On the first day of the listing of Datang Real Estate, the capital bureau of Huang Xi, the richest woman in Xiamen, "surfaced"

Fujian real estate enterprises are known for their radicalism, and the recently listed Datang Real Estate, as a member of the Fujian family, has a style that is even worse. The trader behind it is Huang Xi, who is known as the richest woman in Xiamen. Huang Xi is well known for its real estate business, but the financial territory that is not mentioned by others may be its core. Over the years of capital operation, Huang Xi's financial territory covers banking, insurance, private equity funds, asset management platforms, etc., with the help of these capital forces to deeply participate in the secondary market.

After more than ten years of being known as the "dark horse of Fujian", Datang Real Estate has finally realized its dream of Hong Kong stocks in three wars.

On December 15, Datang Group Holdings closed at HK$4.56 per share, unchanged from the listing price on the 11th. However, on the day of listing on the 11th, Datang Real Estate once broke down to 3.61 Hong Kong dollars per share, a drop of 20.83%.

Interestingly, on the day of the official listing of Datang Real Estate, Wu Di, chairman of Datang Group Holdings, and Zheng Wanchun, president of Minsheng Bank, jointly sounded the gong for the listing of Datang Real Estate, but Huang Xi, the actual controller of Datang Real Estate, did not appear. However, the shareholders of Datang Real Estate have not seen the figure of Minsheng Bank, why is there a president of Minsheng Bank for such an important thing as ringing the bell?

In fact, Minsheng Bank has a very close relationship with Datang Real Estate, and there has always been a lending relationship between the two. According to the prospectus, as of December 31, 2019, Datang Real Estate's outstanding loans from Minsheng Bank accounted for 32.3% of bank loans. It can be said that Minsheng Bank is an important financing channel for Datang Real Estate.

This close relationship between Minsheng Bank and Datang Real Estate is mainly due to the relationship between Fuxin Group, an affiliate of Datang Real Estate, and Minsheng Bank. As early as 1995, when Minsheng Bank was established, Fuxin Group participated in it and became its founding shareholder, and still holds 1.77% of the shares of Minsheng Bank. Datang Real Estate and Fuxin Group have a related relationship because the actual controller is Huang Xi, and it can be said that this close relationship between Datang Real Estate and Fuxin Group is because of Huang Xi.

Huang Xi's "Capital Bureau"

At present, the two core assets in Huang Xi's hands are Datang Real Estate and Fuxin Group. Among them, Fuxin Group is a local veteran real estate enterprise in Xiamen, and its founder is Chen Zhanghui.

In the early 1990s, Chen Zhanghui went to the sea and co-founded Xiangsheng Real Estate with his brother Yan Zhanggen, who settled in Hong Kong, and after 1993, Chen Zhanghui single-handedly established Fuxin Group. Compared with the main business of real estate, Chen Zhanghui is also very interested in finance. In 1995, Fuxin Group participated in the establishment of Minsheng Bank, became one of the founding shareholders of Minsheng Bank, and later invested in Industrial Bank and Bank of Communications. According to Chen Zhanghui's concept at that time, the corporate development strategy of Fuxin Group was based on "real estate as the main industry and finance as the backing".

Chen Zhanghui died of illness in Shanghai in 2000, as a family business, it was not Chen Zhanghui's family who took over Fuxin, but Huang Xi and Wu Di, who founded the team.

In the same year, Minsheng Bank was listed, because Fuxin Group was one of the founders, Huang Xi, Zhang Jianhua (one of the shareholders of Fuxin Group) and other people soared, and appeared on the Hurun rich list, especially Huang Xi was known as the richest woman in Xiamen.

After Huang Xi took the helm of fuxin group, its development not only did not decay, but attacked everywhere and accelerated the pace of expansion. In particular, in 2009, it acquired Datang Real Estate.

Datang Real Estate was founded in 1984 by Yu Yingyi, one of Taiwan's first-generation wealthy real estate merchants, and later moved to Xiamen. In 2008, affected by the financial crisis, the capital chain of Datang Real Estate was broken, and the listing plan to Hong Kong the following year was shelved, and it was also in this year that Yu Yingyi died of illness. In 2009, Fuxin Group announced the acquisition of Datang Real Estate, which became another core asset of Huang Xi in addition to Fuxin Group.

