China News Network, June 6 (Zhongxin Financial Reporter Zuo Yukun) On June 8, according to the previous announcement, the former largest real estate enterprise in Sichuan, Blu-ray Development, officially terminated its listing and delisted. At this point, in this round of real estate enterprise reshuffle, the first A-share real estate company to be officially delisted was born.
In the process of adjustment and transition from the "three highs" to the new development model, the long-term accumulated risk exposure has made the industry enter the "settlement period" of survival of the fittest, and some real estate enterprises have also come to the point of paying for the past high leverage, high debt and high turnover business model. How should this phenomenon be viewed?
There is no "blue light development" for A-share stocks
"In 2023, we will face even tougher challenges, but courage and light will be with us. With courage, we can crush bad luck; With light, we can illuminate the future. At the beginning of this year, Yang Wuzheng, chairman and CEO of Blu-ray Development, said in his 2023 New Year's message.
But in the middle of the year, Blu-ray still did not escape the "doom" of delisting at face value. On the evening of May 5, *ST Blu-ray issued an announcement that the company's shares will be terminated from listing and delisting on June 30, and the company's shares will not enter the delisting period.
According to its announcement, from April 4 to May 6, the daily closing price of the company's shares for 5 consecutive trading days was less than 9 yuan, which fell under the circumstances of the termination of the listing of stocks stipulated in the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange. After the termination of the listing of Blu-ray Development shares, it will enter the national small and medium-sized enterprise share transfer system, and the limited liability company will rely on the main board brokerage agency share transfer system to establish and manage the two network companies and delisted companies for listing and transfer.
At this time, it has been only 8 years since Blu-ray Development was listed, less than 4 years after it entered the camp of 2 billion housing enterprises, and <> years after its first default.
Image source: Blu-ray BRC official website
Back in 1989, Yang Keng, the founder of Blu-ray Development who had worked in the system, put down the iron rice bowl and registered Languang Auto Parts Factory. After inspecting the coastal real estate market, he keenly caught the wind and founded Chengdu Languang Housing Development Company, which was later renamed "Blu-ray".
Yang Heng's passion also impressed Blu-ray employees. Sun Ling (pseudonym), who has worked in Blu-ray for many years, told reporters that although she is only engaged in grassroots work in Blu-ray, in her memory, Yang Keng is an amiable and passionate person.
He is often seen at company-wide meetings every Monday afternoon, and he likes to encourage employees with his poems; The company's various norms and assessments are very transparent and reasonable, and the benefits are also good; The atmosphere between employees is also good, there is no malicious competition, and they often help each other. Sun Ling once wanted to work in Blu-ray for a long time, but had to leave due to changes in the city where he lived.
Under the leadership of Yang Keng, who dares to do things, Blu-ray also ushered in a highlight moment. In 2015, Blu-ray Development was listed on the backdoor, and the stock price reached a maximum value of 6.12 yuan on June 13 of that year; the sales scale increased rapidly from about 56.2015 billion yuan in 183 to 2019.1015 billion yuan in 37, successfully entering the "<> billion club".
However, the radical model also led to the fact that at the end of June 2020, the scale of Blu-ray Development's interest-bearing liabilities soared to 6.745 billion yuan. Under the ultra-high leverage ratio, it is still "blindfolded and wild", and the punishment of taking land at a high premium will soon come. In October of that year, in the Foshan project in Guangdong Province, which Blu-ray Development cooperated with Ping An's company, Blu-ray failed to repay a debt of billions of yuan on time during the commitment period. Huge debt risks gradually emerged, and although the asset was sold several times since October of that year, it was still difficult to reverse the decline.
"In my impression, blue light has always been full of vitality, youth and vitality. It's really a shame that it will be delisted so early. For the "former owner" with deep feelings, Sun Ling still sent regrets and blessings.
Fragility in the "three highs" model
But in this round of market replacement, it is not only Blu-ray that ushered in dusk.
