Editor's note: 2023 is the first year after the three-year epidemic of the Chinese economy. It is under many pressures from the external environment and internal development, but after experiencing difficulties, we should strengthen our confidence. At the bottom of the valley, ta

Editor's note: 2023 is the first year after the three-year epidemic of the Chinese economy. It is under many pressures from the external environment and internal development, but after experiencing difficulties, we should strengthen our confidence.

At the bottom of the valley, on the way up. Guandian New Media continues to plan and launch an annual series of reports - "The Year at the Bottom", in order to comprehensively and deeply focus on the strength and tenacity of outstanding corporate groups in difficult times. They have encountered ups and downs but have good intentions.

At the same time, we will continue to dialogue with a group of economists and industry leaders with global vision and rich knowledge to interpret the future development of China's economy and industry from their perspectives.

Viewpoint.com From the successful overall extension of approximately 16 billion yuan in domestic public market bonds at the beginning of 2023, to the formal completion of overseas debt restructuring near the end of the year, Sunac continued to work on the road to debt reduction this year and made significant progress.

lasted 18 months. As a former leading real estate company, Sunac’s overall debt restructuring was successful, which also brought positive signals to the industry. The driving force for action is upward aspirations. Entering 2024, these real estate companies cannot hide their desire for the future in their New Year's speeches.

At the same time, the real estate market that has fallen into a cold winter cannot be ignored. The research results of "Sales Performance of Real Estate Enterprises from January to December 2023" released by

View Index show that from January to December 2023, the top 100 real estate companies achieved a cumulative equity sales amount of 4.0149 billion yuan, a year-on-year decrease of 20%. The overall sales decline in the industry was mainly affected by the sales cliff of insurance real estate companies and the shrinkage of third- and fourth-tier markets.

As far as Sunac is concerned, the contracted sales amount for 2023 will decrease by 84.56 billion yuan year-on-year, a decrease of approximately 49.94%; the contracted sales area will decrease by 6.771 million square meters, a decrease of approximately 52.7%. The three years spent by

in exchange for "removing debt" will not directly save Sunac from the dark night. What will happen after the time window depends not only on how Sunac chooses to spend it, but also on how long the night is.

returns to the poker table

Since announcing on the evening of November 20, 2023 that all conditions for overseas debt restructuring have been met, Sunac China's stock price performance has not been satisfactory, and it only rose briefly after the announcement.

rose 12.02%, 4.21%, and 4.04% respectively on November 21, 22, and 23. It fell again on the 24th, with a drop of 1.77% that day, and a closing price of HK$2.78 per share.

As of the last opening day in 2023, Sunac China's share price was HK$1.5, almost half of its value. Although a group of supporters claimed to be bargain hunting in stock forums, the stock price continued to hit new lows. The poor stock price performance of

is not unrelated to the current market environment. The stock prices of most Hong Kong real estate companies also recorded declines.

Country Garden's stock price fell from HK$1.05 at the closing time on November 23 to HK$0.78 at the closing price on December 29; during the same period, China Resources Land fell from HK$31.15 to HK$28; Longfor fell from HK$15.25 to HK$12.5.

During the same period of time, only a few stocks showed an upward trend, and Sunac failed to buck the trend and outperform the market. But for Sunac, stock price performance does not seem to be very important.

Judging from the past, Sunac China can be regarded as a domestic real estate company that is relatively active in allotment financing. Most of the funds raised are used for general working capital or debt repayment.

Data source: public information, opinion index compilation

In terms of price, Sunac's rights issue price is mostly discounted from the previous day's stock price level, with a range of about 8%-16%.

Sunac China has always been relatively flexible in its use of capital markets. The cumulative principal of overseas debts undergoing restructuring this time is approximately US$10.237 billion. According to relevant announcements, the existing overseas debts can be converted into convertible bonds of US$1 billion and compulsorily convertible bonds. US$2.75 billion, US$775 million of Sunac Services and US$5.704 billion of new notes, corresponding to overseas debt proportions of 9.78%, 26.88%, 7.58%, and 55.76%.

In addition to the new bills, the total amount involved in the equity transfer including Sunac Services reached US$4.525 billion, accounting for 44.2% of the total overseas debt.

