How can the Yang family's father and daughter turn the tide?
text | Xu Aizhi Xiaoyu
editor | Xu Aizhi
reviewer | Fan Bo
first release | young finance Yang Finance
Country Garden delivered the New Year's speech, and it was still Mo Bin. Yang Huiyan is consistent with her father Yang Guoqiang on this point. However, Yang Huiyan's current situation is much more difficult than that of her old father. It can be said that Yang Huiyan is paying off her father's debts and her family's debts.
"Ms. Yang Huiyan speaks fluent American English. She not only understands the importance of strategic layout, but also can fully interpret her own ideas; like her father Yang Guoqiang, she has great ambitions and feelings, an international vision, and an international network of contacts. "
The above is the comment of Wu Jianbin, the former CFO and executive director of Country Garden, on Yang Huiyan, the second daughter of the Yang family, in "My 1,000 Days at Country Garden". There are not many words to describe Yang Huiyan. He wrote: "She is elegant in conversation and well-educated. I think this is Country Garden's luck and the Yang family's blessing."
On March 1, 2023, Yang Huiyan, who had been behind the scenes for nearly 20 years, was pushed to the front. Country Garden announced that Yang Guoqiang will step down and Yang Huiyan will take over.
She became the new chairman of Country Garden’s board of directors. This means that from 1992 to 2023, Country Garden, which has a history of 31 years, has officially completed the replacement of the old with the new.
A Debt Mess
Yang Huiyan was born in the Year of the Rooster and belongs to the real "rich second generation" after the reform. She has been the richest man in China for many years. She is quite low-key and simple, and there are very few personal photos circulated, so that for several years, media reports only included a wedding photo. There are not many rumors in the market, and the frequency of appearances only began to increase a few years before taking over. When she took the stage as the head of Country Garden's family, Yang Huiyan had to deal with Country Garden's mess, and the company was out of money.
For Yang Huiyan, this is a huge contrast. The great changes and fluctuations in the real estate business, flames and icebergs, are all reflected in her body. In an open letter, Yang Huiyan used the words "the family will definitely sell everything to support the company." Faced with this industry cycle change, Yang Huiyan's pressure is difficult for others to understand. She can drink a bottle of red wine at a wine party.
In the first half of 2023, Country Garden incurred a net loss of approximately 45 billion to 55 billion yuan. It encountered "the biggest difficulty since its establishment" and its top priority was to "do its best to ensure the safety of the company's cash flow."
Country Garden’s 2023 semi-annual report shows that Country Garden holds cash and cash equivalents on its books of 101.115 billion yuan, and debt due within 12 months is approximately 108.7 billion yuan. Country Garden's remaining cash and cash equivalents can barely cover these short-term debt.
Since August, Country Garden has frequently issued announcements to update debt-related information.
html On the evening of August 12, Country Garden announced that starting from August 14, 11 of its domestic corporate bonds would be suspended from trading and the restructuring of domestic bonds would begin. html On August 28, Country Garden announced on the Hong Kong Stock Exchange that it would sell 26.67% of the company’s equity in Guangzhou Lihe Real Estate Development Co., Ltd. for a total consideration of RMB 1.2915 billion. It is expected that the group will realize pre-tax gains of approximately 500 million yuan from the sale. The proceeds from the sale are currently mainly planned to be used for construction expenses of the group's guaranteed-delivery buildings and other projects. html On September 5, Country Garden paid two coupons on US dollar bonds due on August 7 (a total of US$22.5 million). html On September 19, Yang Huiyan completed the extension of nine domestic bonds with a total principal of 14.7 billion yuan.On October 10, Country Garden announced that it has not yet paid its maturing debt with a principal amount of HK$470 million, and it is expected to be unable to repay its overseas debt as promised. Therefore, it "hopes to comprehensively resolve the company's current overseas debt risks by seeking an overall solution."
Yang Huiyan attended the 2022 results announcement
On December 13, Country Garden Real Estate Group Co., Ltd., Country Garden's main domestic bond issuer, released the results of the "22 Bidi 02" bond holders' sell-back results, saying that the principal and interest of part of the bonds were sold back The full amount has been paid to the bank account designated by China Securities Depository and Clearing Co., Ltd. Shenzhen Branch.
