Betting, layoffs, selling properties, withdrawing shares, what happened to China Fortune Land Development, once the king of new industrial cities?

In the field of real estate in China, China Fortune Land Development is undoubtedly a very unique representative. It does not have the sharpness of the "South China Five Tigers" nor the big success of "recruiting money and guaranteeing ten thousand", but it does With its own unique development model, it has become a unique company in the Chinese real estate market. However, such a company is now facing many difficulties, including laying off employees to save itself, withdrawing its shares to build cars, selling properties to raise funds, and its stock price has been cut in half. China Fortune Land Development What happened? Can China Fortune Land Development continue to be happy?

1. This winter of China Fortune Land Development

Recently, it has been a cold winter for the real estate market. Vanke shouted "survive" at its annual meeting. The real estate industry has even issued a saying of "waiting in line to die", but for China Fortune Land Development, a well-known real estate company, this winter seems to be particularly cold.

On July 10, China Fortune Land Development announced that its controlling shareholder China Holdings and Ping An Asset Management signed an equity transfer agreement. The two parties agreed that China Holdings would transfer 582 million shares of China Fortune Land Development to Ping An Asset Management at a price of 23.655 yuan per share, accounting for 19.7% of the company's total share capital. China Land Development promises that in the next three years, the company’s net profit growth rate will be no less than 30%, 65%, and 105% respectively. Such a harsh gambling agreement shows China Fortune Land Development's desire for funds.

On October 10, China Fortune Land Development announced that it plans to sign a cooperation agreement with Beijing Vanke Enterprise Co., Ltd. for 339,300 square meters of residential land in the Beijing area of ??China Fortune Land Development. The tentative transaction price is approximately 3.234 billion yuan. . The land around Beijing involves 10 pieces of land, with a total land area of ??509 acres and a total of 339,000 square meters of residential land. The above land parcels were acquired by China Fortune Land Development from September 9, 2017 to May 9, 2018, with a total land price of approximately 3.833 billion yuan. China Fortune Land Development is also considered to be selling land at a loss and selling properties at a discount.

On November 10, China Fortune Land Development reported that "more than 400 employees at China Fortune Town Group nationwide and more than 500 employees at China Fortune Jingnan Group have been laid off." The news that China Fortune Land Development laid off thousands of employees in three days also This spread in the real estate circle.

On November 29, according to data from Qixinbao, the legal representative of Hezhong New Energy was changed from Wang Wexue to Fang Yunzhou. This is the same as last October when Wang Wexue replaced Fang Yunzhou as the legal representative of Hezhong New Energy. Just over a year ago, in December 2017, Zhihe Travel Technology Co., Ltd. controlled by Wang Xuewen injected 1.25 billion yuan into Hezhong New Energy, thereby controlling Hezhong New Energy. The outgoing Wang Wenxu is the head of China Fortune Land Development.

Strict gambling, selling properties at discounts, laying off employees to save themselves, and withdrawing shares to build cars. These actions all show that China Fortune Land Development seems to be experiencing problems. As of the close of trading on December 4, China Fortune Land Development’s share price has dropped from 20% this year. The peak of 46.88 yuan per share in February has dropped to almost half of the current price of 25.92 yuan. This makes everyone wonder what happened to China Fortune Land Development?

2. From a hot pot restaurant to the unique China Fortune Land Development

Whenever China Fortune Land Development is mentioned, the real estate industry will use the word legend to describe it. In 1992, when the tide of market economy just took off, Wang Wenxue, the head of China Fortune Land Development, quit his job at the local transportation bureau to open a hotpot restaurant. With the help of the original capital accumulated from the hot pot restaurant, Wang Wenxu started an increasingly prosperous decoration business, and within a few years he took over the decoration projects in Langfang City. When he changed from boss Wang of the hot pot restaurant to contractor Wang of the decoration, it coincided with the Asian financial crisis in 1997. When the economy was in recession, the welfare housing allocation policy in various places was also canceled. Wang Wenxue was keenly aware of the welfare distribution policy. Business opportunities arising from room cancellations. He gave up the profitable hot pot business and decoration business and directly joined the real estate development trend. The first real estate, Huaxia Garden, was named after a local small street, Huaxia Li, and this became the name of the company: China Fortune Land Development.

Around 2000, China Fortune Land Development already owned three projects in Hebei and became a small developer. Faced with the vigorous development of real estate, China Fortune Land Development actually did not do well, so Wang Wenxue Starting to look for differentiated competitive advantages, he focused on the piece of industrial real estate that real estate companies were reluctant to do.

In 2002, Hebei Gu'an Development Zone became the representative work of Wang Wenxue's Chinese Happiness. Since Hebei's Nansan County is far away from Beijing, Gu'an is almost a tough nut to crack compared to Beisan County, which has a lot of land and is closer to Beijing. It’s a hard nut, but Wang Wenxue took a fancy to the hard nut and signed a development agreement for 60 square kilometers with a term of 50 years.