Figure 丨 Debt restructuring plan structure

Data source: corporate announcements, opinion index compilation

On December 6, 2023, Sunac announced the results of the first conversion of compulsory convertible bonds, and has received a total principal amount of approximately US$1.904 billion in conversion. Notice, accounting for approximately 69.23% of the initial issuance amount.

Based on the conversion price of HK$6 per share, Sunac China has issued a total of approximately 2.475 billion shares to conversion holders, equivalent to approximately 29.49% of the issued share capital on the announcement date. Since then, Sun Hongbin’s shareholding ratio in Sunac has dropped from 38.3% to 29.98%.

After the debt-to-equity swap, the value of the "debt" is inevitably linked to Sunac China's stock price. For creditors, if the stock price rises, they can enjoy the corresponding income and realize it in the secondary market.

Huatai Securities believes that for companies, paying debts with shares can reduce liquidity pressure and optimize capital structure. For some creditors, exchanging debt with shares provides a more liquid exit channel.

This may also be one of the reasons why Sunac's overseas debt restructuring was successfully completed.

Overseas debt restructuring has bought Sunac a time window, but until the real dawn comes, it still depends on the improvement of operating conditions and substantial improvement on the financing side.

According to previous announcements, there may be a second phase of debt-for-equity swaps after May 31, 2024. At that time, the number of shares will further increase based on the current 8.393 billion shares, but Sunac’s future stock price performance is still uncertain. sex.

Data source: Company announcement

Faced with the continued downward trend in stock prices and diluted equity, Sunac’s hope of raising funds through equity placement in the short term is slim.

Towards the end of 2023, after the three departments held a symposium on financial institutions, positive signals such as the "white list" of real estate company financing and the three "no less than" were released. At the same time, some banks also held symposiums to support the financing of real estate companies. It is reported that among private enterprises, the real estate companies Country Garden and Greenland Group, which have been in danger, are also on the list.

The emergence of Country Garden seems to indicate that risk-related real estate companies have the opportunity to return to the table, which will play a greater supporting role in restoring liquidity to companies and also provide confidence to more risk-related real estate companies and the overall market. But if you want the relevant benefits to be realized, you still need to wait.

In the past period of time, financing channels for real estate companies experiencing risks have been passively tightened. CICC once pointed out in a research report that due to the certain repayment risks involved in the bailout of guaranteed buildings and real estate companies, they are more dependent on the support of policy financial institutions, and commercial institutions are still more cautious in participating.

In response to liquidity crises, companies usually adopt methods such as selling assets, introducing strategic investment, and equity financing. For Sunac, this specifically includes the exit of joint venture projects and asset sales, cooperation with asset management companies such as AMC, and bank-guaranteed supporting financing for the property.

Sunac has relatively rich assets for sale, and disposal actions are always in progress. Among them, unlike real estate companies with a single housing development business, Sunac has accumulated more cultural and tourism assets, and these projects have been put on the shelves either actively or passively.

Sunac's asset disposal situation in 2023 Source: Company announcements, opinion index compilation The funds brought by the disposal of the

project can alleviate the temporary money shortage problem. In the long term, ensuring normal development progress and delivery requires continuous capital input.

Delivery reinforcements

Looking back on the past year, Sunac has two main tasks: one is to promote debt restructuring, and the other is to ensure project delivery and sales collection.

In addition to various news about domestic and foreign debt restructuring throughout the year, Sunac spent most of its time looking for money through various methods. The day after

announced that all conditions for overseas debt restructuring had been met, Sunac China announced that it had reached a financing cooperation with Huarong on the Shanghai Yalong project. Huarong will provide a loan of 3.48 billion yuan to the project company with a term of no more than 3 years, and the funds will be used for the development and construction of the Shanghai Yalong project.

In fact, amc played a more important role in the process of revitalizing the Sunac project. On the one hand, the "16 Financial Articles" in November 2022 proposed to support development policy banks in providing special loans for "guaranteed housing".At the same time, it is clarified that financial asset management companies and local asset management companies are encouraged to leverage their experience and capabilities in non-performing asset disposal and risk management, and jointly negotiate with local governments, commercial banks, real estate companies, etc. on risk resolution models to promote accelerated asset disposal.

