The Value Company 100 series value list is a comprehensive list released by Sohu Finance from the perspective of the media, in conjunction with professional research institutions, integrating value judgment and data judgment, and is committed to mining good companies in China and discovering the unique value of enterprises.
The "Star List of Business Safety Evaluation of China's Listed Real Estate Enterprises" is a sub-list of sub-industries under the 100 series of value lists of value companies, jointly initiated by Sohu Finance, Sohu Real Estate and Focus Finance, and selected 60 representative real estate companies to be included in the research scope through the long-term financial indicators (such as assets, sales, etc.), short-term operating indicators (such as land investment, financing, etc.), recent stock and bond performance and other phased indicators of major listed real estate enterprises, combined with all-round and multi-dimensional comprehensive evaluation. As a result, an enterprise research system is formed to evaluate the operation safety of listed real estate enterprises.
Assessment results and explanations
According to the assessment system, the results are as follows:
In December 2023, the easing of the real estate industry on the policy side has basically peaked, and many cities have also ushered in the high point of transactions in the second half of the year, but the slight "tail" is still difficult to hide the sluggish sales throughout the year. In this list, the annual results of real estate companies have been released, and the overall performance is not good. The ranking of five-star top real estate companies has changed limitedly, but the top companies have ushered in changes again, while the two-star risk real estate companies at the bottom of the list have ushered in expansion. The macro situation of the real estate industry in December is as follows:
In terms of policy, the degree of easing is basically at its peak, and there are two directions of support in the future
Since December, with the successive introduction of policies in Beijing and Shanghai to reduce the proportion of down payments, reduce loan interest rates and relax the standard of ordinary housing, the policy easing in the second half of 2023 has basically reached the top. As the continued downturn in the real estate market and the accumulation of industry risks will have an adverse impact on the stability of the entire macroeconomic and financial system, the easing signals of Beijing and Shanghai are still strong weather vanes. In 2024, the policy will first focus on the promotion and support of the "three major projects", and secondly, with the arrival of debt pressure in the new year, meeting the reasonable financing needs of real estate enterprises will continue to be put on the agenda.
In terms of sales, sales in December were sluggish but still in the bottoming stage
The transaction data for the whole year of 2023 are hovering at the trough, and the sales of real estate companies in December have a short "tail", but the year-on-year decline has expanded compared with the previous month, and the rebound is still not obvious, and the overall industry transaction volume in 2024 will still be in the bottoming stage. According to agency data, the total annual sales of the top 100 real estate companies were 6,279.10 billion yuan, a year-on-year decrease of 17.3%. At present, it is still necessary to expect that under the signal effect of the relaxation of housing purchase policies in first-tier cities, the overall transaction sentiment of the industry can pick up.
In terms of financing, the scale of bond issuance continues to decline, and 2024 will usher in the peak of debt repayment
In December 2023, the scale of bond issuance by real estate enterprises rebounded, an increase of 23.8% from November, and the average issuance interest rate continued the growth trend in November, but from the perspective of institutional data, the amount of bonds issued by 80 typical real estate enterprises in 2023 was 305.6 billion yuan, a year-on-year decrease of 31%. The Central Financial and Economic Work Conference in December pointed out that it is necessary to actively and prudently resolve real estate risks, meet the reasonable financing needs of real estate enterprises with different ownership systems without discrimination, and promote the steady and healthy development of the real estate market. The scale of debt due in 2024 is still at its peak, with the scale due in the first two quarters of more than 150 billion, and the actual landing of financing support is very important to the operational safety of real estate enterprises, especially private enterprises.
In terms of investment, the land market may only have a chance to recover after the sales pick up
In 2023, the average premium rate of land sales was 4.88%, an increase of 0.95 percentage points from 2022, and the unsold rate was 9.58%, a decrease of 9.49 percentage points from 2022. As the sales market as a whole enters the off-season in the second half of 2023, the performance of the land market is also weaker. With the gradual release of the effect of easing policies, the land market may usher in recovery opportunities after the sales market bottoms out.
Typical enterprise analysis
1. Sustained and stable real estate enterprises:
With the complication of the macroeconomy, the market dividend has gradually faded, and the industry has reached a difficult turning point. At this time, real estate companies with the background of state-owned enterprises and central enterprises can swim against the current in the market due to worry-free funds and stable operation, so most of them have received five-star or four-star evaluations in this evaluation. Among them, China Overseas Land & Investment surpassed China Resources Land in the last list of 2023 and topped the list with its stable operating capabilities.
China Overseas Land & Investment: Sales exceeded 300 billion yuan, an increase of 5.1% year-on-year, and it has rich experience in urban village transformation
In 2023, the contracted property sales of COLI, its subsidiaries and joint ventures amounted to approximately RMB309.810 billion during the performance period, representing a year-on-year increase of 5.1%. The corresponding sold floor area was about 13,356,900 square meters, a year-on-year decrease of 3.7%. In December, the sales volume of China Shipping's contracted properties amounted to approximately RMB22,781 million, and the corresponding gross floor area sold was approximately 983,500 square meters. China Overseas is also one of the very few real estate companies with year-on-year growth in annual sales performance.
