The author | accounting academy around him (please pay attention to the public account of the same name)
Horace, the poet and critic of the roman empire, wrote in his Poetry: "Those who are now decaying may shine again in the future." Those who are favored now may be eclipsed in the future. ”
China's real estate market has also been hanging on the clouds and waves, but under the current high-pressure policy of "three red lines", under the common vision of common prosperity, and in the context of the turning of the national development strategy, the climax is not there.
When the tide receded, we could see who was swimming naked.
<h1 class="pgc-h-arrow-right" data-track="61" > one| start with Wang Jianlin's "boldness"</h1>
In 2017, Wang Jianlin said in a speech at the "Entrepreneur Lecture Hall" of Tsinghua University: "What Tsinghua Peking University is not as bold as being bold; what Harvard Yale is not as dare as yourself." Wang Jianlin's words are definitely a summary of his own successful experience in life, and there is no sense of ridicule and ridicule.
In 1997, the central bank promulgated the Trial Measures for the Administration of Personal Housing Guarantee Loans, which stipulates that the maximum loan ratio is 70% of the house price, and the maximum loan term is 20 years. From that time on, a two-decade-long real estate bull market began.
In that era of barbaric growth, only you were bold enough to invest, and indeed most people got a share of the dividends of the development of the times, and even made a lot of money, such as China's real estate developers.
It can be imagined that when Xu Jiayin, the boss of Evergrande Group, heard this sentence, his heart must have been silently applauding, and he fiercely raised his hands in approval, lamenting that the hero saw something the same.
Because looking at the successful history of Xu Jiayin, it is a history of full horsepower and gambling all the way.
<h1 class="pgc-h-arrow-right" data-track="10" >| Three big bets in Xu Jiayin's life</h1>
The first big gamble was related to listing.
Chasing the first battle of the listing, the beginning was full of pride, the innings crashed and plummeted, the ending was eclipsed, and after exiting, it accidentally missed the big bull market, and the plot turned thousands of times and had ups and downs.
In August 2002, Xu Jiayin invested 54 million yuan (a huge amount of money at the time) to buy a 27% stake in the listed company "Qiong Energy" and became the company's largest shareholder.
The purpose of investing in "Qiong Energy" is to "backdoor listing", so Xu Jiayin also injected the assets of Evergrande's "Guangzhou Jinbi Yushui Villa" project worth 150 million yuan and covers an area of 1400 mu into the "shell resources", and renamed "Qiong Energy" to "Evergrande Real Estate".
Evergrande can be described as doing its best to go public, throwing money and high-quality assets, and throwing thousands of dollars. However, after entering the shares, I found that I had jumped into the "fire pit".
The negotiation process between Xu Jiayin and the original major shareholder of "Qiong Energy" was unusually short, such a major negotiation, the two sides took only 1 hour to finalize the investment intention, signed the investment agreement, and did not carry out professional due diligence at all, which is in line with Xu Jiayin's consistent bold personality. But after taking over, it was found that "Qiong Energy" is a company that rots from the inside to the outside to the root, the supplier collects debts, the internal management is chaotic, the third largest shareholder, the fourth largest shareholder are the famous "evil Zhuang" on the Chinese stock market, from 2002 to 2006 is the bear market stage of A shares, Evergrande entered the "Qiong Energy" after the stock price fell all the way, from more than a dozen pieces to more than 2 yuan, the market value erased 80%.
The purpose of Evergrande's backdoor listing was originally financing, but at that time, China's capital market was carrying out equity splitting reform, and the channels for additional stock financing were stopped. This made Xu Jiayin's many wishes disappointed one by one, extremely discouraged, Evergrande was determined to abandon "Qiong Energy", so in May 2006, the price of more than 70 million, the shares were sold to the outside world, liquidated "Qiong Energy".
Operating the "Qiong Energy" one buy and one sale, it seems to have made more than 20 million yuan from the book, but evergrande has injected more than 100 million high-quality assets into it.
After exiting "Joan Energy", a dramatic scene appeared. After Evergrande sold "Qiong Energy" shares in May 2006, a round of super bull market in China's stock market began, the Shanghai Composite Index rose from more than 1400 points in May 2006 to 6000 points in October 2007, and Qiong Energy's stock price also soared from 2 blocks to 22 yuan, during which almost did not experience a major adjustment, Xu Jiayin and his Evergrande Group, very perfectly missed this round of huge bull market.
It can be imagined that when the Shanghai Composite Index rose to 6100 points in 2007 and qiong energy stock price stood at 22 yuan, Xu Jiayin felt in his heart, willing to gamble and lose, silently raised a glass of wine, and drank it all, although it was a little bitter.