On the other hand, a large number of high-quality projects by insurance real estate companies can bring economic benefits to AMC institutions and meet their development needs. Under the dual attraction of

, amc is more actively carrying out rescue work. At the project level, it mainly participates in real estate risk disposal by taking over the project debts of risky real estate companies and participating in real estate risk disposal through models such as incremental capital investment and entrusted management and construction; at the corporate level, it establishes strategic partnerships or participates in debt restructuring.

In the past year, the scale and number of non-performing asset packages acquired by the traditional four major AMCs have increased significantly. Among them, China Huarong newly acquired distressed debt assets of nearly 50 billion yuan in the first half of 2023, a year-on-year increase of 84%; China Cinda newly acquired operating distressed assets of 26.556 billion yuan, a year-on-year increase of 1.52%; Great Wall Assets acquired financial distressed assets There are 56 asset projects, and the principal amount of acquired debt is 13.309 billion yuan.

With the support of amc, many key projects such as Sunac Shanghai Bund No. 1, Wuhan Taohuayuan, Xi'an Qujiangyin, and Xianyang Senyu Island have been gradually revitalized. As of mid-2023, the scale of cooperation between Sunac and leading AMCs such as China Huarong, Orient Assets, and Great Wall Assets will exceed 24 billion yuan.

Among them, the Shanghai Dongjiadu project, which had high hopes, was introduced to CITIC Trust and China Huarong.

In November 2022, on the basis of retaining core assets for Sunac, Huarong Company intervened to rescue the company in the form of "stock + debt", and the joint banking group continued to issue demolition loans to ensure the smooth reorganization and revitalization of the project. The total scale of cooperation exceeded 12 billion Yuan. After the two institutions intervened, Sunac China's shareholding ratio in the project dropped from 100% to 10.322%.

At that time, China Huarong stated that the investment was supported by the Shanghai Huangpu District Government, and together with a syndicate of six banks led by Shanghai Pudong Development Bank, and in collaboration with CITIC Trust and other CITIC Group members, it implemented Sunac Group Shanghai Dongjiadu bail out.

This project site is located in the core location of Shanghai, with mature surrounding facilities and rare urban landscape resources and other added values, which is one of the reasons why it has attracted much attention. At the beginning of 2023, the first tranche of funds was completed.

"Sunac Bund No. 1" was launched on the Dongjiadu plot. The project is divided into three plots. The first plot was launched twice in July and September of the year when Sunac acquired the land.

In December 2022, Oriental Asset and Sunac China reached a financing cooperation for the Wuhan Peach Blossom Land project. According to the cooperation agreement, the total financing scale is 3.311 billion yuan, and the injected funds will be used to resolve the original debt and support the overall development and construction of the project; in Xianyang, Shaanxi Financial Asset Management Co., Ltd. and Sunac are on the financing of the Xianyang Senyu City project The cooperation is completed, and this cooperation is also the successful implementation of the first local AMC bailout for real estate projects in China.

"Guaranteed delivery" has become the consensus of real estate companies in 2023. With the help of AMC, Sunac's guaranteed delivery progress has accelerated.

Throughout 2023, Sunac China delivered 279 projects in 101 cities, including multiple large-scale projects in Beijing, Shanghai, Hangzhou, Chongqing and Wuhan, with a total of 310,000 houses delivered and a total delivered area of ​​35.87 million square meters. Among them, Sunac Beijing region has completed the delivery of 59 projects.

At the same time, Sunac is also promoting the resumption of work and production by applying for bailout funds and supporting financing. As of the first half of 2023, the first and second batches of guaranteed housing bailout funds have landed approximately 19 billion yuan.

The road is still difficult

In terms of sales, in 2023, Sunac China achieved a cumulative contracted sales amount of approximately 84.77 billion yuan, and a cumulative contracted sales area of ​​approximately 6.076 million square meters.

Comparing the sales performance of real estate companies in 2022 and 2023 released by the Viewpoint Index, Sunac China's equity sales ranking dropped from 14th in 2022 to 18th.

In 2021, Sunac China ranked 5th on the list.

Figure | Monthly sales performance data sources in 2023: corporate announcements, opinion index compilation

From the data point of view, Sunac China’s total revenue in the first half of the year was approximately 58.47 billion yuan, an increase of 20.5% compared with the same period in 2022; company owners should Accounted for a loss of approximately 15.37 billion yuan, a decrease of approximately 18.1% from the same period last year to approximately 3.39 billion yuan.

