indicating CFO Wu Jianbin intention's intention to control the debt ratio. But in the end, Yang Guoqiang chose to expand the purchase of land, and through severe incentives and punishments, the heads of various regions of Country Garden were encouraged to buy land.
Country Garden's total liabilities have been soaring since 2015, reaching a peak of 272.6 billion in 2015, 509.9 billion in 2016, 933 billion in 2017, 1.46 trillion in 2018, 1.69 trillion in 2019, and reaching a peak in 2020 with a total debt of 1.76 trillion.
In 2015, Country Garden's revenue was 113.223 billion yuan, and two years later in 2017, it doubled to 226.9 billion yuan, and four years later in 2019, it doubled again to 485.9 billion yuan.
In 2020, Country Garden reached the peak of its performance, achieving equity sales of 570.7 billion yuan and net profit of 54.1 billion yuan. This is Country Garden's most beautiful year, becoming the highest-ranked real estate company in the Fortune Global 500.
Now it's a different story. The rules that contributed to Country Garden's success are no longer working, and at the moment they have become an obstacle to Country Garden's development.
Country Garden has almost stopped acquiring land since 2022, but it still hoards a large amount of land in third- and fourth-tier cities, and the financial report shows that as of the end of 2021, the saleable value of Country Garden's land reserve equity was 1,484.6 billion yuan, of which third- and fourth-tier cities accounted for 53%. After a whole year of stock consumption in 2022, at the performance exchange meeting in March 2023, Cheng Guangyu, executive vice president of Country Garden, said that nearly 60% of the 955.5 billion yuan of land reserves currently in hand are for the third- and fourth-tier markets.
After a year, the proportion of land reserves in the third and fourth tier has increased, which means that Country Garden is consuming land stock in third- and fourth-tier cities at a lower rate than in first- and second-tier cities.
With the decline in housing prices in third- and fourth-tier cities, Country Garden's past basic advantages have gradually disappeared, and instead have become a drag on Country Garden, which can be reflected in Country Garden's plummeting sales.
In addition, Country Garden's executives who have expanded its territory in the past will also be a problem that Yang Huiyan will need to deal with. Some of Country Garden's management positions are in charge of Yang Huiyan and her husband's classmates, and in the upward stage of the industry, Country Garden is a super Party A, and personal ability may not be so important. But when the industry enters a downturn, the real ability may be shown The expansion of the ability of some staff may also be a problem for Yang Huiyan to face.
Perhaps Yang Huiyan has already been aware of the crisis, in the process of Country Garden's rapid development, Yang Huiyan, as vice chairman, has met some well-known consulting companies, trying to explore the direction of Country Garden's transformation, and the suggestions are roughly two, one is to transform the main real estate business inside, and the other is to look for opportunities for cross-border transformation. Either way, developers are faced with entering new areas, and they need to pay the cost of exploration and trial and error.
After taking office, Yang Huiyan began to make adjustments to Country Garden. On March 30, at the performance exchange meeting, Mo Bin said that he would plan to increase the company's first- and second-tier cities to third- and fourth-tier cities to 50:50 in the next 3-5 years, and Country Garden's strategic focus began to shift from the third and fourth tiers to the first and second-tier cities.
On May 31, Country Garden Holdings Co., Ltd. issued an internal document to start a new round of organizational structure adjustment. The most significant change is the establishment of a new real estate group, which mainly focuses on real estate development and escrow business. In addition, Cheng Guangyu, the former executive vice president of the holding group, will become the CEO of the real estate group.
On the 280th day of Yang Huiyan's tenure, Country Garden underwent the latest organizational structure adjustment. The 14 regional companies were merged into seven new regions: Hebei and Beijing were merged into North China, Shandong and Northern Jiangsu were merged into Lusu Region, Northwest China and Shaanxi were merged into Central and Western China, Anhui and Zhejiang were merged into Zhejiang-Anhui Region, Jiangxi and Fujian were merged into Jiangxi-Fujian Region, Yunnan and Sichuan were merged into Sichuan-Yunnan Region, and Guangxi and Jiangzhong were merged into Jiangzhong Region. After the completion of the merger, the total number of Country Gardens areas was reduced from 28 to 21.
Yang Huiyan repaid her father's debts for 300 days, Country Garden's adjustment was in full swing, and the battle to ensure delivery was also continuing. But there are still debts waiting for Yang Huiyan ahead, and on January 27, Country Garden will have another dollar bond due. I don't know when Yang Huiyan will be able to pay off the debt left by her father.