In terms of land acquisition, COLI acquired a total of 11 land parcels in Tianjin, Suzhou, Shenyang, Zhengzhou, Chengdu, Taiyuan, Beijing and Wuhan in December, with an attributable floor area of approximately 1,686,500 square meters and a land transfer fee of approximately RMB16,806 million. Good sales proceeds and shareholder support ensure that the company has a cash flow that is the envy of its peers, so it can focus on high-quality assets in high-energy cities in the land market.
In addition, COLI has many years of project experience in the transformation of urban villages, which is the first of the "three major projects", especially in Beijing, Shanghai, Jinan and other cities, where there are still relatively high requirements for the comprehensive capacity and capital of developers.
Based on the above performance, the overall ranking of China Overseas Land & Investment rose to the top of the list.
2. Significantly improve real estate enterprises:
In 2023, the real estate industry will "turn the rudder". At this stage, the delisting of the "three high" real estate enterprises and the intensification of the industry reshuffle are intensifying, and the real estate companies are facing new challenges and opportunities, and the competition is strategic vision and execution. In this evaluation, Vanke's A ranking rose 4 places and returned to the TOP5 ranks.
Vanke A: The sales collection is better than the industry, the cost of bonds has decreased and it has expanded to new financing channels
According to Vanke's announcement on January 2, the company's cumulative contracted sales in 2023 will be 376.12 billion yuan, down 9.8% year-on-year, and the cumulative contracted sales area will reach 24.66 million square meters, down 6.24% year-on-year, while according to agency data, the overall sales amount of the top 100 real estate companies in 2023 will decrease by 17.9% year-on-year. From this point of view, Vanke's year-on-year sales are better than the industry as a whole, and it still remains in the first echelon, but compared with previous years or horizontal comparison with other leading real estate companies, it is insufficient.
In terms of financial data, Vanke will issue a total of 17.30 billion yuan of new bonds in 2023, and the cost of new open market bonds will drop by 10bp to 3.01%; on November 26, CICC SCP Consumer REIT was approved for registration by the China Securities Regulatory Commission, becoming one of the first batch of consumer infrastructure REITs, which may help open up the exit path of the company's asset-heavy business. In terms of the three red lines, Vanke continued to meet the target, with an asset-liability ratio, cash-to-short-debt ratio and net debt ratio of 67.7%, 2.5 and 50.3% respectively. In terms of investment, Vanke's land acquisition in 2023 will focus on core cities, with the Yangtze River Delta and Pearl River Delta accounting for nearly 8% of the total land acquisition.
Based on the above performance, Vanke A rose 4 places in this list to the fifth place of five-star real estate companies.
3. Real estate companies with declining performance:
After the industry experienced the longest downward cycle in history, some real estate companies suffered from irreversible losses and slow debt reduction, resulting in stock price collapse, difficult annual reports, and finally suspended or even delisted in the market. In this evaluation, ST Shimao performed poorly and fell in the ranking again.
ST Shimao: Only 7 billion new starts were sold for the whole year, and the debt solution is still in doubt
According to ST Shimao's announcement, in 2023, the company's sales contracted area will be about 418,000 square meters, a year-on-year decrease of 40%, and the sales contracted amount will be about 7.06 billion yuan, a year-on-year decrease of 23%. The newly started area was about 55,000 square meters, a year-on-year decrease of 91%, and the completed area was about 1.083 million square meters, a year-on-year increase of 91%. At present, the company is still focusing on ensuring the delivery of buildings, with a total of more than 91,000 units delivered throughout the year, but new projects are almost stagnant.
In terms of debt, as of the end of 2023, Shimao Co., Ltd. and its subsidiaries have failed to pay a total of 10.695 billion yuan of open market debt, non-public market bank and non-bank financial institution debt. There has been no significant improvement in many payment channels such as sales, financing, and asset sales, and there are still some cases where some proposals for debt solutions have not been passed.
Based on the above performance, ST Shimao dropped 4 places in the overall list, and its rating was downgraded from 3 stars to 2 stars.
Assessment system and significance
This round of real estate regulation began in 2020, with financial control as the main line and frequent policies with far-reaching impact.
From the "three red lines", "housing loan concentration management" to "two centralized land supply", and then to the "guiding average price of second-hand housing", real estate regulation and control policies have been issued frequently.
The continuous deepening of regulatory policies has made the real estate industry enter a new stage of development. The original business model of "high leverage, high turnover, and high debt" is facing many challenges, and finding a new development model and achieving sustainable and steady development has become the primary obligation of real estate enterprises.
In the process of industry transformation, real estate companies are generally faced with many problems such as organizational changes and market strategy adjustments. Some real estate companies failed to adjust their market strategies in a timely manner, and eventually "liquidity" problems broke out in the development process, and even debt defaults and bankruptcy restructurings occurred.
As a result, "stability" has become the primary goal of the real estate industry in 2023. In the 2023 government work report, its positioning of the real estate industry is based on the premise of "risk prevention" and the goal of "stability", which is in line with the Central Economic Work Conference.
Therefore, it is of great practical significance to continue to pay attention to the safe operation status of real estate enterprises and prevent systemic risks in the real estate industry.
The significance of this safety assessment is to standardize the business behavior of real estate enterprises, guide the healthy growth of real estate enterprises, and promote the sustainable and steady development of the real estate industry.
(Monitoring time: as of December 31, 2023; the final interpretation right belongs to Sohu Finance, Sohu Real Estate and Focus Finance)
Produced by | Sohu Finance
Author | Zhang Zihao
Operations Editor | Xue Suwen
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