Behind the "acceleration" of CCRE Real Estate's home delivery, it is suspected that delivery has been reduced and quality problems have occurred frequently

Red Weekly丨Xiong Ying

CCRE Real Estate’s difficulties are not only reflected in the delivery and sales levels, but also directly reflected in its capital side. According to CCRE Real Estate’s 2022 mid-term report data, it can be clearly seen that the company’s financial situation has “deteriorated” and its operating risks have increased.

Looking back on 2022, "Guaranteed Delivery of Buildings" is a major issue for many real estate companies. On the one hand, "delivery power" has become the core competitiveness of real estate companies, because this affects consumers' home purchase intentions to a certain extent; on the other hand, the delivery progress is mainly subject to the financial strength of real estate companies.

"Red Weekly" observed that the previous "unfinished buildings" and "severely affected areas" were also key areas for the implementation of the "Guaranteed Delivery Building" policy. For example, Henan's local real estate company Jianye Real Estate "guaranteed delivery" However, according to reports from owners, the progress of "Guaranteed Delivery of Buildings" for some CCRE Real Estate projects is still lagging behind, and some projects that have been delivered are also suspected of having delivery reductions and quality problems.

In the context of “Guaranteed Delivery of Buildings”:

Funding issues limit the speed of delivery

Starting from the second half of 2022, The central and local governments are accelerating the implementation of policies related to "guaranteeing the delivery of buildings". On January 3, Wang Yi, deputy director of the Henan Provincial Department of Housing and Urban-Rural Development, said at a press conference that (in 2022) Henan will fully promote "guaranteeing the delivery of buildings and stabilizing people's livelihood" and strive for the support of the country's first batch of special loans of 20 billion yuan. 337 overdue projects have been sold, and more than 9,500 units have been completed and delivered. We are currently actively seeking the second batch of special loan support.

Against this background, as a local real estate company in Henan, China Construction Real Estate has also significantly accelerated its "Guaranteed Delivery of Buildings". According to the official Weibo of Jianye Group, in 2022, Jianye Group will deliver a total of 166 batches, 74,800 suites, and a delivery area of ??10.9989 million square meters. Comparing its housing delivery report card in 2021, there were 132 batches of housing delivered, with a total of 65,200 properties delivered and a delivery area of ??9.8161 million square meters. It can be seen that the delivered area increased by 12.05% year-on-year.

However, the special funds for "Guaranteed Delivery of Buildings" are limited. To ensure the orderly implementation of the project, the ability of real estate companies to revitalize themselves is also very important. It is worth noting that according to the 2022 interim report, as of June 30, 2022, CCRE Real Estate has 192 projects under construction, corresponding to a construction area of ??approximately 31.438 million square meters. According to the investigation of "Red Weekly", among them, the construction progress and delivery time of many projects of CCRE have been questioned by the owners.

"Red Weekly" found on the leadership message board platform that there were many complaints about CCRE Real Estate's delayed house delivery. For example, on January 29, 2023, an owner of Jianye Puyuan in Puyang said that he purchased the residence in Building 13 of Jianye Puyuan Phase 2. According to the contract, it should be delivered on December 31, 2022, but it is now overdue. The owner asked the sales department staff and was told that (the developer) was short of funds and was waiting for financial assistance from the government and did not know when construction could start.

According to information from Tianyancha, Puyang Jianye Urban Construction Co., Ltd. (hereinafter referred to as "Puyang Jianye"), the developer of Puyang Jianye Puyuan, has been involved in multiple lawsuits. . In 2022, Puyang Jianye was sued in court by five companies including Jujiang Construction Group, Linyi Caijun Trading, Shanghai Hengyu Materials, Xinxiang Yuehong Materials, and Xianxian Lisheng due to bill recourse disputes and other reasons. In addition, at the end of 2022 and the beginning of 2023, Puyang Jianye was enforced by the court twice for failing to perform its legal obligations on time, with the total execution amount exceeding 1.5 million yuan.

It is worth noting that "Red Weekly" obtained information from the Puyang City Real Estate One-stop Convenience Service Network and found that currently, there are still 155 residential units in the aforementioned real estate Jianye Puyuan shown as available for sale.

"Red Weekly" combed through multiple complaints against CCRE Real Estate for delaying home delivery and found that funding problems are one of the main factors affecting the progress of real estate companies in delivering homes. When responding to home buyers, relevant departments in many places mentioned the impact of funding issues on CCRE Real Estate's home delivery.

For example, on January 10, when the relevant departments of Zhumadian City asked the owners about the Zhumadian Jianye Zunfu project, they responded that “Affected by the epidemic, project sales are difficult, and project shareholders are currently actively negotiating equity acquisitions. We will raise funds from various sources and strive to resume work as soon as possible.”

In addition, an owner asked “When will Jianye No. 1 City State resume work?” The Huixian Municipal Party Committee of China responded that "Huixian City has applied for a special loan for the Jianye No. 1 City State Project to the Provincial Department of Housing and Urban-Rural Development to strive for supporting financing for the "guaranteed building" project and related financial loans for real estate companies. Next, After the funds are in place, the construction unit will be urged to reverse the construction schedule, speed up the construction progress, and deliver the house for use as soon as possible. ”

The owner questioned the quality of the delivery

Suspected. Delivery allocations are reduced and quality problems occur frequently

For some owners of CCRE Real Estate, they are worried not only to hand over the house, but also to worry about it after handing over the house. "Red Weekly" found out that in the eyes of owners who have delivered their houses, suspected delivery reductions, quality problems, etc. are also mentioned more frequently.

