Unfortunately, the capital market does not believe in "Confucian business cultivation", and this year is already Wu Jiangang's second IPO in Hong Kong.
Wu Jiangang, the boss of Okuyama Holdings, is a cultural man.
The Hubei boss once talked about "Confucian business culture" in an interview with the media, saying that he "has a special love for cultural undertakings and cultural industries." He believes that Confucian businessmen "pay attention to cultivation", in his view, businessmen are pursuing profit maximization, while Confucian businessmen should take into account profits and righteousness, people-oriented, not only to make the enterprise bigger and stronger, but also to make users satisfied, employees happy, and benefit the society. ”
This is not the first time That Wu Jiangang has talked about "culture." This Confucian merchant who pays attention to "cultivation" has repeatedly expressed his admiration for culture.
At the beginning of 2016, as a member of the Hubei Provincial Committee of the Chinese People's Political Consultative Conference, he suggested that during the "13th Five-Year Plan" period, Hubei should pay more attention to the development of the cultural industry and make every effort to build the cultural industry as a pillar industry. ”
In the enterprise, Wu Jiangang advocates the "people-oriented and lifelong career system", and the name of Aoshan Holdings takes "mechanism to motivate people, cultural shaping people, warm feelings, and career cohesion" as the concept.
However, it is worth mentioning that the "people-oriented" Okuyama Group shows in its prospectus that for the years ended 31 December 2016, 2017 and 2018, certain subsidiaries did not pay enough provident funds for some employees in accordance with the law and may be ordered to pay provident fund contributions.
As a natural cultural gene, it is not surprising that the Okuyama Group has developed the ice and snow industry, which is quite a "gentle" project. The unique advantages of the ice and snow industry as the Okuyama Group have also been placed in the listing application, from the policy trend to the development prospects, describing an Okuyama ice and snow kingdom for investors.
Hubei started as a local giant
Like many successful housing business owners, Wu Jiangang also started his own life career in the 90s.
In 1997, Wu Jiangang founded the Aoshan Group in Hubei, but the main business of Aoshan at that time was not real estate, but related architectural decoration.
In 1999, Okosan officially entered the real estate field and established a real estate company. Since then, through real estate projects such as "Aoshan Byzanting" and "Aoshan Oujingyuan", Aoshan has gradually gained a foothold in Wuhan and begun the road of prosperity.
In 2006, Aoshan officially entered Huangshi through the "Aoshan Magnetic Lake World" project, and began to go out of Wuhan and radiate to the outside world.
Photo/ Okuyama Magnetic Lake World Source/Network
However, compared with the attention of other housing enterprises to the real estate industry, the traditional development path of continuous radiation expansion from the local to the whole country, perhaps by Wu Jiangang's admiration for culture, Aoshan Holdings has embarked on a less traditional path.
In 2008, Okuyama established a film and television culture company and officially entered the film and television art industry. It is worth mentioning that Okuyama Film and Television filmed an award-winning movie "Moving My Heart" the following year, starring her daughter Wu Zhenlin, who was 14 years old at the time.
Since then, Aoshan Holdings can be described as a rapid development in the film and television industry, and its film and television art development has even surpassed the development of real estate investment, shooting TV series such as "Blood of the Republic", but in real estate, it has been limited to Hubei region, and less investment and expansion.
According to the prospectus, as of March 31, 2019, Aoshan Holdings had a total of 25 projects in Hubei, Anhui, Sichuan, Chongqing and Zhejiang, including 24 projects developed by its subsidiaries and one project developed by an associated company, with a total estimated gross floor area of approximately 3.4 million square meters of total land bank attributable.
Among them, the soil reserves of the Wuhan project accounted for about 63.2% of the total soil reserves, 7.9% of the total soil reserves in Huangshi, 12.7% in Enshi, and 3.1% in Chongqing, 4.1% in Chengdu, 6.4% in Fuyang, 2.0% in Jiaxing, and 0.6% of the total soil reserves in Chongqing and the KWG Taifu and Guangming Real Estate Joint Venture Development Yingyuetai Project.
This also means that 83.8% of the current land reserve of Aoshan Holdings is located in Hubei, and Aoshan is more like a local housing enterprise, and it is still far from becoming a national housing enterprise.
Is the ice and snow project a kingdom or a gimmick
In the prospectus, Aoshan Holdings presents itself as "the forerunner of revenue from China's rapidly developing ice and snow sports and entertainment industry", and the introduction of ice and snow sports can be described as "with the advantage of being a pioneer" everywhere.
Therefore, how Okuyama Holdings has developed in ice and snow sports, and why it is called "with the advantage of being a pioneer" has become an important agenda to attract the attention of investors.
According to the prospectus released by Okuyama Holdings itself, there is only one ice skating rink in operation in Aoshan at present, and the remaining three ice and snow rinks are under development and construction.
