Edit | Yu Bin
Produced by | Chaoqi Network "Yu see column"
Recently, the accident and debt pressure of the Zhongnan construction project have been fermented together, which has made it a big question known as the "dark horse of Soviet real estate enterprises".
On the one hand, the quality of the company's projects is facing criticism, the recent Nantong Zhongnan Center Building has caused a lot of media reports due to another collapse accident, and the company's real estate projects have frequently fallen into quality and safety disputes; on the other hand, Zhongnan Construction under the pressure of more than 300 billion yuan of debt is not small in the current real estate market environment, coupled with the company's performance is worrying, the stock price continues to decline, all kinds of signs show that the current situation of Zhongnan Construction is not optimistic.
Project accidents are frequent
According to relevant media reports, in early September, a collapse accident occurred on the road surface in the southeast corner of the Nantong Zhongnan Central Building, and the developer behind this accident was Zhongnan Construction, which once again fell into the criticism of construction quality and safety accidents.
It is worth noting that this is not the first collapse accident in the area near the Central South Center Building in Nantong, as early as 2017 and 2019, there have been two collapse accidents on the road around the building, which has made Zhongnan Construction directly complained by some netizens that "it is Zhongnan again".
As a top 500 listed company in China that has gradually developed from a small construction contractor team, Zhongnan Construction can easily trigger a large-scale public opinion crisis if there is a problem in the quality of the project, and what is worrying is that Zhongnan Construction seems to have been without criticism at the project quality level.
In recent years, while Zhongnan Construction has expanded and developed significantly, it has often been deeply involved in construction quality problems. Through various types of public reports on the Internet, we can see that many projects under Zhongnan Construction have "stepped on the pit".
For example, in the past 2020, the first phase of Zhongnan Shangyuecheng was jointly refused by a large number of owners due to the lack of municipal roads in the surrounding area and the quality of housing decoration; the Zhongnan Fanfu in Xi'an World Garden was exposed to be directly ordered to rectify by the Housing and Construction Bureau because of the housing quality problems; and the Huantai Zhongnanyu Fu in Zibo City was ordered by the relevant departments to rectify because of the many hidden dangers of the project.
At the beginning of this year, the Zhongnan Fanfu project in Hefei High-tech Zone was notified because the construction personnel did not do a good job of safety protection and fell from a high place, which once caused Zhongnan Construction to suffer great doubts.
In view of the frequent accidents in the company's projects and the frequent occurrence of building quality problems, Zhongnan Construction itself is actually very clear. Just last year, Zhongnan Land also admitted that the company's construction quality is "obviously different from that of benchmarking enterprises", and the company also deeply realized that if the quality of the project cannot be effectively improved, then the pricing ability and profit performance of the company's products will be negatively affected.
This may be the root cause of zhongnan construction in the company's profitability and product strength has been questioned, as a company mainly engaged in real estate development business, it must improve product quality as its basic requirements.
Financial pressures should not be underestimated
In addition to product quality problems, the financial pressure of Zhongnan Construction in recent years has also become increasing, and the company's financial pressure has become prominent in the context of the overall tightening of the real estate market and the increasingly strict industry supervision.
In recent years, the pace of expansion of Zhongnan Construction can not be described as fast, from the sales of 50 billion yuan in the early years to nearly 200 billion sales last year, the company's sales growth rate is very fast. However, this pace of counter-trend expansion will naturally put companies under heavy debt pressure.
According to the company's latest 2021 mid-year financial report data, Zhongnan Construction achieved a total revenue of nearly 38.5 billion yuan in the first half of this year, an increase of nearly 30% compared with the same period last year; however, the company's profit performance was seriously worrying, and the company's net profit attributable to shareholders of listed companies was 1.748 billion yuan, a year-on-year decrease of nearly 15%.
This kind of financial situation of "increasing income without increasing profits" has made this real estate company that uses high leverage to expand under the "scrutiny" of investors.
At present, Zhongnan Construction's stock price is at a low point in nearly a year, and as of the close of trading on September 24, 2021, the company's stock price closed at 4.5 yuan per share, which has fallen by half compared with the performance of eight to nine yuan per share last year.
From the perspective of gross profit margin performance, Zhongnan Construction is currently at a relatively low level in recent years, and the company's gross profit margin in the first half of this year was only 16.31%, a slight decline year-on-year.
At the level of liabilities, Zhongnan Construction and many other housing enterprises are not optimistic, according to the mid-year financial report, the company's total assets as of the first half of this year are about 372.9 billion yuan, but the total liabilities are more than 320.7 billion yuan, the asset-liability ratio is nearly 86%, the company's financial leverage is not small, and the future debt risk is worth vigilance.
From the perspective of the "three red lines" regulatory requirements, as of the first half of this year, the net debt ratio of Zhongnan Construction was 95.27%, the asset-liability ratio after excluding pre-collection was 77.42%, and the cash short-term debt ratio was 1.03.
From the perspective of the overall debt structure, Zhongnan Construction's current liabilities account for more than 80% of the total liabilities, and the short-term liabilities that will mature within one year are about 20.9 billion yuan, considering that the company still has more than 26.9 billion yuan of monetary funds on its books, and its short-term debt repayment pressure is not large. However, the company has the problem of relatively high interest-bearing liabilities, considering that the company's overall financing costs have not been low, which will continue to encroach on the company's profit margins, and the profit performance of Zhongnan Construction may be under pressure for a long time in the future.
Although it has successfully entered the camp of China's housing enterprises of 200 billion yuan in 2020, "clear-eyed people" understand that the rapid expansion of Zhongnan Construction in recent years is difficult to continue for a long time. On the one hand, the company's expansion is inseparable from a large amount of financing, which is difficult to continue to go through under the overall trend of the real estate market to reduce leverage, if Zhongnan Construction does not want to have a crisis because of the debt problem, then it has to reduce the speed; on the other hand, under the downward channel of the property market, the house is more and more difficult to sell, the house is not speculated, the profit margin of selling the house is getting smaller and smaller, and the zhongnan construction must solve the balance between growth and profit.
For Zhongnan Construction, strategic transformation will also be on the string, under the increasing pressure of real estate regulation and financing control, the company needs to improve performance, improve project quality, reduce debt, steady development and other dimensions of synchronous efforts in the future.