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Large scale cases occur frequently, and M & a scale of diversified real estate industry is expected to set a record

Large scale cases occur frequently, and M & a scale of diversified real estate industry is expected to set a record

  • Categories:Industry
  • Author:
  • Origin:中国证券报
  • Time of issue:2017-08-10 16:42
  • Views:

Large scale cases occur frequently, and M & a scale of diversified real estate industry is expected to set a record

(Summary description)The regulation period of real estate is often the time when the real estate enterprises cooperate. According to the data, since 2017, real estate enterprises have launched 162 M & A events, involving an amount of more than 224 billion yuan, and the scale of M & A ranks first in various industries.

  • Categories:Industry
  • Author:
  • Origin:中国证券报
  • Time of issue:2017-08-10 16:42
  • Views:
Information

The regulation period of real estate is often the time when the real estate enterprises cooperate. According to the data, since 2017, real estate enterprises have launched 162 M & A events, involving an amount of more than 224 billion yuan, and the scale of M & A ranks first in various industries. According to the reports of relevant institutions, a number of major M & A transactions emerged in the second quarter and July, and the total amount of real estate M & A transactions in 2017 is expected to set a record.

From the perspective of the target assets of real estate enterprises, the assets of small and medium-sized real estate enterprises are the main target of merger and acquisition. Among them, there are many tens of billions of Yuan M & A cases involving Vanke's acquisition of Guangxin assets. With the dust of these M & A cases settled, the industry pattern of real estate enterprises will be reshaped and the industry concentration will be further improved. In addition, some real estate enterprises try to diversify through mergers and acquisitions.

Tens of billion yuan of mergers and acquisitions

In the past two years, the scale of mergers and acquisitions initiated by real estate enterprises is in the forefront. According to the data, in 2016, the number of mergers and acquisitions in the real estate industry was 217, involving an amount of 401.25 billion yuan, an increase of 44% over the same period of last year. The number of mergers and acquisitions in 2015 was 341, involving a value of 285.3 billion yuan, a year-on-year increase of 12%.

Analysts pointed out that since this year, the real estate industry merger and acquisition "one branch alone" mainly has two reasons. First of all, the environment of M & a market has changed significantly since the second half of last year, and the return of overseas assets to A-share market based on valuation arbitrage has been basically suspended; driven by the supply side reform, cyclical industries such as coal and steel have made a large-scale turnaround. Through the merger and integration of capital market, the urgency of improving the profitability of related enterprises has decreased. The scale of the above two types of mergers and acquisitions is often more than tens of billion yuan. These two types of M & A cases have decreased significantly this year, which highlights the scale of M & A of real estate enterprises. In addition, from the development of the real estate industry, the regulation cycle is often a good opportunity for real estate enterprises to merge and reorganize. Large and medium-sized real estate enterprises with strong capital usually take the opportunity to expand land reserve and market share through acquisition.

Judging from the current cases, at the end of the second quarter, especially in July, several M & A cases of 10 billion yuan significantly increased the scale of industry M & A. In the second quarter, Vanke A invested 55.1 billion yuan to acquire some real estate assets and affiliated interests of Guangdong International Trust and investment company. The asset package mainly includes three claims and interest amounts totaling 3.858 billion yuan; Guangxin real estate's 100% investment equity, with an appraisal value of 40.441 billion yuan; and the 100% investment equity of Guangzhou branch held by GDIC, with an appraisal value of 378 million yuan. The best assets are the assets of Guangxin real estate, including 16 developable land in Guangzhou urban area, and the corresponding equity developable floor area ratio is at least 1.5 million square meters. Among them, about 98% are located in Liwan and Yuexiu. This means that after taking the asset package, Vanke's land acquisition amount in the first half of this year will reach about 146.3 billion yuan, ranking first in the industry.

Large scale cases in July also included Wanda Commercial's plan to sell assets to rongchuang China and Fuli real estate, with a total consideration of about RMB 63.7 billion. Wanda Commercial transferred 77 hotels including Beijing Wanda Jiahua to R & F real estate at a price of 19.906 billion yuan, and transferred 91% equity of 13 cultural tourism projects, including Xishuangbanna Wanda cultural tourism and Nanchang Wanda cultural tourism, to rongchuang China at a price of 43.844 billion yuan. The total amount of the two transactions was 63.75 billion yuan. In addition, on August 9, Wanda Hotel Development Group announced that it had signed the letter of intent on asset restructuring of related persons involved in the company, and the trading of shares was temporarily suspended.

