On May 13, at the monthly management meeting of Country Garden Group.
Yang Huiyan, Chairman of the Board of Directors of the Group, delivered an inspiring speech.
She firmly said that although the current real estate industry as a whole is still at a low ebb, as long as the industry works together and strengthens confidence, it will usher in the arrival of spring.
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These words undoubtedly injected a shot in the arm for the entire real estate industry. But what is it that underpins Yang Hye-yeon's confidence? Is the spring of the industry really just around the corner?
"Two Swords Together"
To solve this question, we have to start with the recent changes in real estate control policies.
With the recent introduction of "relaxation" policies for the property market in first- and second-tier cities, the liquidity of the market has improved. For example, Beijing, Shanghai and other cities have successively lifted restrictions on home purchases, and Guangzhou and other cities have also introduced measures such as "trade-in", which has undoubtedly injected new vitality into the real estate market.
At this time, on May 11, Country Garden Real Estate Group also completed the interest payment of its medium-term notes as scheduled, fully repaying the interest of 35.55 million yuan and the interest during the grace period of 8,278.77 yuan. This is undoubtedly a strong indication that the group's capital chain is still relatively healthy and that there is no crisis.
In the face of such a "combination of two swords", Yang Huiyan is naturally full of confidence. "The recent relaxation of purchase restrictions in first- and second-tier cities and measures such as 'trade-in' show that the government is taking action to promote the improvement of market liquidity and strive to gradually restore industry confidence," she analyzed at the meeting.
Policy warmer wind help
In fact, since the beginning of this year, a series of policy measures taken by the central and local governments at all levels in the real estate market have brought warm wind to the industry.
In February this year, the central bank and the China Banking and Insurance Regulatory Commission jointly issued the "Notice on Further Promoting the Stable and Healthy Development of the Housing Rental Market", proposing to support real estate development enterprises to get involved in the housing rental market, and encourage banking financial institutions to provide financing support for housing rental enterprises.
In March, the executive meeting of the State Council required all localities to further optimize real estate regulation and control policies, reasonably determine restrictions on housing purchases, and ensure the demand for rigid and improved housing. Subsequently, a number of first- and second-tier cities such as Beijing, Shanghai, and Guangzhou have relaxed restrictions on home purchases.
In April, the Ministry of Housing and Urban-Rural Development and 10 other departments jointly issued the "14th Five-Year Plan for the Development of Modern Service Industry", which proposed to support the transformation and development of real estate development enterprises. At the same time, all localities are required to formulate differentiated real estate regulation and control policies in light of the actual situation.
It can be said that under the warm wind of policies at different levels, the real estate industry has ushered in the dawn. It is in this context that Country Garden Group has also ushered in a rare development opportunity.
Steady and far-reaching
At present, the real estate industry is indeed facing a severe test. Especially under the influence of multiple factors such as rising interest rates, declining sales, and tight funds, many companies are facing an existential crisis.
But as Yang Huiyan said, as long as the industry works together and strengthens confidence, it will usher in the arrival of spring.
First of all, Country Garden itself has a strong ability to resist risks. According to publicly available data, the group's debt-to-asset ratio was 67.3% at the end of 2022, well below the regulatory requirement of 70%. At the same time, the company's cash reserves are abundant, with total cash of more than 1.5 trillion yuan, which is sufficient to cope with the short-term debt service peak.
In addition, Country Garden also has relatively stable sales channels and excellent brand image in the industry. In the first four months of 2023, the group achieved sales of 315.9 billion yuan, down 5.6% year-on-year, which is significantly lower than the industry average. This is also inseparable from the sales network and marketing strategy that it has invested heavily in in recent years.
More importantly, Country Garden is continuously improving its ability to resist risks through the refinement of internal management. Yang Huiyan stressed at the meeting that it is necessary to seize the opportunity in the crisis and build an "iron army" that can withstand the test. This means that the group is focusing on optimising its internal team building to lay the foundation for sustainable development in the future.