Since there was no precedent before, Wang Wenxue’s journey to Gu’an was not smooth, but China Fortune Land Development just explored it bit by bit and figured out what was later called “government-led, enterprise-operated, cooperation** "Win", forming a mechanism of "clear rights and responsibilities, maximum sharing of benefits, maximum risk sharing, and full cooperation". Of course, today, more than ten years later, we know that this model also has a trendy name "PPP model" ".

China Fortune Land Development relies on its own exploration of the PPP model, its own planning and design, its own land consolidation, its own infrastructure construction, its own public facilities, its own public facilities, its own industry attraction, and its own city operation. In this way, a poor place has been turned into a new city with attractiveness, carrying capacity and competitiveness, and China Fortune Land Development has therefore called itself an operator of new industrial cities. After 2008, China Fortune Land Development expanded its model and launched more than 100 projects across the country. China Fortune Land Development has become the most famous and unique real estate company.

3. What happened to China Fortune Land Development?

In fact, if we carefully study the model of China Fortune Land Development, we will find that China Fortune Land Development is a most special real estate company. All the residential land of China Fortune Land Development is within its own park, and the three links and one leveling of the entire park are also China Fortune Land Development is all done by itself, so the cost of land acquisition for China Fortune Land Development is not high. Furthermore, since China Land Development is engaged in industrial real estate, its land reserves are not high among the entire real estate industry. There are neither high land acquisition costs nor land reserves on hand. In theory, China Land Development should not have any problems. . However, something is wrong with China Fortune Land Development, so what exactly is his problem?

First, China Fortune Land Development’s development costs are too high. For general real estate companies, the biggest cost is undoubtedly the cost of acquiring land. But as we said before, the cost of acquiring land for China Fortune Land Development is basically not high. However, what China Fortune Land Development does is not only the business of real estate developers, but also the real estate industry. If it is a business matter, then the real estate cost is too high. The main costs of China Fortune Land Development come from land consolidation, three connections and one leveling (water, electricity, roads, land leveling) and local infrastructure construction. Since the land itself is not land with high block value, this requires China Fortune Land Development Fortune Land Development has made great efforts to attract investment and find ideas for this industrial park. These all require huge costs, which also leads to the high cost of developing China Fortune Land Development's new industrial city.

Second, China Fortune Land Development’s policy risks are too great. Compared with other real estate developers, China Land Development develops industrial real estate, which means that its business is greatly affected by policies. If the policies support it, China Land Development will inevitably develop smoothly. However, starting in 2016, real estate market policies have reversed direction. Purchase restriction policies have been tightened in areas around Beijing. Residential prices in the area around Beijing have plummeted, even halving in some places. In 2017, the Xiong'an New District appeared in the surrounding Beijing area. It can be said that the industrial purchase restriction policy has reached the strictest in history. The real estate market in the surrounding Beijing area has fallen into serious problems, and the surrounding area is the main position of China Fortune Land Development, so it is naturally affected by it. The biggest impact. In 2017, China Fortune Land Development's net operating cash flow was -16.228 billion yuan, and in the first half of 2018 it was -7.818 billion yuan. China Fortune Land Development's cash flow pressure is evident.

Third, China Fortune Land Development’s business model is difficult to copy. China Fortune Land Development's success comes from its development of industrial parks. Compared with many places in the Beijing-Tianjin-Hebei region where there is almost no land, China Fortune Land Development can be said to be painting on a blank sheet of paper. Although it is not easy, there is little resistance and there is considerable room for free development. many. However, problems arose when China Fortune Land Development's model was copied to the Yangtze River Delta, Pearl River Delta, the middle reaches of the Yangtze River, the Central Plains urban agglomeration, the Chengdu-Chongqing urban agglomeration and other places. This is because these places are different from the Beijing-Tianjin-Hebei region in terms of their own industrial base. It already exists, leaving little room for China Fortune Land Development to move around. China Fortune Land Development has encountered varying degrees of difficulties in its development in many places. It is quite difficult to perfectly replicate the model in the Beijing-based region.

On this basis, the scene of the severe bet between China Fortune Land Development and Ping An, the self-rescue of layoffs, selling properties at discounts, and withdrawing shares to build cars that we mentioned at the beginning of the article appeared. Of course, China Fortune Land Development’s control There is no doubt that the disciples are losing their cars to protect their commanders, and their heroes are cutting off their wrists. No matter how to maintain cash flow, surviving first is the most correct thing. Recently, Wu Xiangdong, the former head of China Resources Land, parachuted into China Fortune Land Development. Whether Wu Xiangdong, who was appointed at the critical moment, can lead China Fortune out of the current predicament is worthy of our further expectations.