2023 has passed, and Country Garden’s troubles continue.
According to a report by The Paper in October, documents produced by Country Garden bond holders showed that Country Garden was identifying the identities of 17 offshore bond holders, and the identification process was valid until January 24, 2024. The documents show that the 17 bonds include two ordinary convertible bonds circulating on the Singapore Stock Exchange with an existing amount of HK$6.9 billion. The other 15 bonds are all US dollar bonds, with a total duration of US$9.91269 billion. The earliest maturity date is January 27, 2024, and the latest is January 2, 2031. This means that Country Garden will need to deal with its USD debt that is about to mature within the next month.
The real estate market is not optimistic.
Country Garden has always followed policy requirements and worked hard to ensure delivery. The Yang family has also provided funds to Country Garden many times.
At the group executive meeting held on October 9, President Mo Bin confirmed that the Yang family is selling its private jet. A brand new, unused private jet overseas under Yang Guoqiang's name has been sold, and another one in use has also been listed. The cash flow generated from selling private jets can support the company's operations to a certain extent.
In addition, the Yang family of Country Garden founder Yang Guoqiang provided an interest-free loan of US$300 million to Country Garden. According to an announcement issued by Country Garden, before this US$300 million loan, the Yang family had supported the company through various means totaling approximately HK$38.6 billion, and had never reduced its stock holdings.
On December 12, Country Garden issued an announcement stating that the company’s executive directors Yang Huiyan, Mo Bin, Yang Ziying and non-executive director Chen Chong took the initiative to request a salary reduction. The annual salary of the four people dropped to 120,000 a year. Among these four people, except Mo Bin, the other three are members of the Yang family.
It is foreseeable that Baojiao Building will become the focus of Country Garden and the Yang family in the next few years.
Mo Bin revealed in his New Year's speech that as of December 31, Country Garden has delivered more than 600,000 houses in 2023, and its delivery volume is far ahead in the industry. However, the delivery target set by Country Garden for 2023 is 700,000 units. Failure to achieve the target may be related to Country Garden's difficulty in selling new homes, because the decline in new home sales means reduced liquidity.
In the second half of 2023, Country Garden’s single-month sales suffered a cliff-like decline. From January to November 2023, Country Garden’s monthly sales were 22 billion, 24.8 billion, 25 billion, 22.7 billion, 18.2 billion, 16 billion, 12.1 billion, 8 billion, 6.2 billion, 6.3 billion and 6.1 billion, respectively. Sales volume in four months was less than 10 billion.
In the next few years, Country Garden’s new home sales prospects are also not optimistic, which is related to the overall downward trend of the real estate industry. Since the second half of 2021, the domestic real estate market has continued to decline. According to data from the China Index Research Institute, the total sales of the top 100 real estate companies (top100) in 2023 will be 6.2791 billion yuan, a year-on-year decrease of 17.3%. Among them, the sales of the top 100 real estate companies in December fell by 35.9% year-on-year and increased by 20.8% month-on-month. The sluggish sales of
, as well as the tight cash flow caused by the sluggish sales, will drag down the delivery pace, which will become problems that Yang Huiyan needs to deal with in the future.
Some rumors
Along with the debt crisis, there were some rumors, some of which were "published on multiple online platforms with ulterior motives, causing bad effects", which inevitably plunged the Yang family into a new turmoil.
Country Garden founder Yang Guoqiang and president Mo Bin went to the second plot of land west of Nanping Road in Beijiao, Shunde, Guangdong to guide the work.
One of the rumors is that "Country Garden's founder and daughter may have left the country." Country Garden officials responded twice.
On October 11, Country Garden’s official WeChat released an article stating that founder Yang Guoqiang and president Mo Bin went to the Lot 2 project west of Beijiao Nanping Road in Shunde, Guangdong to guide the work. Not only did it include photos of the scene, but it also included a 20-second paragraph. video.