Of course, Xu Jiayin, who can achieve great things, has not been frustrated by this, and his eyes have shifted to another place.
The second big gamble, again, is for the sake of listing.
In 2006, Xu Jiayin, who lost the big bet on "Qiong Energy", set his sights on the Hong Kong stock market and planned to land on the Hong Kong stock market.
In order to land on the Hong Kong stock market and attract investors' attention, Xu Jiayin invested in the favor of Hong Kong people and started a 3-year crazy expansion of the land reserve. At the end of 2006, Evergrande's land reserve was only 6 million square meters, but by the time it first hit Hong Kong stocks in early 2008, the size of the land reserve had reached 55 million square meters, an increase of 8.2 times in more than two years, thus becoming the king of the mainland. Hoarding such a large-scale land will inevitably lead to extreme tension in Evergrande's capital chain. On December 31, 2007, Evergrande's asset-liability ratio was as high as 96.02%, and the total liabilities were 20.533 billion yuan, while the total operating income of the year was only 3.167 billion yuan, and the liabilities were already 6.48 times of the operating income.
In order to raise funds, Evergrande Group sold 34% of its shares to International Investment Banks such as Merrill Lynch, Deutsche Bank, Temasek and other international investment banks for US$1 billion, but these investment banks required the signing of VAM agreements, the content of which was: the IPO must be ensured, and once the listing fails, Evergrande must return the US$1 billion investment with interest.
In March 2008, Evergrande Real Estate officially launched a roadshow of an IPO in Hong Kong, but then the US subprime debt crisis broke out, and the Hang Seng Index in Hong Kong plummeted, plummeting thousands of points in a matter of days. The Hong Kong stock market has been full of rumors, the stock market has plummeted, and the market value of listed companies has fallen off a cliff, which has directly dragged down the valuation of Evergrande's IPO, institutions have refused to buy Evergrande shares, and Evergrande's first IPO has died.
But then came the real crisis. Before the IPO, the VAM agreement signed between Evergrande and international investment banks to ensure listing played a role, and investment banks demanded that Evergrande return the investment funds.
Evergrande was instantly plunged into a crisis of bankruptcy.
In order to resolve this crisis, Xu Jiayin asked for help from many sources, and according to reports, Xu Jiayin had to go to Hong Kong tycoon Zheng Yutong as a "horse boy" and play cards with Zheng Yutong at zheng Yutong's home every day for 3 consecutive months. Later, it won the trust of Hong Kong tycoons Zheng Yutong, Liu Luanxiong, Zhang Song and other rich people, and it was their additional investment that brought Evergrande Group back to life, and in November 2009, the second impact of the IPO success, thus Xu Jiayin's life was started.
At that time, in response to the financial crisis, the Chinese government invested 4 trillion yuan to drive economic growth, and the Chinese real estate market opened a wave of soaring market. Evergrande Group, with its huge land reserves, has a rocket sales scale, and in 2011 Evergrande surpassed the leading Vanke in sales and became the largest real estate enterprise in China.
During the two sessions in 2012, a photo was widely circulated: the Xu family was covered with red light, suits and leather shoes, hermès belts were shining, and a large number of reporters chased and interviewed in Tiananmen Square, which was probably the highlight of his life.
The third big gamble, or to go public.
Listing has become the key coordinate in Xu Jiayin's life.
In 2016, Evergrande decided to list again on the backdoor of A-shares, this time, Xu Jiayin took a fancy to the listed company in Shenzhen City. In order to impact A shares, Evergrande once again "opened up".
The first step, the relocation of the headquarters, the relocation of Evergrande's headquarters from Guangzhou to Shenzhen, is to "get closer" to the Shenzhen Municipal State-owned Assets Supervision and Administration Commission, the actual controller of the listed company Shenfang.
In the second step, Evergrande invested 36.2 billion yuan to buy Vanke shares to support Vanke in the dispute between Vanke and Baoneng' equity, the purpose of which was actually to help the Shenzhen Municipal State-owned Assets Supervision and Administration Commission, because Vanke introduced the Shenzhen Metro as a support in order to hold the controller, and the controller of the Shenzhen Metro was the Shenzhen Municipal State-owned Assets Supervision and Administration Commission.
A year later, Evergrande transferred Vanke's shares to Shenzhen Metro for 29.2 billion yuan, with a net loss of 6.7 billion yuan.
