Xinli Insiders' Response After Stock Price Crash And Temporary Suspension

Since the Black Monday on September 20, the trading of Hong Kong stock new strength Holdings (02103. HK, referred to as "SunPower") has been suspended. After the close of the day, SunPower announced that the trading of the company's shares and debt securities (Stock Code: 40557 and 40413) had been suspended from the Hong Kong stock exchange from 3:38 p.m. on Monday, September 20, 2021, pending the publication of a notice containing inside information.

At that time, the industry speculated that Xinli would announce the sale of its property company; There is also another saying that Xinli wants to disclose the large shareholder stock pledge explosion. Xinli related people said they did not know about the two statements.

SunPower holdings reported HK $0.5/share before the suspension, down more than 87% on the same day, with the lowest level of HK $0.37/share; The latest market value is HK $1.785 billion.

A few days ago, the 21st century economic reporter verified some rumors with insiders of Xinli, and learned that Xinli is trying to relieve the pressure on the company's capital from several aspects to cope with the upcoming debt repayment crisis. However, judging from the progress of Xinli property sales company and national projects, it is not smooth to recover funds by selling assets.

According to people familiar with the matter, there are projects in Jiangsu Province in Xinli Yangtze River Delta region that are being discussed for sale, while projects in other parts of the country have been successfully sold, and handover procedures are being handled.

"The tightening of financial supervision and the superposition of regulatory policies have led to the drying up of repayment. In addition, the company's recent negative public opinion has led to the rapid tightening of financing, so it is difficult to support the cash flow," said the insider.

However, the opinions of insiders of Xinli only mentioned a common problem in the industry, that is, under the pressure of policies, enterprises with weak pressure resistance are prone to "accidents". If Xinli is taken as a case study, the crisis encountered by the real estate company just exposes some problems in its operation and strategy, such as the high proportion of minority shareholders' equity and excessive dependence on external funds for development.

"Self help"

A few days ago, the public opinion of Xinli explosion has been rampant. Up to now, according to surging news reports, a commercial ticket of 5.4 million yuan in Xinli was overdue in August and has been fully cashed. This is also the only positive signal sent by Xinli to the outside world after the "920" incident.

The reporter of 21st century economic report exclusively learned that Xinli has a trust of more than 4 million yuan which is overdue, and the financial department of the company is still trying to allocate funds to repay. On October 18, Sony had a $244 million dollar debt to be cashed. In fact, before and after the "920" incident, the three US dollar bonds in the duration of Xinli fell sharply, and the biggest drop was the US dollar bonds due within one month.

Recently, United International and standard & Poor's correspondingly lowered the rating of SunPower to "CCC +" and continued to put it on the negative rating watch list; Fitch lowered the default rating of long-term issuers of Sony holdings from "B +" to "CCC", its senior uncollateralized rating from "B +" to "CCC -" and its recovery rating from "RR4" to "RR5".

After the "920" incident, Xinli's measures in three aspects also showed that the real estate enterprise was in financial difficulties, including "reducing wages and layoffs, selling Xinli services and selling project equity".

It is understood that prior to September 15, Xinli company headquarters employees have received oral notice of 50% pay cut, but so far the company has not issued specific documents on the salary reduction, and the salary of the current month has been paid normally, and the real situation of salary reduction can only be verified by the salary payment of next month. A few days ago, new force announced layoffs, new force service layoffs 50%.

Since its expiration in early September, there has been no action to update the prospectus. Industry insiders point out that Xinli has a high probability of selling properties.

From country garden to Jinke, it is rumored that SunPower has been "peddling" its services in the market for some time, but so far, this business has not fallen. It can be seen from the prospectus that the revenue of Xinli service in 2020 is 1 billion yuan, which is not inferior to that of Zhongliang Baiyue Zhijia, a property company under Zhongliang, which is also a black horse real estate enterprise.

According to people familiar with the situation, Xinli chairman Zhang Yuanyuan and Jinke Chairman Huang Hongyun are familiar with each other and are likely to promote business. However, Jinke service related personnel told reporters of the 21st century economic report that there is no very accurate information at present.