On October 19, Country Garden issued a statement on its WeChat public account to refute the rumors, saying that the founder of Country Garden and the chairman of the group’s board of directors are currently working normally in China.
Yang Guoqiang may not have expected that the current situation requires him to show up in person to increase his confidence. Rather than saying that Yang Huiyan needs her father's endorsement, it is better to say that Yang Guoqiang is repaying his debt for his wrong decision.
Public information shows that since the listing of Country Garden Services, Li Changjiang and his wife have reduced their holdings in Country Garden Services 22 times, and this reduction is the largest. After the reduction, the number of shares held by Li Changjiang in Country Garden Services dropped to 3.690 million shares, accounting for 0.11% of the issued voting shares. Since the remaining shares are actually unlisted physically settled share options granted under the share option plan, Li Changjiang and his spouse's reduction in holdings is also known as a "liquidation reduction" by the outside world.
Another rumor came from the fact that Li Changjiang, the former president of Country Garden Services (still in office at the time), sold Country Garden Services shares twice in July and cashed out a huge amount of 28.25 million. Therefore, there are rumors that Li Changjiang is about to retire or leave, and his successor is a classmate of Yang Huiyan, Chairman of the Board of Directors of Country Garden. Rumors also claim that the successor has already entered Country Garden Services as a temporary employee, but it has not been made public yet.
This is not the first time Li Changjiang has reduced his holdings in recent years. On December 30, 2022, Li Changjiang reduced his holdings of Country Garden Services by 1.964 million shares at an average price of approximately HK$18.63 per share; on March 29, 2023, he reduced his holdings by another 2.1 million shares. . The three reductions in holdings resulted in a total cash out of approximately HK$90 million. Rumors of
's resignation have lasted for more than two months, and Country Garden Services has not officially responded. Until October 10, Country Garden Services issued an announcement announcing Li Changjiang's resignation as the company's executive director, president, authorized representative, chairman of the Environmental, Social and Governance Committee and the agent for receiving legal process documents in Hong Kong.
Xu Binhuai, President of Country Garden Services Group, is 44 years old. He graduated from Fudan University in polymer materials and engineering in July 2002 and obtained an MBA from the University of Hong Kong in November 2016.
The Yang father-daughter donation controversy
html July 30 , is the 152nd day after Yang Huiyan took over. Country Garden Services announced that Yang Huiyan will donate 675 million shares of Country Garden Services to the Guoqiang Charity Foundation (Hong Kong). The donated shares will be used to support science, education, culture, health and youth in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area. development, disaster relief, and rural revitalization in the Mainland and other public welfare purposes. The donated equity accounts for 20% of the issued shares and is worth approximately HK$6.443 billion based on the stock price at the time of donation.In the announcement, Country Garden Services stated that Yang Huiyan and her family have been committed to the development of charity for many years. Her family, holding company and foundation have participated in social charity donations of more than 10.5 billion yuan.
At the Country Garden Services interim results conference held on August 29, Country Garden once again explained the donation. Country Garden Services Chief Financial Officer and Joint Company Secretary Huang Peng responded:
"The donation was made after Chairman Yang's careful consideration." Chairman Yang and his family have been persisting in the long-distance charity run for more than 10 billion for 26 years. Even 10 years before his first company went public, he donated half of his net worth. Many people do not understand that there is no Emotions are difficult to understand."
Country Garden Services was established in 2013 and listed in Hong Kong in 2018. It is completely independent and isolated from Country Garden Group in terms of personnel, finance, assets, etc. Country Garden Services will not provide any guarantees or loans to Country Garden Group, nor will it use its cash deposits as security for related party debts. Country Garden Services mainly relies on stable property management fees and value-added service income to achieve profitability, and is not affected by fluctuations in the real estate market. Therefore, even if Country Garden Group encounters a debt crisis or bankruptcy risk, it will not have a substantial impact on Country Garden services.
After the donation news was announced, some articles similar to the draft tried to reasonably explain Yang Huiyan’s donation, including that the shares donated by Yang Huiyan were Country Garden Services and not Country Garden Holdings; Yang Huiyan’s actual control over Country Garden Services remained unchanged after the donation was completed; the donation was not It was a spur-of-the-moment idea and the plan was made a year ago.