As of the end of December 2023, Sunac has achieved a cumulative contracted sales amount of approximately 84.77 billion yuan, a cumulative contracted sales area of ​​approximately 6.076 million square meters, and an average contracted sales price of approximately RMB 13,950 per square meter. Among them, the contracted sales amount in December was approximately 5.49 billion yuan, the contracted sales area was approximately 405,000 square meters, and the average contract sales price was approximately 13,550 yuan/square meter.

As of the end of December 2022, Sunac China has achieved a cumulative contracted sales amount of approximately 169.33 billion yuan, a cumulative contracted sales area of ​​approximately 12.847 million square meters, and an average contracted sales price of approximately 13,180 yuan/square meter. In December 2022, Sunac China achieved a contracted sales amount of approximately 8.23 ​​billion yuan, a contracted sales area of ​​approximately 664,000 square meters, and an average contracted sales price of approximately 12,390 yuan/square meter.

Comparison shows that the contracted sales amount in 2023 will decrease by 84.56 billion yuan compared with 2022, a decrease of approximately 49.94%; the contracted sales area will decrease by 6.771 million square meters, a decrease of approximately 52.7%; the average contract sales price will increase by 770 yuan/square meter. The difference in

sales performance mainly comes from the second half of 2023.

Although Sunac benefited from the regional distribution of projects and the value of its own products, the average sales price performance increased year-on-year, but from the overall sales situation, revenue decline has become a reality.

The general market view is that by the end of 2023, the real estate market policy environment will have approached the most relaxed stage. According to incomplete statistics, a total of nearly 800 local regulatory policies were issued in 2023, and the frequency was highest in the second half of the year, reaching its peak.

These housing market easing policies involve many aspects, including the purchase of houses but not loans, price limits, trade-ins, loan interest rates, down payment ratios, common house standards, room ticket placement and many other aspects. Despite this, property market transactions remained subdued. The

opinion index believes that current real estate development investment is mainly restricted by the lack of confidence of private enterprises. Especially since the second half of the year, private enterprises have remained cautious about the land market, urban renewal and other fields.

Sunac China, which is working hard to resolve debt, has not added any new land reserves from the open market in the past period of time. However, due to the pursuit of scale in the early years, there is still abundant inventory to meet business development needs for a long time in the future.

Figure 丨 Data sources of land reserves in recent years: corporate announcements, opinion index compilation

As of the end of June 2023, Sunac, together with its joint ventures and associated companies, has a total land reserve of approximately 186 million square meters, and a total land reserve value of approximately 20,900 billion, of which the equity land reserve is approximately 122 million square meters, the value of the equity land reserve is approximately 1.39 trillion yuan, and more than 70% is distributed in first- and second-tier cities.

Regarding the future direction, market sentiment is generally cautious. During the period of existing housing stock, real estate companies trading time for space gained immediate vitality, but debt extension is not the same concept as debt reduction and liquidation.

external recruitment, the introduction of partners to jointly revitalize the project, what really saves the company is the actual profit and debt ratio improvement brought about by the reduction of sales.

statistics show that February-March 2024 will be the peak of debt repayment for real estate companies. Taking credit bonds as an example, the amount of debt due in these two months is approximately 42.6% of the amount of debt due throughout the year.

Under the cold winter, it remains to be seen how real estate companies will survive this round of crisis.

Data source: corporate announcements, opinion index compilation

As of mid-2023, Sunac China’s current and non-current borrowings are approximately 240.42 billion yuan and 72.14 billion yuan respectively, and the cash balance (including cash and cash equivalents and restricted cash) is approximately 348.2 billion.

As of June 30, 2023, Sunac China's due and unpaid loan principal was approximately 110.13 billion yuan, resulting in a total loan principal of approximately 96.9 billion yuan that may be required to be repaid in advance.

As of August 30, 2023, Sunac’s outstanding loan principal was approximately RMB 129.23 billion, which may result in the total loan principal of approximately RMB 86.02 billion being required to be repaid in advance.

As of the end of the interim period, Sunac China's total unaudited assets were approximately 1.07 trillion yuan, total liabilities were approximately 1 trillion yuan, and the asset-liability ratio reached 93.7%.

Sunac still needs to wait for the dawn before its debt is light enough.

A year at the bottom | At the bottom, on the way up.