The third step, in order to impact A-shares, Evergrande introduced 130 billion yuan of strategic investors. These strategic investments also require the signing of a "VAM agreement", which reads as follows: to ensure rapid performance growth and high dividends, and once the listing fails, the strategic investor's investment funds are fully repurchased. The agreement stipulates that Evergrande's net profit in 2018, 2019 and 2020 will be no less than 50 billion yuan, 55 billion yuan and 60 billion yuan respectively, and promises to distribute 68% dividends to shareholders every year. In 2017, Evergrande's net profit was 37 billion yuan, which means that the profit will increase by 35% within one year.
After getting huge funds from strategic investors, Evergrande began a crazy expansion road. Investing in football clubs, investing in Evergrande grain and oil, investing in new energy vehicles, investing in Evergrande Ice Spring, etc., the result of these diversified expansions is crazy money, but almost no project can bring profits.
At the same time, China's real estate market has begun to undergo major changes. The market of price increases and inventory has entered the end, and "housing is not speculation" has gradually risen to the national strategy.
In September 2020, the "three red lines" policy for the financing of housing enterprises was introduced, and Evergrande's three red lines were all in the middle, and the A-share listing plan was completely abandoned.
With the Evergrande wealth incident, the group's internal executives privately redeemed the wealth management products in advance, which gave Evergrande a fatal blow, and after the media exposure, the Evergrande crisis broke out.
Xu Jiayin's third high-roller gambling failed, and this time it failed, and the blow was fatal.
<h1 class="pgc-h-arrow-right" data-track="62" > three | The root cause of the Evergrande crisis: half is the general trend, half is man-made</h1>
Some people think that the Evergrande crisis is because of crazy expansion, failure to do a good job in risk control, resulting in huge debts, ultra-high asset-liability ratio, and ultimately crushed Evergrande Group. In fact, in addition to its own reasons, the Evergrande crisis is also related to the characteristics of the real estate industry itself.
What kind of industry is real estate?
First, real estate is an industry that requires a sustained investment of huge amounts of capital. The money that is profitable every year must be reinvested in new plots of land and projects. Huge capital investment, resulting in real estate developers' cash flow is always very tight, must rely on external financing to maintain normal operations.
Second, the business cycle of real estate is too long.
From the perspective of the operational characteristics of the real estate industry, the operating cycle from land, housing, sales, and payment collection is relatively long, and the fastest is also two or three years, which requires housing enterprises to have a very accurate forecast for future market demand and policies, the forecast is too cautious, too conservative to make money, the forecast is too optimistic, and the expansion is too fast to expect God to bless the smooth shipment. This operating model determines that when the wind is downwind, when the house sells well, the more debt, the greater the leverage, the more you earn, but once the real estate market stagnates and rises, even if it does not fall, the huge debt risk brought by financial leverage will bring an impact to the enterprise.
Third, the real estate market naturally has the attribute of stimulating the debt expansion of housing enterprises.
The better the real estate market, the more housing enterprises have to expand the scale, the stronger the incentive to increase leverage, which leads to the enterprise to develop the old project after the land will be more expensive, the investment will be greater, the inventory estimate after the new project will be higher. In essence, this makes the risk coefficient of real estate enterprises always in a high state.
Therefore, from the inherent characteristics of the real estate industry, it can be seen that it is not a high debt and high leverage operation of Evergrande, but the entire real estate industry operates in this way. The reasons for the frequent outbreak of debt crises by real estate enterprises such as Huaxia Happiness, Taihe Group and Sunshine City are similar.
Of course, the crisis of Evergrande Real Estate is inseparable from Xu Jiayin's decision-making mistakes, and when Vanke shouted "live" in 2018, Evergrande was still expanding wildly. Xu Jiayin's beginnings are based on debt, all his successful experience is borrowing and expansion, if he is allowed to change from a proud person to a cautious decision-maker, without experiencing the nirvana of life and death, it is impossible to change.
In November 2019, Xu Jiayin said in a speech at the Evergrande New Energy Vehicle Global Strategic Partner Summit that Evergrande's car-making path is five sentences:
The first sentence "buy, buy, buy", acquire enterprises, buy technology; the second sentence "hehehe", joint venture with domestic and foreign enterprises; the third sentence "circle circle", establish a circle of friends for new energy vehicles; the fourth sentence "big and big", do large-scale; the fifth sentence "good and good", good quality, good appearance, good price.
Xu Jiayin and his Evergrande Group, the reasons for their success and failure are included in these five sentences.
Xu Jiayin and his Evergrande Group were also favored, but now they have eclipsed; now that they have been decadent, can they be reborn in nirvana and shine again in the future?
In any case, we still wish Evergrande Group to survive the crisis, for nothing else, for the millions of ordinary people who bought Evergrande off-plan housing, for those investors who bought Evergrande wealth management and Evergrande stocks, after all, they are innocent.