According to incomplete statistics from Zhuge Data Research Center, more than 10 real estate enterprises, including Jiakaicheng, Oceanwide Holdings, Songdu Shares, Zhongtian Finance, etc., trigger the risk of delisting, while more than 20 Hong Kong real estate enterprises such as China Evergrande, Shimao Group, China Aoyuan, Fantasia, Xiangsheng Holdings, Jiayuan International, Legao Group, and Modern Real Estate are still suspended.
Jiang Han, a senior researcher at Pangu Think Tank, believes that in the current market environment, housing enterprises with high turnover are under greater pressure. The delisting of Blu-ray Development is actually more of a portrayal of the fierce competition and rapid reshuffle in the current real estate market.
Tongce Research Institute also believes that the common feature of this wave of delisted real estate enterprises is the implementation of the "three highs strategy" model in the past, which essentially belongs to the capital chain cycle of "borrowing new to repay the old" under the loose financing environment. For housing enterprises with declining credit, because it is difficult to connect with external funds, which is reflected in the stock market, that is, the stock price trend declines, some companies can only face the dilemma of delisting.
Chen Xiao, a senior analyst at Zhuge Data Research Center, believes that taking Blu-ray Development as an example, it will face more severe challenges after being delisted. Not only is the corporate reputation image greatly discounted, but the loss of the support of the capital market will make follow-up financing difficult, coupled with the loss of sales and high debt, follow-up operation is also difficult.
"There is still a chance for real estate enterprises to re-list after delisting, as long as the corresponding conditions and the approval of the exchange are met, but the threshold for relisting of stocks is higher and the conditions are more stringent, and it is still very difficult to re-list from this point of view." Chen Xiao said.
Therefore, there are also some of the above-mentioned insurance housing companies who are unwilling to delist and strive to maintain their listing status. *ST Oceanwide announced the plan to increase the shareholding of directors, supervisors and controlling shareholders after falling below 11 yuan for 1 consecutive trading days; ST Shimao also triggered the warning line when the stock price fell to 1.01 yuan, and the controlling shareholder Fengying International announced that it increased its holdings by more than 1 million yuan.
"If we want to avoid delisting, in the long run, the first major shareholder should increase its holdings, increase the confidence of the capital market, pull up the stock price, and avoid staying below 1 yuan for a long time; Second, through the increase in confidence in the capital market, we should expand new financing channels to ensure the replenishment of external cash flow and cope with the problem of short-term maturing debt; Third, it is necessary to speed up the disposal of projects and the collection of sales payments. Tongce Research Institute believes.
Infographic: Stock Market.
Rationally look at the survival of the fittest in the market
However, in another aspect, industry analysts believe that speeding up the delisting process is also to eliminate some enterprises with poor operation and deteriorating financial status, which will help optimize the allocation of resources, strengthen the competitiveness of enterprises, and maintain market order, thereby helping to promote the healthy development of the market in the long run.
Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Urban and Rural Planning Institute, pointed out that the delisting of housing enterprises in this round also means that the distortion of listing behavior for fast turnover and leverage (rather than improving corporate governance) has begun.
"Delisting does not mean bankruptcy, but it is not in line with public listing circulation and refinancing. The rights and interests of shareholders will continue to be undertaken by the surviving entity, and if the shareholders are willing to give the enterprise time to settle its debts and breathe, the survival of the entity (rather than bankruptcy) is a high probability event. Li Yujia said.
He also mentioned that delisting only means that the channels for refinancing (additional issuance or allotment) in the capital market are closed, and other financing channels are not closed. If the corporate debt problem is not solved, the functions of financing and corporate governance are greatly weakened, and it is of little significance to stay in the capital market.
"The accelerated withdrawal of housing enterprises in danger is in line with the law of survival of the fittest in the industry, and to a certain extent, it has accelerated the reshuffle of the industry." Chen Xiao also believes that in the future, real estate enterprises must reduce the level of debt, ensure stable cash flow, get rid of the old model of high debt and high turnover, and actively explore new development models.
"Delisting does not mean the decline of the company. After the delisting of enterprises, the burden is reduced, and new tracks can also be found. Yan Yuejin, research director of E-House Research Institute, pointed out that from the perspective of medium and long-term development opportunities, if the real estate business is weakened, then due attention should be paid to new development opportunities and new industrial points. (End)