Significant progress has been made in the reorganization of Jinke shares.
On the evening of April 22, Jinke Co., Ltd. announced that the company and Chongqing Jinke received the (2024) Yu 05 Po Shen No. 129 and (2024) Yu 05 Po Shen No. 130 Civil Rulings served by the Chongqing Fifth Intermediate People's Court (hereinafter referred to as the "Chongqing No. 5 Intermediate Court"), and the Chongqing No. 5 Intermediate People's Court ruled to accept the reorganization applications of Jinke Co., Ltd. and Chongqing Jinke. So far, Jinke has also become the first large-scale national listed real estate company in A-share to officially enter the reorganization procedure in recent years.
According to the "Shenzhen Stock Exchange Stock Listing Rules", Jinke shares will be suspended for one day on T+1 after receiving the court's formal ruling notice, and will be subject to delisting risk warning since the resumption of trading on T+2, the stock abbreviation will be changed to "*ST Jinke", the stock code will still be "000656", and the daily rise and fall of the stock price will be limited to 5%.
Jinke also stated in the relevant announcement that "except for the acceptance of the reorganization, the company does not have other delisting risk warning matters". After the completion of the reorganization, the company will apply to the Shenzhen Stock Exchange to cancel the delisting risk warning, and the company's shares will resume normal trading after approval. At that time, the stock abbreviation will be changed from *ST Jinke back to Jinke shares, and the daily rise and fall of the stock price will recover to 10%.
It can be found that in the cases in which the enterprise was formally ruled to accept the reorganization, the success rate of the reorganization of the listed company was as high as 100%. As of the end of 2023, a total of 118 listed companies have been successfully reorganized in recent years, including Lutianhua, Changhang Phoenix, Shuntian Shipbuilding, Salt Lake Shares, Shanzi Shares, etc., after the completion of the reorganization, the operating difficulties of the above companies have been resolved, the financial situation has improved significantly, the debt crisis has been lifted, and the company has been reborn. There have been no cases of bankruptcy liquidation due to reorganization failure after the court ruled to accept the case, showing that the success rate of reorganization is much higher than that of ordinary enterprises.
It is foreseeable that by giving full play to the value of the reorganization, Jinke is expected to enhance the company's resilience and vitality and take the lead in stepping out of the road of hope.
After the listed company adjudicates to accept the reorganization, the success rate is as high as 100%
Since the implementation of the new Bankruptcy Law in 2007, bankruptcy reorganization, one of the three bankruptcy methods, has gradually become a consensus in the market, especially in saving the operation of listed companies.
In fact, listed companies often have a certain economic scale and social influence, and are generally relatively excellent enterprises in various industries, with higher brand influence and greater survival value; through the cooperation of the government, the courts and the securities regulatory departments, replacing bankruptcy liquidation with bankruptcy reorganization is more conducive to high-quality enterprises to break through difficulties, obtain new life, and realize greater social value as a whole.
For example, Lotus Health, the former "No. 1 monosodium glutamate stock", once fell into a debt crisis due to the failure of industry competition and diversified transformation, and was put on a delisting risk warning by the exchange. In 2019, three reorganization investors were introduced, namely Lotus Investment, Runtong No. 2 and Xiangcheng State Holding Group, which provided a guarantee for the success of its reorganization. After the completion of the restructuring, Lotus Health's asset structure, profitability and operating efficiency have all improved significantly. In 2022, Lotus Health's inventory turnover ratio and accounts receivable turnover ratio increased by 9.35% and 25% respectively compared with three years ago, and the expense ratio during the period decreased significantly to 8.29% from 23.49% in 2019. The company's share price also rose from less than 1 yuan/share in 2019 to the latest 4.11 yuan/share, an increase of more than 300%, and even set a record of 8.24 yuan/share in more than 20 years since its listing in October 2023.
Another example is Zhongnan Culture, formerly known as Zhongnan Heavy Industry, which initiated mergers and acquisitions with large debts in the transformation to a large cultural industry, but since then, due to the tightening of regulatory policies in the film and television industry and the cold of the industry, it has fallen into a business crisis, and in 2020, it applied to the court for pre-reorganization and introduced three investors. In the end, the company completed bankruptcy reorganization in 2021, resolved the debt crisis, and returned to the manufacturing sector as its main business. From the perspective of performance, Zhongnan Culture's operating income in 2021 and 2022 will grow steadily, and the non-net profit deducted in 2022 will turn around to 64 million yuan, and the operating income will reach 656 million yuan, achieving the predicted level in the reorganization plan.