With the equity pledge financing of credit lines and high-quality assets obtained as shareholders, Fuxin Group and Datang Real Estate have always been "not bad money". For example, in 2010, Fuxin Group entered Hengfeng Bank through a fixed increase, with a shareholding ratio of 6.1%. Affected by the latter's introduction of war investment restructuring, the current shareholding ratio has plummeted to 0.85%, ranking the fifth largest shareholder. In the past ten years, Fuxin Group has only obtained loans from Hengfeng Bank in 2013 and 2014, ranking second in the ranking of related party loans. Since 2017, Minsheng Bank has given a total of more than 20 billion yuan of credit to Fuxin, of which only one credit in the first half of this year, the amount of credit is as high as 7.9 billion yuan.

However, in recent years, due to the tightening of financing policies in the real estate industry and the restriction of financing channels, Huang Xi has had to look for other financing opportunities - to promote the listing of Fuxin Group and Datang Real Estate.

At the end of 2018, Xiamen Stone Enterprise Wanlishi announced that the company's top three shareholders intend to entrust part of the equity transfer and voting rights to Tibet Fuju, a subsidiary of Fuxin Group. If the transaction is completed, Tibet Fuju will become the controlling shareholder of Wanlishi. But by March 2019, the plan was finally broken down by "the parties to the deal failed to reach an agreement."

After the unsuccessful backdoor listing of Fuxin Group, Huang Xi's "Fuxin System" can only be pinned on the successful listing of Datang Real Estate. At the beginning of 2019, Datang Real Estate officially began to build an overseas structure, submitted a listing prospectus at the end of 2019, and after the expiration of the prospectus in May this year, Fuxin submitted the prospectus again, and finally realized the listing after a series of twists and turns.

According to the prospectus of Datang Real Estate, before the IPO, Huang Xi owned 77.79% of the equity of Datang Real Estate, wu di, an executive director, had 21.21% of the equity, and the directors and senior management had a total of 1% of the equity. After the global offering, Huang Xi's equity was diluted by 58.34%, Wu Di's equity was diluted by 15.91%, directors and senior management were diluted by 0.75%, and the remaining 25% of the equity was held by the public.

Fuxin's financial landscape

Compared with the real estate business that the market is familiar with, Huang Xi's financial territory may be more worth mentioning.

After the completion of the acquisition of Datang Real Estate, Fuxin Group transferred its real estate business to Datang Real Estate, and Fuxin Group focused on financial investment business. The most famous are investment in Minsheng Bank and Kunlun Insurance.

In July 2015, Kunlun Health's solvency was difficult and it was urgent to increase capital. Fuxin Group, on the other hand, took a fancy to its insurance license and reached an agreement with the five shareholders at the time to jointly invest about 671 million yuan by Fuxin Group plus its designated institutions to subscribe for new shares at a price of 1 yuan per share. Specifically, the shareholding ratios of the three new shareholders Fuxin Group, Tibet Hengshi Investment and Fujian Zero2IPO were 19.04%, 17.98% and 12.98% respectively, totaling 50%, and the registered capital increased from 671 million yuan to 1.342 billion yuan.

According to media reports, the new shareholders Tibet Hengshi Investment and Fujian Zero2IPO have close relations with Fuxin Group, a shareholder of Kunlun Health.

In June 2016, under the leadership of Fuxin, Kunlun Health carried out another round of capital increase, and two "tomorrow" companies entered. At the same time as the introduction of new shareholders, Fuxin plans to leave.

In December 2016, tibet hengshi investment and fujian zero2IPO shareholders, which held only one and a half years of shareholding, withdrew at the same time. Tibet Hengshi Investment transferred 241 million shares and 180 million shares held by Tibet Hengshi Investment to four companies in Shenzhen. The transaction involved a 30.96% stake in Kunlun Health.

However, due to regulatory inquiries, the transaction could not be closed, and Fuxin did not achieve an exit.

However, in March 2019, a woman named Lin Le, with a background in the Department of People's Livelihood, entered Kunlun Health and served as the temporary person in charge. The relationship between the People's Livelihood Department and Fuxin is very close.

In addition, one of Fuxin's shareholders is Xiamen Core Consulting Services Co., Ltd. (1.96% shareholding), which has participated in the pre-IPO investment and equity change of New China Life.

In addition to investing through the shadow platform, Fuxin Investment of Fxgen Group is an important LP of many private equity funds under Envision. Together with the Vision Fund, Fuxin participates in the capital operation of listed companies such as Haili Bio, Huazhi Liquor, Qinchuan Machine Tool, Chery Automobile, and Sinovel Wind Power.