In January this year, Jianye Longfu located in Yichuan County, Luoyang City ushered in the delivery period. However, "Red Weekly" found that some owners complained about Jianye Longfu's illegal delivery and false propaganda on the official website of Luoyang Convenience Hotline, People's Voice. The owner pointed out that the property not only had quality problems such as obvious cracks in the walls, water leaks, broken elevators and no warranty, but also serious reductions in equipment, such as turning the stone into red bricks, the luminous latex track into asphalt paint, and the garden into turf. Standard fingerprint locks were secretly exchanged and delivered; in addition, there were many problems such as delayed delivery and refusal to pay compensation.

An announcement posted by the Yichuan County Housing and Urban-Rural Development Bureau on January 4, 2023 also showed that "Jianye Longfu has not yet reached the acceptance standard for house delivery. The conditions for handover are not met. The specific handover date shall be subject to the acceptance and handover conditions. ”

The phenomenon of Jianye Longfu is not an isolated case. On January 16, an owner pointed out on the People’s Voice platform that Yiyang Jianye Shiyue Mansion had false propaganda and reduced housing allocation. Not only has the road surface collapsed, but the greening and water systems previously advertised are also seriously inconsistent. The Yiyang County Housing and Urban-Rural Development Bureau also responded on January 21 that it had contacted the project leader and asked him to investigate the recent complaints.

Since 2022, more and more real estate projects have experienced delivery quality problems and delivery delays, which represents the "delivery ability" of delivery quality and on-schedule delivery. "This has also become a core competitiveness of real estate companies. The quality of "delivery power" is also reflected in the sales performance of real estate companies to a certain extent.

CCRE Real Estate’s sales performance in 2022 and January 2023 are not very optimistic. CCRE Real Estate has issued an announcement stating that as of December 31, 2022, the group has obtained total property contract sales of 24.049 billion yuan, a year-on-year decrease of 60%; the total contracted sales construction area is 3.4487 million square meters, a year-on-year decrease of 57.8%. The average sales price per square meter was 6,973 yuan, a year-on-year decrease of 5.3.

Among the real estate companies that announced their annual goals for 2022, CCRE Real Estate is also a real estate company with a low degree of target completion. Previously, CCRE Real Estate CEO Yang Mingyao had announced in the company’s 2021 results release It was stated at the meeting that the sales target of 53 billion yuan is based on a development strategy of stable operation and takes cash flow as the starting point. We are confident in achieving our goals and will actively pursue higher growth on this basis. However, in fact, CCRE Real Estate's contracted sales of 24.049 billion yuan in 2022 only completed 45.38% of its annual target.

By 2023, CCRE Real Estate’s sales “downhill road” has not yet reversed.

Recently, the sales ranking list of real estate companies in January 2023 was released. CRIC data showed that China Construction Group completed sales of 1.66 billion yuan in January, a year-on-year decrease of 25.9 from 2.09 billion yuan in the same period last year.

It is worth noting that CCRE Real Estate clearly stated in its 2022 interim report that the company recorded 30 sales due to year-on-year sales decline, price-for-volume, one-time asset and inventory impairment, etc. The first loss in the year, the net profit loss in the first half of 2022 was 5.605 billion yuan, a sharp decrease of 868.77 yuan year-on-year. It is not difficult to see that the sales decline has a great destructive effect on the company's performance, and the recent sustained decline in CCRE Real Estate's sales performance also means that future performance will be negatively affected for a long period of time.

"Three red lines" worsened

Debt repayment pressure is obvious

CCRE Real Estate's difficulties are not only reflected in the aforementioned delivery and sales levels, but also directly reflected in Its financial side. According to CCRE Real Estate’s 2022 mid-term report data, it can be clearly seen that the company’s financial situation has deteriorated and operating risks have increased.

For example, in terms of the "three red lines", CCRE Real Estate has turned from "yellow" to "red". Among them, the asset-liability ratio after excluding advance receipts has increased from 86.4 at the end of 2021 to mid-2022. 92.9; the net debt ratio surged from 94.9 at the end of 2021 to 315.6 in mid-2022; the cash to short-term debt ratio also dropped from 1.46 at the end of 2021 to 0.59 in mid-2022, which shows that the company's cash on hand cannot cover short-term liabilities and liquidity Sexual pressure is high.

In November 2022, the S&P report also downgraded CCRE Real Estate’s rating to “CCC-” and stated that in the absence of refinancing channels in overseas markets, CCRE Real Estate’s overseas High reliance on bonds (63.3% of total debt as of June 30, 2022) poses near-term repayment risks. Three senior notes totaling US$900 million will mature in April, August and November 2023; interest payments of approximately US$73 million will also be payable in the next six months. The company is more likely to default on its offshore senior notes and interest payments in the next six months.

"Red Weekly" also found that since January, multiple projects under CCRE Real Estate have received complaints on leadership message boards and other platforms, and it is suspected that workers' wages are in arrears. A construction worker said that 12 workers, including himself, were engaged in the installation of exterior wall aluminum panels at Jianye Longcheng Dongwang, Yibin District, Luoyang City from June 1, 2022 to July 15, 2022. 12 people per ***100,000 yuan in salary arrears. In this regard, the Luoyang Municipal Affairs Service Center stated that the project leader promised to pay the remaining wages after the holiday when the project funds are received.

In addition, Jianye Shihe Mansion in Zhoukou, the first bid section of Zhumadian Queshan Jianye City, and the second phase of Jianye Guiyuan in Xiangcheng County all have unpaid wages for workers. Phenomenon.

(This article was published in "Red Weekly" on February 4, The individual stocks mentioned in the article are only for example analysis and do not make trading recommendations)