As analyzed by some industry experts, the real estate industry is currently at the bottom of the hovering stage, and with the continuous optimization of policies and the gradual recovery of sales in the future, the industry as a whole is expected to usher in the dawn. As an industry giant, Country Garden undoubtedly has stronger anti-risk capabilities and development potential. "Spring is coming." Yang Huiyan's words were like a spring thunder, causing ripples in the real estate industry.
However, for the vast majority of businesses, this is indeed the darkest hour. Various unfavorable factors are superimposed, making the living space of real estate companies more and more narrow. So, what is it that supports the chairman of Country Garden to be so confident?
This is where the mystery begins to emerge.
Major positives are frequent
Looking back on the recent past, the real estate market is setting off a new policy warm wind.
In early May, first-tier cities such as Beijing and Shanghai successively announced the relaxation of restrictions on home purchases, allowing more rigid and improved demand to enter the market. Guangzhou, on the other hand, has launched incentive policies such as "trade-in" to further unleash market vitality.
At the same time, the "14th Five-Year Plan for the Development of Modern Service Industry" jointly issued by 10 departments including the Ministry of Housing and Urban-Rural Development also clearly requires support for the transformation and development of real estate enterprises. This means that the support at the policy level will be further strengthened in the future.
Against this backdrop, Country Garden Group also successfully completed the on-schedule interest payment of its medium-term notes, fully repaying the interest of RMB 35.55 million and the interest during the grace period of RMB 8,278.77. This not only demonstrates the group's excellent solvency, but also highlights its sufficient reserves in terms of capital chain.
It can be said that the "double sword" of these favorable policies and the performance of the enterprise itself has undoubtedly injected a boost into the real estate industry and even Country Garden itself.
Sure enough, at the monthly management meeting held on May 13, Yang Huiyan said with confidence: "As long as we persist in surviving the trough, the real estate industry will definitely usher in spring."
The feedback from the capital market has been positive
For Yang Huiyan's declaration, the capital market also gave positive feedback.
On May 14, Country Garden Holdings stock (02007.HK) rose 3.2% to HK$15.8, a new high in nearly a month. This is undoubtedly a reflection of the capital market's confidence in the group's future prospects.
Analysts pointed out that as an industry leader, Country Garden not only has strong financial strength, but also is relatively mature in terms of sales channels and marketing strategies. These factors will become an important support for it to tide over the industry trough in the future.
What is more noteworthy is that Country Garden is actively laying out the leasing business. Its "Hopewell Beauty" brand has been implemented in many cities and has become an important starting point for the group to expand the housing rental market.
The development of leasing business can not only bring long-term and stable cash flow to Country Garden, but also coincide with policy guidance. From this point of view, the group's transformation and upgrading path is gradually becoming clear.
In addition, as a veteran of the industry, Country Garden has always spared no effort in investing in talent echelon and corporate culture. At the meeting, Yang Huiyan stressed that it is necessary to seize the opportunity in the crisis and build an "iron army" that can withstand the test. This will undoubtedly lay a solid foundation for the sustainable development of the group in the future.
All in all, with the two-way boost of favorable policies and the capital market, Country Garden is poised to welcome the arrival of spring in the industry.
Integration and innovation for development
At present, the real estate industry as a whole is still facing a severe test. But as Yang Huiyan said, as long as the industry works together and strengthens confidence, this spring will come.
For Country Garden, how will its future development be paved?
First, it is necessary to further strengthen cooperation with the government and deeply integrate into national strategies such as urban renewal and housing rental. Make full use of various policy dividends to inject new momentum into its own development.
Second, we must speed up the innovation and upgrading of products and services. Fully respond to the diverse needs of consumers, continue to make efforts in project design, life services, etc., and improve the quality of products and services.
Third, it is necessary to deepen the refined reform of internal management. Further optimize team building, improve operational efficiency, and enhance the company's ability to resist risks. Only in this way can Country Garden gain a firm foothold in the fierce market competition.
Spring blossoms and autumn fruits, there is always a time when winter goes to spring. It is believed that with the help of the warm wind of policies and the unremitting efforts of Country Garden, the real estate industry will be able to usher in this firm and hopeful spring.
Let's look forward to the arrival of this spring! Readers are welcome to leave a message and share your views on the future development of the real estate industry.
#碧桂园杨惠妍: The real estate industry will welcome spring