These explanations cannot completely dispel market doubts.
Before the final donation, Country Garden had a large amount of debt that was about to be repaid, which means that Yang Huiyan made the donation despite knowing that there was a risk of debt default. This inevitably makes people suspect that it is misleading and sends a signal that Country Garden's debt problem is not serious.In fact, less than half a month after the donation, Country Garden announced that it would restructure its domestic corporate bonds.
Others cannot comment on whether Yang Huiyan’s donation decision is correct or not, but it is obviously difficult to say that she is mature. The eldest lady’s habitual decision is very obvious. After the announcement of the donation, Country Garden's stock price fell by more than 50% in more than ten days.
But this donation is not without benefits. According to Hong Kong law, equity donated to charities for free is tax-free, and the relationship between the donor and the recipient does not need to be disclosed. In this way, Yang Huiyan can avoid paying high stamp duty and income tax, and can also avoid being held responsible for any legal responsibility or liability. In addition, the founder of the recipient Guoqiang Charity Foundation (Hong Kong) is Yang Huiyan’s sister Yang Ziying.
Ms. Yang Ziying, Executive Director of Country Garden Group
What will Yang Huiyan do in the future?
People and business are actually products of the times.
Wu Jianbin recently described the "craziness" of the real estate market in that year in a conversation:
"In the past thirty years, the development of real estate companies has been to finance a piece of land twice, once through sales and financing from a bank. : Ordinary people buy a house, get financing from banks, and give the money to real estate developers. Real estate developers have such rapid development momentum, so the return rate of real estate companies can reach dozens of percent. For a period of time, real estate developers had a piece of land If you spend 10%-20% of the funds, you may get it back in seven or eight months, which is equivalent to not spending any money."
Country Garden is the leader among these real estate companies. Wu Jianbin recorded it in "My 1,000 Days in Country Garden" Country Garden’s “crazy”. “Country Garden requires the implementation of 456, which is a fast turnover model: construction starts immediately after land acquisition/delisting, 4 months from land acquisition to opening, 5 months for funds to return to normal, and 6 months to acquire new land. This model is generally only possible in third- and fourth-tier cities Construction can begin as soon as delisting is achieved."
During the rising period of the real estate industry, powerful people follow the trend and take advantage of the trend. Things are accomplished and money is earned. There is always an element of pride in their speech and behavior. In Wu Jianbin's records, Yang Guoqiang was very proud of Country Garden's model, and It is due to its own ability:
"Our business model is very unique, and others can't learn it even if they want to. We acquire land at low cost, develop quickly, have supporting facilities in place, launch at low prices, and deliver houses with fine decoration; we focus on the third and fourth tiers City. When acquiring clear land, the area must be large and payment must be made in installments. When acquiring the land, the design must be basically completed. Construction must start within three months. Funds can be recovered in the fourth and fifth months. Subsequent development depends on the progress of market sales. Others can’t do this at such a speed, and others can’t do this with such control. I, Yang Guoqiang, can do it.”
Wu Jianbin’s record also shows that Country Garden once had the opportunity to avoid the current situation. Before March 2015, there was always a debate within Country Garden about whether to expand land purchases or control the debt ratio.
In 2014, after Wu Jianbin, who is known for his stability, came to Country Garden, he set up a debt red line for Country Garden, requiring Country Garden's net borrowing ratio to be less than 70%, showing CFO Wu Jianbin's intention to control the debt ratio. But in the end, Yang Guoqiang chose to expand land purchases and used strict rewards and punishments to encourage Country Garden regional leaders to buy land.
Country Garden's total liabilities have continued to soar since 2015. In 2015, the total liabilities were 272.6 billion, 509.9 billion in 2016, 933 billion in 2017, 1.46 trillion in 2018, 1.69 trillion in 2019, and reached 2020. At its peak, total debt was 1.76 trillion. The high turnover model of
"456" put Country Garden's performance on a rocket. In 2015, Country Garden's revenue was 113.223 billion yuan. Two years later, in 2017, it doubled to 226.9 billion yuan. Four years later, in 2019, it was again It doubled to 485.9 billion yuan.