It has been observed that the reorganization of listed companies has shown an extremely high success rate. In 2020, among the 728 bankruptcy and reorganization cases concluded nationwide, 532 enterprises were reborn, accounting for 73.07%. In contrast, as of the end of 2023, there were 118 listed companies in China that had completed reorganization, of which there were no cases of bankruptcy liquidation due to reorganization failure after the court ruled to accept it, showing that the success rate of reorganization is much higher than that of ordinary enterprises.
An important reason for this is that, in addition to the assets owned by the company itself, the shares of listed companies have great circulating value, and their debt repayment resources have natural advantages; at the same time, the reorganization cases of listed companies are strictly supervised and guided by the bulls, and the reorganization plan is highly feasible under the full interests of the reorganization investors and creditors.
Specific to Jinke shares, in August 2023, Jinke deliberated and passed the "Proposal on Proposed Application to the Court for Reorganization and Pre-reorganization", intends to take the initiative to apply for reorganization and pre-reorganization, and promote the preparatory work for pre-reorganization and formulate a reorganization plan according to the relevant requirements of the people's court with jurisdiction. In February this year, Jinke formally applied to the court for reorganization and obtained the case, and the court organized a hearing on April 10, and most of the creditors who participated in the hearing expressed their support for the reorganization of Jinke's shares. Now, in the past 8 working days, the reorganization application has been approved, which proves that the reorganization value and feasibility of Jinke have been recognized and supported by many parties.
In the first half of 2023, the company's sales in Chongqing alone accounted for a quarter of the group.
At the same time, the company signed the Strategic Investment Framework Agreement with Great Wall Guofu before it voluntarily applied for bankruptcy reorganization. Great Wall Guofu intends to participate in the pre-reorganization procedure of Jinke as a reorganization investor, and the two parties jointly set up a working group to establish a coordination and contact mechanism, and have completed on-site due diligence work.
As a listed company, according to the Minutes of the Work Symposium on the Trial of Bankruptcy and Reorganization Cases of Listed Companies, before formally accepting a reorganization case of a listed company, the relevant court shall submit a report on the feasibility of reorganization of the listed company, the notification materials of the provincial people's government of the place where the listed company is domiciled to the securities regulatory authority, the opinions of the securities regulatory department, and the stability maintenance plan issued by the people's government of the place where the listed company is domiciled. In other words, the acceptance of Jinke's reorganization ruling must have been recognized and supported by the Chongqing Municipal Government, the People's Court, the China Securities Regulatory Commission and other competent authorities.
As the first large-scale national listed real estate enterprise in the A-share market to officially enter the reorganization procedure in recent years, the success rate of Jinke's reorganization is not only attention-grabbing, but also expected.
The main investment in the war is a very cost-effective investment
In the eyes of industry insiders, the reorganization of Jinke shares will be a win-win choice for all parties.
Jinke shares can get a new opportunity through reorganization. According to the provisions of the Enterprise Bankruptcy Law, during the period of reorganization, judicial freezing and court enforcement may be prevented, the guarantor may be prevented from exercising the security right, the holder of the right of repossession may be restricted from exercising the right of repossession, and the shareholders of the enterprise may be restricted from exercising their equity. These regulations will greatly improve the business environment of enterprises. As Jinke said in the announcement, "if the company successfully implements the reorganization and completes the reorganization plan, it will be conducive to optimizing the company's asset and liability structure, reversing the company's declining business trend, and restoring the company's sustainable profitability."
With the help of reorganization, Jinke can re-examine and adjust its business structure and operating model to achieve more reasonable and high-quality development.
In addition, the rebirth of large listed companies is also conducive to the win-win situation of debtors, creditors, investors, employees and other parties, and is conducive to the effective use of social resources.
And from an investor's point of view, it will also be a very valuable business.
Taking Great Wall Guofu Real Estate, which signed a strategic investment framework agreement with Jinke as an example, as an investment and operation platform under China Great Wall Asset Management with real estate development and operation as its main business, Zhantou Jinke will help it quickly build a complete real estate system and capabilities to serve the overall strategy of Great Wall Asset Management.
At present, among the four major AMC companies, only Cinda Asset Management has a listed company platform of Cinda Real Estate, after the success of the Great Wall Guofu War Investment Jinke, Jinke shares can be used as the listed company platform of the Great Wall Guofu in the future, regardless of the project research and judgment capabilities, product development capabilities, management capabilities, land reserve capabilities have been greatly improved, the company's development ecology will be further improved, which is conducive to the benign interaction between financial capital and industrial investment.
According to the previous announcement, the cooperation between the two is not only a project-level cooperation, but a strategic cooperation at the equity level. According to industry experience, war investors generally inject capital through the conversion of capital reserve into share capital. It is assumed that the reorganization plan will be based on 5.3 billion outstanding shares, and the capital reserve will be converted into share capital at the ratio of 10 shares for every 10 shares, with a total of 5.3 billion shares. According to rough estimates, Great Wall only needs to spend 3 billion to 5 billion yuan to become a controlling shareholder.