Up to now, Fuxin's financial territory includes Minsheng Bank, Hang Seng Bank, Hangzhou United Rural Commercial Bank, Yongan Property Insurance, Kunlun Insurance, Hankou Bank, Bank of Communications, etc., and its subsidiaries also include private equity funds, asset management platforms, guarantee companies and microfinance companies.

The "hidden worries" of Datang Real Estate

Datang Real Estate, which is a Hong Kong stock in the three wars, is not optimistic about the market. On December 11, Datang Real Estate fell below the issue price quickly after opening. Some insiders said that the listing of Datang Real Estate was broken due to its own lack of strength, greater debt pressure, and weak ability of small and medium-sized housing enterprises to withstand market fluctuation risks. In the context of continuous industry regulation and industry competition, and rapid increase in market concentration, the capital market has little confidence in its future expectations.

Up to now, a total of 6 housing enterprises have successfully landed on the Hong Kong stock market this year, except for the 100 billion housing enterprise Xiangsheng Holdings, which was passed once, other small and medium-sized housing enterprises either failed their prospectuses, or were undersubscribed or listed. In the case of a large number of small and medium-sized real estate enterprises flocking to the listing, behind the indifferent treatment of Datang Real Estate by the market is its less than ideal fundamentals.

In terms of the performance shown in the financial report, the scale of Datang Real Estate is small and the growth is weak. Specifically, from 2016 to 2020 (the first 11 months), the sales amount of Datang Real Estate was 8.61 billion yuan, 14.47 billion yuan, 30.86 billion yuan, 33.95 billion yuan and 37.4 billion yuan, respectively. Although Datang Real Estate successively put forward the slogans of "50 billion yuan in three years" and "breaking 100 billion in three years" in 2018 and 2019, from the sales data and industry rankings in the past three years, the performance target is gradually moving away.

In addition, the revenue and profitability of Datang Real Estate are not strong. In the first half of 2020, Datang Real Estate achieved revenue of 1.785 billion yuan, down 29.32% year-on-year, and net profit of 0.89 billion yuan, down 75.64% year-on-year.

Due to the decline in revenue, Datang Real Estate's profit decreased from RMB369 million in the first half of 2019 to RMB90 million in the same period of 2020. From 2017 to 2020H1, the gross profit margin of Datang Real Estate was 24.0%, 27.8%, 27.0% and 23.3% respectively. The gross profit margin in the first half of this year was the lowest in the past three years, and Datang Real Estate explained that the main reason for the temporary suspension due to the impact of the epidemic was construction and sales activities, the company's delivery area was greatly reduced, a year-on-year decrease of 31.81%, and the average selling price of residential projects also fell by 6.08%.

In addition to poor performance, Datang Real Estate stepped on two of the "three red lines". As of the first half of this year, after excluding pre-received accounts, datang real estate's asset-liability ratio reached 84.7% (the debt ratio after excluding pre-collection was less than 70%), and the net debt ratio was 128.5% (net debt ratio was less than 100%).

It is worth mentioning that the net debt ratio of Datang Real Estate of up to 128.5% is still the data after it has improved. According to the prospectus, from 2017 to 2019, the net debt ratio of Datang Group was 1087.9%, 408.8% and 119.2%. Datang Real Estate explained that the short-term sharp decrease in the net debt ratio is due to the continuous increase in the company's retained profits, the increase in capital injection by the company's shareholders, and the use of surplus cash to repay borrowings.

As a real estate company, spending money to get land is the premise, and Datang Real Estate is still facing the problem of narrow financing channels. According to the prospectus, as of the end of 2019, Datang Real Estate received loan support from Minsheng Bank of 2.506 billion yuan, accounting for 32.3% of the total interest-bearing liabilities in the current period.

According to the financial report of Minsheng Bank, in 2017, the "Fuxin Department" obtained 1.505 billion yuan of loans from Minsheng Bank, of which 1.2 billion yuan was used for the merger and acquisition of Datang Real Estate. In 2018, when datang real estate's performance increased the most, the financial support received by the "Fuxin System" from Minsheng Bank was 2.367 billion yuan, an increase of 57.17% year-on-year. As of the end of 2019, the loan balance of "Fuxin" in China Minsheng Bank was 3.033 billion yuan, and most of the funds also flowed to the real estate sector.

Stepping on the two red lines, the financing of Datang Real Estate will be restricted, coupled with the narrow financing channels, the Fuxin Group backed by the "big mountain" has limited ability to obtain funds at this stage, and it is more difficult for Datang Real Estate to achieve scale expansion.