Zhuge Liang real estate

Compared with more than a decade ago, the real estate industry as a whole is no longer as prosperous as it used to be. In recent years, the news that Wanda has lost weight and Evergrande is heavily in debt has cast a "sunset" color on the whole industry. Of course, this is all relative. The so-called thin camel is bigger than the horse, and the real estate industry market is still huge, but the related enterprises have changed from "singing all the way" to "walking on thin ice".

R&F started in Guangzhou. The rapid development in the past 20 years and its bold business decisions reflect the enterprising spirit of R&F. The most well-known thing is that in 20 17, R&F bought more than 70 hotels from Wanda and joined the ranks of the largest hotel operators in the world. But now, R&F is plagued by falling income and high debt.

In the early days, R&F was in a leading position in the real estate industry. In 2008, R&F Group's real estate sales ranked fourth in the industry. After more than ten years, R&F has obviously fallen behind. The sales volume of 20 17 ranked 23rd, and the sales volume of 20 18 increased slightly, ranking 19, which obviously could not be compared with the previous glory.

In 2020, the evaluation agency gave a list of the top ten real estate enterprises according to the brand value. Among the top three companies, China Shipping, Vanke, Evergrande and R&F rank ninth, while China Resources and Sunac, which are still behind at 20 18, all surpass R&F. How did R&F lose its leading position bit by bit?

Since 2005, the scale of R&F's real estate sales has been growing slowly. The main reason is that R&F Group focuses on commercial real estate, while R&F has made forward-looking planning. Take the new CBD of the city as an opportunity to enter commercial real estate, establish a unique diversified business format and lead the development of the industry.

Therefore, the development of R&F in this decade is obviously inconsistent with the progress of the whole real estate industry. At the same time, other peer housing enterprises are vigorously developing residential development and achieving high profits through high turnover. Compared with residential development, the initial investment of commercial real estate development is larger, and the overall process is slower, which directly prolongs the return cycle.

From now on, R&F made a strategic mistake. Although it is wise after the event, the long return period of capital really makes R&F lose its leading position in the initial accumulation. In addition, R&F did not grasp the rhythm of buying land. 2005 was the year when R&F went public. It can be said that R&F at this time is full of confidence, just like its name, full of strength.

From the perspective of overall land acquisition, the R&F layout is very reasonable, covering major areas, and second-tier cities and third-and fourth-tier cities have become the focus of operation, and risks are differentiated by expanding the scope. China's real estate is a differentiated industry, with obvious differences from place to place. The business scope is wider, which is conducive to slowing down the impact of regional market fluctuations, and at the same time can effectively grasp the potential cities in different growth periods.

In 2006, R&F began to buy land on a large scale, and the scale of land reserve increased to 20 million square meters within two years. Large-scale land purchase increased R&F's debt, and the arrival of 2008 gave R&F a heavy blow. The financial crisis broke out in 2008, and the global economy was depressed, which was also the worst year for China stock market. The economic downturn caused the real estate boom index to drop by 10 point, which formed a slope in the broken-line statistical chart.

At this time, R&F shouted the slogan, and must survive next year. In 2009, when the government rescued the market, R&F was on the rescue boat. In addition, the Panda City invested by R&F in Chengdu in 2006 and the 700,000 square meters of land reserved in Shanghai in 2007 have never paid off, which is considered as a loss-making transaction. At this time, R&F gradually lost the status of the Five Tigers of South China (Evergrande, Country Garden, Agile and Hesheng).

In 20 13 years, the ranking of R&F in the industry has dropped to 16, and the sales performance of Vanke has been comparable to that of four R&F companies. R&F began to seek to change the status quo. In 20 13, R&F purchased land on a large scale for the second time. In that year, the new land reserve was 20 million square meters, focusing on expanding investment in non-first-tier cities. At this time, the net debt ratio of R&F also reached 1 10%. In 20 13, the state strengthened the regulation of the second and third tier property markets, and R&F was once again affected, facing severe inventory pressure and almost stagnant growth rate.

After that, R&F put forward the diversification strategy. The landmark event was in 20 17, when R&F acquired 77 Wanda hotels, including the office building of Dalian Wanda Center, and the transaction amount reached1895.5 billion RMB. Obviously, R&F hopes to reduce the risk and impact of the real estate industry by developing self-sustaining properties. After the acquisition of Wanda Hotel, R&F's assets in hotels, shopping malls and office buildings accounted for nearly 1/5. This acquisition further increased R&F's debt ratio.

In fact, the hotel business operated by R&F is also at a loss. Net loss in 20 16 years10.8 billion, and net loss in 20 17 years10.5 billion. After the acquisition of 20 18, the turnover increased by1800,000, but it still lost1800,000. In terms of real estate, the real estate policy was slightly relaxed in the first two years, the sales performance of R&F increased, and the profitability rebounded. However, due to the high debt of R&F, the overall income is not particularly obvious.

R&F's debt ratio has always been at the forefront of its peers. In the average net debt ratio level of 10, R&F ranks second with 127%. The first place is Evergrande with a debt ratio of 240%, followed by Sunac, Greentown and Poly.

It can also be seen that the business strategy of R&F is high reserve and high debt, and the purpose of appreciation is achieved through long-term land reserve. Of course, it is common in the industry to extend the real estate development cycle before. However, with the regulation of policies, high reserves and high liabilities may also mean high risks. Vanke and China Shipping in the industry have much lower debt ratios and more stable management methods.

In 2020, R&F seems to be aware of the risks, and the annual report points out that R&F will reduce its liabilities in 2020. The quickest and easiest way to reduce debt is to sell assets, which R&F did. Guangzhou R&F International Airport Logistics Park sold 70% of its equity, making a profit of 6 billion yuan, and the transaction return of Guangzhou office buildings and other properties was nearly 6 billion yuan.

At the same time, Li Silian (Chairman of R&F) also indicated that he would continue to sell assets such as shopping malls, office buildings and hotels at appropriate prices. In addition, R&F laid off 40% of its staff in 2020, partly due to the sale of real estate.

Despite selling so much, R&F's net debt is still as high as 130%, and the ratio of unrestricted cash to short-term debt is 0.4, which still belongs to a red-file enterprise. Li Silian said that the company has sufficient cash reserves on its books, and it is expected that its debts will be reduced to below 65,438+000% within one year, and it will quit the "red file" in 2022.

In fact, the pressure and challenges faced by R&F are still enormous, the prospect of the real estate industry is not clear, and the "red file" of enterprises will only be more limited in policy. The previous measures of R&F have not played a very good role, and they still lack foresight in decision-making.