Not only that, according to the 2023 semi-annual report disclosed by Jinke shares, the company's total saleable resource area is about 52.74 million square meters. Based on the sales volume of 20.2 billion yuan and the average price of 8,900 yuan per square meter announced by the China Index Institute in the current period, the total saleable value of Jinke exceeds 450 billion yuan, which is enough to support its sales in the next 3-5 years. After the company's operation is back on track, Jinke's ability to continue to operate will be effectively guaranteed.
The optimized business layout and high return on investment can already be said to be a huge benefit. With the entry of new investors, the two sides integrate resources and complement each other, and there is room for further growth in Jinke's future business increment and profit improvement.
Self-helper Jinke, God helps
With the company's reorganization ushering in key progress, Jinke shares are also expected to get a respite and accelerate the return to normal business track.
As real estate enters a new cycle, in 2024, Jinke Co., Ltd. will put forward the overall development strategy of "one body, two wings, three moves and four new", adhere to real estate development as the main body, vigorously develop the asset-light service industry, actively cultivate and create a new track, and adhere to the business model of simultaneous development of light and heavy, simultaneous leasing and sales, and simultaneous increase of stock. The asset-light service industry and the new track were once again emphasized.
In terms of operation, in the first half of 2023, Jinke Co., Ltd. added 47 new enterprises to the park through industrial investment, and obtained a total of 60 asset-light projects, of which 9 new asset-light projects were added in the first half of 2023, accounting for 78% of the projects in first- and second-tier cities. Through the active development of industry, commerce, cultural tourism real estate, agency construction and other businesses, Jinke has formed a diversified source of income, and enabled the company to better adapt to market changes and changes in consumer demand, and enhance the company's competitiveness.
In addition, another key task is to ensure the delivery of the building.
According to the data, in 2023, Jinke will deliver a total of about 21.45 million square meters and 145317 houses, with a record number of deliveries, involving 229 delivery projects and 379 delivery batches, covering 96 cities across the country. Among them, 58 projects, about 3.94 million square meters, have been delivered ahead of schedule. According to the "Research Report on the Delivery Performance of China's Typical Real Estate Enterprises from January to December 2023" released by Yihan Think Tank, the company's annual industry ranking in the number of units delivered and the area delivered has made great strides to the 7th place.
Entering 2024, the company will still increase its efforts to ensure the delivery of buildings. In the first quarter of this year, Jinke delivered a total area of 1.71 million square meters and a total of 9,681 sets. At the "2024 China Top 100 Real Estate Enterprises Research Results Conference and the 21st China Top 100 Real Estate Entrepreneurs Forum" held on March 21, Jinke won the honor of "2024 China Real Estate Delivery Outstanding Enterprise" for its outstanding delivery results.
In the current market environment, behind such achievements, from "delivery of houses" to "delivery of life", Jinke has built with heart and fulfilled the promise of "better life" with the greatest sincerity, which not only brings confidence to owners, but also boosts the confidence of the industry.
At the same time, Jinke has also been communicating with various financial institutions to actively resolve various debt risks. Since the establishment of the urban real estate financing coordination mechanism and the first batch of "white list" of real estate projects, as of April 17, 2024, 82 projects of Jinke have been included in the "white list", distributed in 14 provinces (autonomous regions and municipalities directly under the central government) across the country. Among them, 16 whitelisted projects have successfully obtained support from financial institutions by adding new financing, adjusting loan repayment nodes, and reducing loan interest. The company said that it will actively respond to the policy call, actively communicate with local housing and construction departments and banks, promote more projects to enter the "white list", realize the financing landing, and further ensure the steady progress of the company's operation and delivery of buildings.
Even after the industry adjustment, Jinke's core management and business backbone team still maintain a very high degree of stability, and most of the management such as Zhou Da and Yang Chengjun have been in office for more than 20 years, which undoubtedly gives the outside world confidence in reorganization.
It is worth pointing out that since 2023, the central government and ministries have repeatedly emphasized that real estate is the pillar industry of the national economy, the real estate market policy has been intensively released, various "purchase restrictions, sales restrictions, and price restrictions" policies have been continuously relaxed, and financial institutions have supported the stable financing channels of real estate enterprises and met the reasonable financing needs of real estate enterprises under different ownership systems without discrimination, etc., and the stabilization and recovery of the property market can be expected.
Now, Jinke shares, which have officially entered the reorganization procedure, are only a matter of time before they get out of the short-term liquidity difficulties and achieve "nirvana rebirth".