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Overseas Chinese City's acquisition of Jiangsu Guoxin Real Estate Business approved Guoxin's many projects are in a state of shutdown.
Sep 9,2020 10:29CST
Source:Financial Union
The content below was translated by Tencent automatically for reference.

SMM: learned from a number of independent sources that overseas Chinese Town has completed negotiations on the acquisition of the real estate business of Jiangsu Guoxin Group Co., Ltd. (hereinafter referred to as "Jiangsu Guoxin Group"), and has been agreed by the State-owned assets Supervision and Administration Commission (SASAC).

"it was completed last month, and the earliest contact was in 2018. Guoxin's real estate business could no longer be done, and the overseas Chinese Town ate the goods." Nanjing overseas Chinese City insiders told the Financial Associated Press. A person close to Jiangsu Guoxin Group said, "Guoxin's real estate business is not doing well, and SASAC has agreed to the acquisition of overseas Chinese Town, followed by procedures."

An industry source in Nanjing also confirmed the matter to reporters, saying: "Guoxin is out of the consideration of doing a good job in the main business. It has a lot of high-quality land in Jiangsu and projects in Hainan."

Regarding the related acquisition matter, the overseas Chinese Town side said to the reporter, "at present really does not have the accurate news, wait for the accurate information that can be disclosed, will inform the first time."

Guoxin has shut down a number of projects.

Jiangsu Guoxin Group, founded in August 2001, is a wholly state-owned enterprise group in Jiangsu Province. It is subordinate to three listed platforms of Jiangsu Guoxin (002608.SZ), Jiangsu Xinyuan (603693.SH) and Jiangsu Sainty (600287.SH). It has five major business sectors, including energy (including traditional energy and new energy), finance, real estate, trade and social undertakings. Real estate development business is concentrated in Jiangsu Real Estate Investment Co., Ltd., not injected into the three listed platforms, only Jiangsu Guoxin's real estate trust business is related to real estate.

In June 2018, Shenzhen overseas Chinese Town Capital Investment Management Co., Ltd., a subsidiary of overseas Chinese Town Group, participated in Jiangsu Guoxin Dingzeng, becoming its second largest shareholder and currently holds 11.12%. Industrial and commercial data show that Jiangsu Real Estate Investment Co., Ltd. currently has two major shareholders, namely overseas Chinese Town East China Investment Co., Ltd., and Jiangsu Guoxin Group. It invests 16 real estate project companies, most of which are located in Jiangsu Province, including Nanjing, Huai'an, Zhenjiang, etc.; there are two places in other provinces, which are located in Ledong, Hainan and Xiangtan, Hunan.

For the sale of the real estate business of Jiangsu Guoxin Group, a number of people familiar with the matter, including the above sources, believe that the main reason is the poor development of Guoxin itself.

The reporter learned that Guoxin's "Guoxin Natural Tiancheng" project in Nanjing and the "Longmu Bay" project in Hainan have been suspended for a long time. Jiangsu Guoxin Xiangshan Real Estate Co., Ltd., the development company of Guoxin Natural Tiancheng, was established in July 2003. the project covers an area of 750000 square meters and is planned as a low-density residential area composed of villas and houses. There has been no new progress since the first opening in September 2008. so far, the expected development of the site has not yet begun.

"the natural Tiancheng project may have been in conflict between the planning at the time of land acquisition and the later municipal planning, resulting in a shutdown. Nanjing issued the Master Plan of Nanjing Laoshan Scenic spot (2015-2030) in 2016, stipulating that there will no longer be any private clubhouses and real estate projects in the 112sq km protected area of Laoshan. The Fuchuang Peach Blossom Garden in the same area also has no movement. " A person from a local real estate agency in Nanjing told reporters.

In September 2018, the official website of Jiangsu State-owned assets Supervision and Administration Commission posted a notice of the proposed transfer of 100% equity and related creditor's rights of Jiangsu Guoxin Xiangshan Real Estate Co., Ltd., showing that as of July 2018, the book had a net loss of-11.2555 million yuan and total liabilities of 890 million yuan. After that, there was no result of the transfer.