There are also some big deal cases in overseas acquisition. On July 14, a Chinese consortium composed of Vanke A and other institutions planned to spend about US $11.6 billion (about RMB 79 billion) to wholly acquire global logistics real estate giant global global global logistics and real estate giant. According to the data, it is the first logistics real estate enterprise in Asia and the second in the world. It has a total area of more than 15 million square meters of warehousing and logistics land and Logistics Industrial Park in China. According to the report "review of China's high-end logistics market in 2015" released by DTZ, in the domestic logistics real estate, the market share of global is the first, reaching 55%. In June this year, pros signed a strategic investment agreement with China Eastern Airlines Logistics Co., Ltd. Global will invest 410 million yuan to acquire 10% equity of China Eastern logistics. Yu Liang, chairman of the board of directors and chief executive officer of Vanke, said that if the transaction is completed, it will be an important measure of Vanke's urban supporting service provider strategy and help Vanke improve its layout in the field of logistics and real estate. At the same time, Vanke and pros will establish an alliance, which is expected to create a new business development model in the global scope.

Rongchuang China is another big M & a player. Since the second half of last year, the company has increased land reserves mainly through mergers and acquisitions. According to incomplete statistics by China Securities Journal reporters, rongchuang China has launched at least seven asset mergers and acquisitions in the same industry since this year. After the completion of the acquisition of 13 cultural and tourism projects of Wanda, rongchuang China has spent 86.6 billion yuan on M & A in 2017. First, according to the Research Report of Shanghai Securities, as of July 2017, rongchuang China's land reserve exceeded 150 million square meters, or jumped to the top three in the industry, second only to China Evergrande and country garden.

Wang Bei, head of capital market and investment services of collier international in China, said in an interview with the media recently, for large real estate enterprises, equity transaction and project merger and acquisition are not only expanding the scale, but also an important way to expand the layout of real estate and upstream and downstream.

In addition to large-scale real estate enterprises, medium-sized real estate enterprises such as Taihe Group, sunshine city and Blu ray development, etc. frequently merge to seek the upper position. Recently, Taihe Group acquired four plots of Zengcheng Zengjiang street for 42.5 yuan to enter the Guangzhou market; it purchased 49% equity of Beijing Qiaoxi with 734 million yuan. By taking over Beijing Qiaoxi shares and related creditor's rights, Taihe Group was able to intervene in Fengtai Diwang new palace project. In the first half of this year, sunshine city acquired 100% equity and debt of Beijing Huicheng real estate company and 100% equity of Shanghai Xinye to expand its market discourse power. In addition, Blu ray development has successively acquired some equity of Chengdu Hairun project and 100% equity of Yangzhou Yurun.

Huang Zhe, an analyst at Moody's, said: "the real estate industry is very active in M & A activities

Actively test water and diversify

In recent years, under the pressure of rising land cost and declining industry profit rate, small and medium-sized real estate enterprises which are not dominant in capital, brand and scale are facing survival pressure. With the third quarter of 2016 entering the regulation cycle, the performance of real estate enterprises is divided again, cross-border merger and acquisition of assets, looking for performance growth point, or through M & a transformation, become the choice of small and medium-sized real estate enterprises.

Taking Yinyi stock, which is the largest M & a scale at present, as an example, the company plans to issue shares to Ningbo Shengzhou to purchase its 100% equity of Dongfang Yisheng. After the completion of this transaction, the company will hold relevant assets of Bangqi group through Dongfang Yisheng. The transaction price of 100% equity of Dongfang Yisheng is 7980586300 yuan. Bangqi group is a world-famous automatic transmission manufacturer, focusing on R & D, production and sales of automotive transmission. Its main products are continuously variable transmission (CVT), and are committed to developing dual clutch transmission, hybrid powertrain system and pure electric powertrain system. Yinyi said that through the restructuring, the listed company will lay out the production and sales business fields of transmission, the core parts of automobile powertrain. The merger is currently in the stage of feedback from the CSRC.