"From the perspective of the property market, there should be no big problem for Xinli to sell its properties. The valuation of the property company has bottomed out this year. It mainly depends on whether the current difficulties of SunPower group can survive." a property veteran told the 21st century economic report that the developers are getting more and more miserable this year. It is very common for them to sell their children to survive. Moreover, too many property companies are listed on the stock market, There is not much money in the capital market.

Joint venture dilemma

In addition to reducing human costs and selling assets, Zhang has no more ways to finance. Before that, the Nanchang project was shut down. Xinli explained that it was due to the quality problem of the supplier in a certain link of the engineering process, and the engineering party required it to rectify, resulting in the shutdown.

It can be seen that if Xinli wants to sell these projects under construction, the buyer should consider whether there is shutdown risk of Xinli project at present. In addition, we should also consider the share proportion of joint ventures.

In the suspension period of September 24, Xinli issued the 2021 interim report. Xinli has always been a yellow file real estate enterprise, and only the asset liability ratio after excluding accounts receivable in advance is substandard. In the first half of this year, sales of Xinli reached 58.789 billion yuan, the property under development was about 22.5 billion yuan, and the investment due to joint venture company was about 4.683 billion yuan. This shows from one side that Xinli's rights and interests in its development projects are relatively low. If it is necessary to introduce capital or partners, it is necessary to communicate well with previous partners.

It is worth noting that the current assets of Xinli in the first half of the year increased by about 20% compared with the end of last year, mainly due to the increase in cash and cash equivalents and properties under development during the period, according to the interim report.

Judging from the advance funds of joint venture companies, Xinli's operation in the first half of this year is not very optimistic. The advance of the joint venture company of the company is about 300 million yuan less than that of last year, but the advance of joint venture company has increased significantly compared with the same period of last year. The joint venture advanced more than 1.8 billion yuan in the first half of this year, compared with 400 million yuan in the same period last year. In the first half of the year, Xinli paid back 1.5 billion yuan to the joint venture, about 100 million yuan less than the same period last year; In the same period last year, it paid back 890 million yuan.

The problem of excessive minority shareholders' rights and interests in Xinli was exposed in the annual report of 2019. At the end of the year, the equity attributable to minority shareholders was 6.729 billion yuan, an increase of 723.95% year-on-year, more than seven times of the growth. In the first half of 2021, the non controlling interests of Xinli reached 10 billion yuan, an increase of 900 million yuan compared with 9.1 billion yuan in the same period of last year.

It is precisely because of the cooperative development mode that Xinli has achieved rapid development. At present, Xinli leads the whole body, and it is not known whether the joint venture company of the project can cooperate with Xinli to tide over the difficulties.

Debt pressure

People familiar with the matter told the 21st century economic report that Xinli had a trust of more than 4 million yuan recently. In addition, a $250 million bond due on October 18 has become the focus of the capital market, and the current visible funding gap is about 1.5 billion yuan.

By the end of June 2021, the current liabilities of Xinli were 75.4 billion yuan, and the interest bearing liabilities were about 29.55 billion yuan, including 24.36 billion yuan of mortgage liabilities and 13.36 billion yuan of debts due in the coming year.

According to the net profit of 730 million yuan in the first half of the year and about 14 billion yuan of unrestricted funds, why has Xinli's solvency disappeared in the short term? For this reason, the reporter of 21st century economic report contacted Xu Jinye, chief financial officer of Xinli for many times on wechat, but the other side has not responded. According to people familiar with the matter, many staff members of the new force Hong Kong office were also unable to get in touch.

Xinli, founded by Zhang Yuanyuan in 2010, has grown into a 100 billion yuan real estate enterprise with the rapid development of China's real estate in the past 10 years, "the black horse has been developing for 30 years, catching up with others for 30 years, but it has also collapsed rapidly.". People familiar with the matter once told reporters of the 21st century economic report that the mode of high turnover must be matched with the corresponding financial environment. In the short term, the financial policy shrinks too fast, which is tantamount to taking the bottom line out of business.

"For so many years, land finance and currency problems have made the real estate industry too popular. In fact, many real estate enterprises can't stand scrutiny." an industry insider said that the mode of high debt realized by unconventional means such as buying lists in the past should be stopped.