Longmuwan, located in Ledong Li Autonomous County, Hainan Province, has not been completed for more than a decade. The project started in November 2009 and is in a ruined state. Some media reported that the main reason for the bad end of the project was a land dispute with the local forest farm. However, a person in charge of a Hainan local real estate consulting company told reporters, "Forest Farm is a secondary reason, mainly because of poor trading ability, solid investment is too high, product dislocation, marketing chaos." .

In October 2017, Longmuwan Investment and Longmuwan Octopus Hotel Co., Ltd. all the shares listed for transfer, also failed to transfer.

In fact, as early as October 2016, Jiangsu Guoxin Group published an article on its official website saying that it was necessary to control the total assets of the real estate business and effectively reduce Guoxin's current total assets of 21.3 billion yuan to 8 billion yuan in the first half of the 13th five-year Plan.

Overseas Chinese Town heavy Storage in Nanjing

"the first piece of land of overseas Chinese Town in Nanjing Yuzui was taken by hook land. Because of the capital supervision of central enterprises, it can not compete with private enterprises in the open market of land in recent years. At present, it is very stuck in Nanjing, and now it mainly wants to acquire land by way of acquisition." The above-mentioned Nanjing overseas Chinese Town insiders told reporters, "overseas Chinese City is still very optimistic about the Nanjing market, there are a large number of goods to be shipped this year."

In the first half of this year, Nanjing overseas Chinese City ranked 10th with sales of 5.253 billion yuan, accounting for 16.6% of the national contracted sales disclosed by overseas Chinese City A (000069.SZ) in the first half of this year, according to the agency's "ranking of Nanjing sales of real estate enterprises in Nanjing for the first half of 2020".

In 2019, four new plots were added to the overseas Chinese Town in Nanjing, and the Lishui large-scale cultural and tourism project was signed. In the past four years, it has won a total of seven projects in Nanjing, and the total investment is expected to be close to 100 billion. According to the company's 2019 annual report, among the investment projects of more than 5 billion yuan, the total investment amount of Nanjing Happy Coast is expected to be 24 billion yuan, with a cumulative investment of 11.9 billion yuan by the end of 2019.

Affected by the epidemic, the performance of overseas Chinese City A declined in the first half of this year. According to its semi-annual report for 2020, during the reporting period, contracted sales totaled 31.664 billion yuan, down 10 percent from the same period last year; net profit was 2.056 billion yuan, down 29 percent from the same period last year; and gross profit margin was 55.3 percent, down 10 percentage points from the same period last year.

However, its debt ratio remains at a relatively low level in the industry. As of the end of June this year, the company's asset-liability ratio excluding prepaid housing payments was 55.84%.

It is worth noting that overseas Chinese Town mentioned for the first time in its semi-annual report in 2020, "strive to keep the asset-liability ratio at the end of the year at the level of the same period last year, and strive to achieve the goal of returning to positive annual operating cash flow."

The operating cash flow of the company has been negative for three consecutive years, and its net operating cash flow from 2017 to 2019 is-7.7 billion yuan,-9.984 billion yuan and-5.188 billion yuan respectively. In the first half of this year, the net cash flow generated by its operating activities was-9.595 billion yuan, which continued to expand over the same period last year.

"the previous negative operating cash flow is mainly due to the excessive proportion of investment." The relevant departments of the overseas Chinese Town told the Financial Associated Press, "the speed of our investment is slowing down. Now we are 'determined to invest'. We will invest only after we have received the money, and we will not take extra money to invest."

According to the China News, 14 new land reserve projects were added to the overseas Chinese Town in the first half of this year, with a total construction area of about 6.4223 million square meters. It decreased by 2 compared with the same period last year, but the volume building area still increased slightly compared with the same period last year. In addition, on July 21, overseas Chinese Town won a piece of land in Zhenbei Community of Tangzhen Town in Pudong New area for 5.001 billion yuan, with a premium rate of 19.07 percent, equivalent to 44239 yuan per square meter, setting a new high for the unit price of floor space in the area.

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