Wolong real estate plans to acquire 5.356 billion yuan of game assets, and Tianjin Carle 100% equity is terminated recently. It is worth noting that this is the second time Wolong real estate purchased game assets and declared failure. In 2016, Wolong real estate planned to purchase 100% equity of Mo Lin shares of Ye you company at a price of 4.015 billion yuan, but it failed. Wolong real estate repeated transformation may be mainly due to the pressure on the main business. Financial data show that from 2010 to 2016, the operating income of Wolong real estate decreased from 2.199 billion yuan to 1.403 billion yuan, and the net profit decreased from 270 million yuan to 81 million yuan.

In addition to manufacturing and game assets, financial assets have attracted the attention of real estate companies due to their stable profit scale. Huaye capital plans to invest 809 million yuan in March this year to bid for 11.51% of Great Wall life. After the transfer, Huaye capital will become the third largest shareholder of Great Wall life. Huaye capital said that it hopes to integrate resources, improve the efficiency of asset utilization, expand the company's financial business, and speed up the layout of financial investment field by participating in insurance companies. Wantong real estate plans to participate in the bidding for 80% of Zhongrong Guofu's equity held by Zhongrong Dingxin, with the initial listing price of about 400 million yuan, and is ready to transfer the 20% equity of Zhongrong Guofu held by Teng Shengchun, a natural person shareholder of Zhongrong Guofu, after the successful bidding. In the future planning, Wantong real estate will take Zhongrong Guofu as the platform to carry out fund investment and asset management business, and further transform to the new model of "asset light" real estate.

Facing the challenge of capital and integration

Behind the large-scale merger and acquisition of real estate enterprises, they are faced with the dual pressure of capital and operation.

According to statistics D, as of the end of the first quarter of this year, 101 of the 129 listed real estate enterprises in the Shenyi class industry had an asset liability ratio of more than 50%. Among them, 61 are more than 70%.

Zhang Hongwei, director of Tongchuang consulting and research department, said that although the relatively loose financing environment last year gave enterprises the opportunity to swap long-term debt for short-term debt and optimize the debt structure, the hidden debt pressure and the adverse risk caused by policy influence on the layout area will cast a layer of hidden worry for the large-scale merger and acquisition and high debt real estate enterprises. More importantly, although the large-scale merger and acquisition has brought a large number of land reserves, from next year, the real estate enterprises will enter the peak period of repayment of loans. The cash flow of some real estate enterprises may face challenges.

After announcing the acquisition of Wanda culture and tourism related assets, rongchuang China started a number of financing activities, actively reducing leverage, including issuing rights issue of no more than HK $4.032 billion and issuing overseas preferred notes of RMB 1 billion. Among them, the average cost of overseas preferred notes reached 8.03%. This shows the demand for funds from the side. In addition, rongchuang China has recently increased its efforts to collect money from the offer.

In addition, the operating environment of the industry in the second half of the year has attracted much attention. Moody's believes that although real estate sales growth picked up slightly in June, sales growth will slow in the second half of the year. However, the risk of substantial price adjustment in the next 12 months in the first and second tier cities is small. Moody's expects that the operating environment of the real estate industry will still face challenges in the next 6-12 months. Strict regulatory measures will affect residential sales in the second half of 2017 and lead to a slowdown in sales growth.

Up to the time of press release, 20 listed real estate enterprises have announced the sales data in July. According to the data, the sales volume of 20 real estate enterprises declined in July, with a total sales volume of nearly 170 billion yuan, a month on month decline of more than 30%. Zhang Dawei, chief analyst of Zhongyuan Real estate, believes that the month on month decline is mainly due to the performance effect of real estate enterprises in June and the carry over of last year has basically ended, and the inertia of July has dropped. In addition, affected by the regulation, real estate sales growth slowed down. Zhang Dawei also pointed out that although the month on month decline in sales data of real estate enterprises in July was more obvious, it was still at a high level compared with last year.

Moody's also pointed out that the residential inventory in the first tier cities and sample second tier cities tracked by Moody's in June (measured by the saleable area of commercial housing / the transaction area of commercial housing) is still about 7-8 months. The inventory level is low, and the risk of substantial price adjustment in the above cities will decrease in the next 12 months.

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