In 2020, Country Garden reached the peak of its performance, achieving attributable sales of 570.7 billion yuan and net profit of 54.1 billion yuan. This is Country Garden's most prosperous year, becoming the highest-ranked real estate company among the Fortune Global 500.
is a different story now. The rules that contributed to Country Garden's success are no longer working, and now it has become an obstacle to Country Garden's development.
Country Garden has almost stopped acquiring land since 2022, but it still accumulates a large amount of land in third- and fourth-tier cities. The financial report shows that as of the end of 2021, the salable value of Country Garden’s land bank equity is 1.4846 billion yuan, of which third- and fourth-tier cities account for 53%. After a full year of stock consumption in 2022, at the performance exchange meeting in March 2023, Country Garden Executive Vice President Cheng Guangyu said that of the 955.5 billion yuan in land reserves currently on hand, nearly 60% is for the third- and fourth-tier markets.
After one year, the proportion of third- and fourth-tier land reserves among the existing land has increased, which means that Country Garden’s consumption of existing land in third- and fourth-tier cities is lower than that in first- and second-tier cities.
With the decline in housing prices in third- and fourth-tier cities, Country Garden's past fundamental advantages have gradually disappeared and become a drag on Country Garden. This can be seen in Country Garden's plummeting sales.
In addition, Country Garden’s executives who have pioneered in the past will also become a problem that Yang Huiyan needs to deal with. Some of Country Garden’s management positions are held by Yang Huiyan and her husband’s classmate. During the industry’s upward phase, Country Garden was a super Party A, and personal abilities may not be that important. But when the industry enters a downturn, the true capabilities may be revealed. The expansion of the capabilities of some staff may also be a problem that Yang Huiyan will face.
Perhaps Yang Huiyan has already noticed the crisis. During the rapid development of Country Garden, Yang Huiyan, as the vice chairman, met with some well-known consulting companies and tried to explore the direction of Country Garden's transformation. The suggestions she received were roughly two types. One was to transform in-house and deeply cultivate real estate owners. industry, and the other is to seek opportunities through cross-border transformation. No matter which one, developers are faced with entering new fields and need to pay the cost of exploration and trial and error. After
took office, Yang Huiyan began to adjust Country Garden. On March 30, at the performance exchange meeting, Mo Bin said that in the next 3-5 years, the company will plan to increase the ratio of the company's first- and second-tier cities to third- and fourth-tier cities to 50:50, which is Country Garden's strategic focus. Beginning to move from third- and fourth-tier cities to first- and second-tier cities.
html On May 31, Country Garden Holdings Co., Ltd. issued an internal document to start a new round of organizational structure adjustments. The most significant change is the newly established real estate group, which mainly focuses on real estate development and management and construction services. In addition, Cheng Guangyu, the former executive vice president of the holding group, will serve as CEO of the real estate group.On the 280th day after Yang Huiyan took over, Country Garden made its latest organizational structure adjustment. Merged 14 regional companies into 7 new regions: Hebei and Beijing were merged into the North China region; Shandong and Northern Jiangsu were merged into the Lusu region; Northwest and Shaanxi were merged into the Central and Western regions; Anhui and Zhejiang were merged into the Zhejiang and Anhui regions; Jiangxi and Fujian Merged into the Jiangxi and Fujian regions; Yunnan and Sichuan merged into the Sichuan and Yunnan regions; Guangxi and Jiangzhong merged into the Jiangzhong region. After the merger is completed, the total number of Country Garden regions will be reduced from 28 to 21.
Yang Huiyan paid off her father's debt for 300 days. Country Garden's adjustment is in full swing, and the battle to ensure delivery is also continuing. But there are still debts waiting for Yang Huiyan ahead. On January 27, Country Garden will have another USD bond due. I don’t know when Yang Huiyan will be able to pay off the debt left by her father.
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