Yangtze River Business Daily reporter Jiang Chuya
The real estate market is still in a state of adjustment, and Greenland Holdings has fallen into a whirlpool of huge performance losses.
On April 29, Greenland Holdings (600606. SH) released its 2023 annual report.
In 2023, the company achieved operating income of 360.245 billion yuan, a year-on-year decrease of 17.28%, and net profit attributable to shareholders of listed companies (hereinafter referred to as "net profit") was -9.556 billion yuan, a year-on-year decrease of 1029.04%. Among them, the real estate revenue of the core business was 184.5 billion yuan, a year-on-year decrease of 4.23%.
Entering 2024, the loss trend continued, and the company achieved operating income of 51.568 billion yuan in the first quarter, a year-on-year decrease of 34.56%, and a net profit of 82.0324 million yuan, a year-on-year decrease of 95.88%.
Debt reduction has become one of the directions for Greenland Holdings to break through the situation and survive. The Yangtze River Business Daily reporter noted that the company has taken a series of deleveraging measures, including the sale of non-core assets such as large infrastructure groups, increasing the sales collection rate, and adjusting the debt maturity.
Under a series of debt reduction measures, in 2023, Greenland Holdings' asset-liability ratio will decline steadily, with the balance of interest-bearing liabilities at the end of the year falling to 214.8 billion yuan, and the annual pressure drop of 2.7 billion yuan, which has accumulated by 173.4 billion yuan since the introduction of the "three red lines" regulatory policy, and at the same time, promoting commercial banks to reduce loan interest rates, with the overall average financing cost of 5.59%.
At present, Greenland Holdings is actively opening up new tracks to promote the company's transformation. In this regard, financial commentator Yan Yuejin told the Yangtze River Business Daily reporter that the transformation shows the keen insight of enterprises into market changes and the determination to take the initiative to respond, and can enhance the comprehensive competitiveness of enterprises through diversified development, but it will take time to verify whether the transformation can achieve the expected results.
Photo by Yangtze River Business Daily reporter Wu Wei
The performance was huge, and sales were under pressure
In 2021, Greenland Holdings' performance suffered a waterloo, with revenue of 544.756 billion yuan, a year-on-year increase of 19.45%, and a net profit of 6.179 billion yuan, a year-on-year decrease of 58.8%.
Since then, the company's profitability has continued to decline. In 2022, Greenland Holdings achieved operating income of 435.5 billion yuan, down 19.98% year-on-year, and net profit of 1.01 billion yuan, down 83.65% year-on-year.
In the context of the tight liquidity situation in the industry, Greenland Holdings will suffer a rare huge loss in 2023.
In 2023, Greenland Holdings will achieve operating income of 360.245 billion yuan, down 17.28% year-on-year, net profit of -9.556 billion yuan, down 1029.04% year-on-year, non-net profit of -10.238 billion yuan, down 647.27% year-on-year, and net cash flow from operating activities of -2.079 billion yuan, down 107.58% year-on-year.
On the one hand, due to the downturn in the real estate market, Greenland Holdings suffered inventory impairment, the company provided for asset impairment losses of 13.772 billion yuan, an increase of 10.510 billion yuan year-on-year, due to the decline in asset prices, the inventory loss of 12.730 billion yuan, the impairment loss of investment real estate of 225 million yuan, and the impairment loss of fixed assets of 329 million yuan.
On the other hand, the industry difficulties that have lasted for three years have not been effectively improved, resulting in a decline in corporate revenue, and the gross profit margin of real estate settlement has also declined year-on-year, and the performance continues to be under pressure.
The overall sales of the industry are under pressure, and the sales scale of Greenland Holdings is also facing a sharp decline.
In 2023, the company achieved a contracted sales area of 10.584 million square meters, a year-on-year decrease of 17.3%, and a contracted sales amount of 111.469 billion yuan, a year-on-year decrease of 15.8%.
In the first quarter of 2024, Greenland Holdings achieved a contracted sales area of 1.277 million square meters, a year-on-year decrease of 41.6%, and a contracted sales amount of 13.234 billion yuan, a year-on-year decrease of 51.4%. During the reporting period, the company did not have any new real estate project reserves.
In the first quarter of 2024, Greenland Holdings' performance continued its downward trend, achieving operating income of 51.568 billion yuan, down 34.56% year-on-year, and net profit of 82.0324 million yuan, down 95.88% year-on-year.
In the secondary market, since August 4, 2023, Greenland Holdings' share price has been declining, falling by more than 40% in the past year. As of the close of trading on April 30, 2024, the company's share price fell 4.17% to 1.84 yuan per share. Since the company's backdoor listing, the market value has fallen from 350 billion yuan to less than 26 billion yuan.
Accelerate the transformation of deleveraging and open up a new track
In 2019, Greenland Holdings' bank entrusted loans were overdue. Subsequently, the company's projects began to be suspended, postponed delivery and other phenomena, and the debt crisis gradually surfaced.
In 2022, Greenland Holdings announced that the company's $500 million bond was seeking to be extended, and said it planned to sell enough high-quality assets to repay the debt, including the sale of 200 billion assets in three years.
In recent years, one of Greenland Holdings' main tasks has been to repay debts and reduce leverage. The Yangtze River Business Daily reporter noted that Greenland Holdings has taken a series of deleveraging measures, including the sale of non-core assets such as large infrastructure groups, increasing the sales collection rate, adjusting the debt maturity, and reducing debt costs.
As of the end of 2023, the balance of Greenland Holdings' interest-bearing liabilities has dropped to 214.8 billion yuan, a decrease of 2.7 billion yuan for the whole year, and a cumulative decrease of 173.4 billion yuan since the introduction of the "three red lines" regulatory policy. At the end of the year, the contract liabilities and advance receipts (mainly the pre-sale amount of the real estate industry) were 254.7 billion yuan, and the total land reserve of the real estate industry at the end of the period was 130 million square meters.
In order to find new performance growth points, Greenland Holdings began to make a cross-border layout. As early as 2018, the company has laid out the wine industry and signed a cooperation agreement with Luzhou City.
In August 2023, Greenland Holdings and Moutai Group signed a strategic cooperation framework agreement, under which the two parties will deepen cooperation in the fields of finance, wine, cultural tourism, health care, and science and technology, and explore and study various types of cross-border linkage projects.
At the same time, Greenland Holdings relies on existing resources to open up new tracks. In the first quarter of 2024, Greenland Smart (Shanghai) Construction Service Co., Ltd., an integrated service platform for urban construction and operation under the company's umbrella, was officially unveiled, and ranked among the top of the list of third-party institutions such as CRIC with a newly signed construction area of 850,000 square meters in the quarter.
For the transformation of Greenland Holdings, financial commentator Yan Yuejin told the Yangtze River Business Daily reporter that from a positive side, the transformation shows the company's keen insight into market changes and determination to take the initiative to respond, through diversified development, can reduce the risk of a single business, expand new growth space, and enhance the comprehensive competitiveness of enterprises.
However, Yan Yuejin believes that the transformation also faces certain challenges and uncertainties. The expansion of new business takes time and resources, which may have an impact on performance in the short term. At the same time, the market competition is fierce, and it will take time to verify whether the transformation can achieve the desired results. Overall, Greenland's transformation is a positive attempt to adapt to the development of the times, but it needs to continue to pay attention to and evaluate the progress and effect of its transformation.
Exclusive In-Depth Recommendations:
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