Although there are only four projects at hand, this does not stop Aoshan's ambition to "draw a big pie", in Aoshan's wild prospectus, Aoshan said that he wants to enter Sichuan, Zhejiang, Chongqing, and to open up new formats such as ski resorts and ice and snow amusement parks. In the future, we even plan to provide ski circles, snow cities, dog sledding, sledding, ice sculpture exhibitions and story theme fields.
The reason for its development is in line with the general trend of the country to welcome the Winter Olympics, and the government encourages enterprises to invest heavily and develop ice and snow sports. According to the prospectus, from 2014 to 2018, China's ice and snow industry and market size reached a compound annual growth rate of 24.3% from 2014 to 2018, and it is expected that ice will reach 600 billion yuan in 2020.
Of course, although Okuyama's move conforms to the general trend of the country, its revenue capacity has not kept pace with the country.
According to the prospectus, from 2016 to 2018, the revenue of Aoshan's ice and snow sports and entertainment business was 2.255 million yuan, 8.684 million yuan and 2.954 million yuan respectively, accounting for only 0.17%, 0.56% and 0.16% of the company's total revenue. Its gross profit was 1.019 million, 2.606 million and -667,000, respectively, which were higher than the company's overall gross profit margin in 2016, and the overall gross profit in 2017 and 2018 was lower.
Okuyama explained this because before April 2018, due to the renovation of the real ice rink, the ice and snow business was suspended for four months, so the revenue fell from 8.684 million yuan to 2.954 million yuan.
Chart/Breakdown of Annual Revenue, Sales and Gross Profit
Source/Okuyama Prospectus
In this regard, financial commentator Yan Yuejin believes that ice and snow projects should be said to have a certain seasonality, which is a certain pressure on property development. Of course, the bid for the Winter Olympics is to some extent conducive to the development of such business, and there are actually similar projects in various places to introduce demand for ice and snow projects, so this in itself is not a gimmick to get land, but it does help it to obtain various types of high-quality land.
Debt is high and operating income is susceptible to fluctuations
Although Okuyama, as the "forerunner of ice and snow sports", is more famous than real, and uses the concept of foreign energy to write a special book for himself, but Okuyama's high net asset-liability ratio is really high.
According to the prospectus, in 2016, 2017 and 2018, the total borrowings of Okuyama Holdings were RMB2,533.4 million, RMB5,338 million and RMB5,967.8 million, respectively, showing a clear growth trend. Its net gearing ratio was 316.5%, 568.9% and 283.1% respectively. That number even reached 804 percent in 2015.
Figure/Year's Main Financial Ratio Source/Okuyama Prospectus
It is worth mentioning that in 2016, in order to solve the short-term capital needs of property project development, a loan of 50 million yuan with a monthly interest rate of 2% was made to individuals. Of course, Okuyama said that according to the laws of our country, this is allowed, and this loan only accounts for 2% of the outstanding loans in 2016.
In terms of cash flow, Okuyama will inevitably have a lot of pressure, according to the prospectus, in 2016, 2017 and 2018, its cash and cash equivalents were 1.006 billion, 1.148 billion and 550.4 million, respectively. Okuyama attributed the sudden drop in its cash flow to project development.
In view of such a high net capital debt ratio, Yan Yuejin believes that the debt data of Okuyama is indeed relatively high, which may be related to its business structure. Because Okuyama Holdings is not a simple residential development enterprise, similar ice and snow projects have the characteristics of a long investment cycle. However, debt is not conducive to enterprises to some extent, especially the deleveraging policy orientation that began in 2016.
In addition to the high debt, Okuyama's profitability is also worth worrying about. According to the prospectus, in the three years of 2016, 2017 and 2018, Aoshan's revenue was 1.312 billion yuan, 1.552 billion yuan and 1.891 billion yuan, respectively. Gross profit was RMB355 million, RMB663 million and RMB731 million respectively, while its net profit was only RMB0.46 billion, RMB169.4 million and RMB239.9 million. Although gross profit and net profit show a trend of rising year by year, as a national TOP50 housing enterprise, the lower gross profit and net profit are inevitably somewhat unworthy of the name.
Chart/Annual Gross Profit and Gross Margin Source/Okuyama Prospectus
At present, Aoshan's revenue mainly comes from property sales, and in the past three years, the sales amount of Aoshan Holdings property was 1.239 billion yuan, 1.451 billion yuan and 1.781 billion yuan respectively, contributing 94.4%, 93.5% and 94.2% of the overall revenue. At present, 83.8% of Aoshan's land reserve is located in Hubei, 63.2% in Wuhan, 12.7% in Enshi and 7.9% in Huangshi, which means that Aoshan's property sales sources will be very susceptible to the Hubei market and the three local markets of Wuhan, Enshi and Huangshi.
According to the China 100 Cities Residential Inventory Report released by E-House in August, in the past year, the inventory-to-sales ratio in Wuhan has been 12.2, although the potential is huge, but the overall market is stable, and the inventory-to-sales ratio belongs to the normal range. Yan Yuejin believes that similar land reserves should be said to still grow, and the follow-up housing sales market in some backward cities may also rise in the future, but the risk of regional markets will still exist.
Singularity Commercial Real Estate Original
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