On March 21, 2024, the "2024 China Top 100 Real Estate Enterprises Research Results Conference and the 21st China Top 100 Real Estate Entrepreneurs Forum" hosted by the China Enterprise Evaluation Association, the Institute of Real Estate Research of Tsinghua University, and the Beijing Zhongzhi Information Technology Research Institute, and undertaken by the China Real Estate TOP10 Research Group of Beijing Zhongzhi Information Technology Research Institute was held in Beijing.
In 2024, China's real estate market will show a new development trend after a series of adjustments.
According to the "2024 Research Report on China's Top 100 Real Estate Enterprises" (hereinafter referred to as the "Report") released by the China Index Research Institute, the industry is gradually shifting from the traditional "high debt, high leverage, and high turnover" model to a steady development that focuses on efficiency and quality.
Under the current situation, the relevant departments have proposed to support the reasonable financing needs of real estate enterprises with different ownership systems without discrimination, as well as the "three not less than" requirements of financial supervision, to resolve real estate risks by treating both the symptoms and the root causes, adapting to the development trend of new urbanization and changes in the supply and demand relationship of the real estate market, and accelerating the construction of a new real estate development model. In this context, real estate enterprises should adapt to the new situation, take active actions, pay attention to both light and heavy, and achieve steady development with fixed investment.
"Big but not strong" enterprises are left behind, and a large number of new high-quality enterprises are on the list
The report pointed out that the market share of central state-owned enterprises continued to increase, and the "big but not strong" enterprises fell behind, resulting in faults.
At present, the real estate market is still in the adjustment stage, and the top 100 enterprises are taking advantage of the trend, focusing on the core areas of core cities, and grasping the mainstream demand of the market to recover the money. In 2023, the total sales and sales area of the top 100 enterprises will reach 5,389.60 billion yuan and 261.316 million square meters, respectively, a year-on-year decrease of 5.8% and 7.4%, respectively, and the performance is slightly better than the national level.
In the process of continuous reshuffle of the industry, "big but not strong" enterprises are gradually falling behind, and a number of new high-quality enterprises will emerge to promote the steady and healthy development of the real estate industry.
From the perspective of the companies on the list, China Rongtong Asset Management Group Co., Ltd., New Hope Wuxin Industrial Group Co., Ltd., Dahua (Group) Co., Ltd., Chengdu Xingcheng Habitat Real Estate Investment Group Co., Ltd., Suzhou New Area High-tech Industry Co., Ltd., Zhong'an Group Co., Ltd., etc., were not well known before, and the reshuffle was very strong.
In 2023, the market share of the top 100 companies will be 46.2%, a slight increase of 0.4 percentage points from the previous year. The sales market share of the top 10 enterprises in comprehensive strength was 22.3%, which was basically the same as that of the previous year. In terms of enterprise ownership, the central state-owned enterprises continued to increase their market share by virtue of their strong resource endowment and stable operation.
It is worth mentioning that among the latest top 100 enterprises, such as Shenzhen Metro Real Estate Group Co., Ltd., Shanghai Urban Construction Real Estate Development Co., Ltd., Beijing Haikai Holdings (Group) Co., Ltd., Guangzhou Urban Investment Real Estate, etc., are all local leading state-owned enterprises.
In 2023, the top 100 enterprises will continue to gather in first- and second-tier core cities, grasp the policy window period of key cities to accelerate decentralization, and increase the proportion of sales contribution in key cities. The top 100 cities representing the top 5, 10 and 20 cities in terms of sales volume increased by 1.1, 1.8 and 3.5 percentage points respectively to 39.3%, 58.3% and 78.9% compared with the previous year.
In 2023, the wait-and-see sentiment of the group that just needs home buyers will not improve significantly, and the entry of improved products into the market will drive the release of demand for improved housing. This is very obvious from the sales proportion of products in each area of the key projects of the top 100 representative enterprises.
The sales of first-home products below 90 square meters accounted for 12.1%, a year-on-year decrease of 1.0 percentage points, and the wait-and-see sentiment of the rigid demand group was heavier; the sales of 90~140 square meters of first-time products accounted for more than half, reaching 51.9%; the sales contribution rate of 140~200 square meters of improved products increased greatly compared with the previous year, an increase of 1.7 percentage points; and the sales contribution rate of high-end products above 200 square meters decreased slightly.
The average values of the "three red lines" indicators have all been complied with, and the short-term solvency has been significantly differentiated
It is worth mentioning that the average value of the "three red lines" indicators of the top 100 enterprises has been complied with, but the net debt ratio has increased and the cash short-term debt ratio is basically the same.
In 2023, the average asset-liability ratio of the top 100 enterprises excluding pre-receivables will be 66.1%, the average net debt ratio will be 89.7%, and the average cash short-term debt ratio will be 1.67, with the net debt ratio increasing by 3.3 percentage points from the previous year, and the cash short-term debt increasing by 0.06 from the previous year. The interest-bearing debt of the top 100 enterprises was basically the same as the relative scale, the average maturity of debt was slightly extended, and the proportion of short-term debt decreased.
In 2023, the average net profit margin and return on net assets of the top 100 companies will be 5.0% and 3.0%, respectively, and the profitability will decline. The average net profit margin and return on net assets of the top 100 enterprises decreased by 1.4 and 1.5 percentage points respectively compared with the previous year. In recent years, the net profit margin of the top 100 enterprises has declined due to multiple factors such as high carry-over costs, stock depletion, and asset impairment.
The liquidity performance of the top 100 enterprises has become more differentiated, with some central state-owned enterprises and private enterprises benefiting from good sales and financing, and their liquidity has continued to improve.
The China Index Research Institute suggested that the focus of financing policies should be shifted to support projects, and it is necessary to do a good job in project development and operation to strive for capital inflow.
On the one hand, the top 100 enterprises can use the urban real estate financing coordination mechanism to obtain financing, and at the same time do a good job in development and operation to enhance project credit. On the other hand, the top 100 enterprises should grasp the latest policies, revitalize operating assets, and expand financing channels, so as to thicken the safety cushion.
Real estate enterprises can revitalize their operating properties by issuing ABS and REITs, and at the same time, they can use operating property loans to repay existing loans and open market bonds by the end of 2024. In addition, real estate enterprises can use the policy support of the "three major projects" to obtain financing support for projects such as urban village renovation and placement of affordable housing.
At the same time, as predicted by some leading developers, the revenue and profit structure of some of the top 100 companies have changed, and the proportion of non-development business has increased.
The report believes that, on the one hand, non-development businesses such as typical real estate enterprises' holding business and service business have contributed higher revenue and profits. On the other hand, the holding business and service business improve the overall liquidity of the enterprise with its stable cash flow. At the same time, as a holding property is an asset that relies on long-term operation, real estate enterprises also need to improve the efficiency of asset operation, clear inefficient assets, and achieve long-term sustainable operation.
In the medium and long term, affected by the peak of the incremental scale of new housing and the definancialization of real estate, it is difficult for enterprises to maintain a certain revenue scale by relying solely on development business income, and there is still a ceiling on the improvement of profit margins after the market recovery, and the growth of their profit scale is more limited.
Therefore, how to maintain profitable development in the face of the new cycle has become an issue that the top 100 companies must face. There is a certain degree of differentiation in the strategy between enterprises, and the overall business goal is to focus on profit as the core business objective, focus on advantageous areas and regions, give full play to competitive advantages, adjust business layout strategies according to the new situation of real estate, and achieve more efficient and sustainable development.