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By reducing debt and maintaining stability, Sunac has changed
Source: Yinshi Finance
On the morning of March 12, Sunac China (01918.HK) held a 2020 annual earnings conference. The Yinshi Finance reporter found that Sunac and Sun Hongbin appear to be different.
The first is different: Sunac, which was not as active in its financial reporting, was the first to publish its 2020 performance report this year ahead of several other real estate giants. According to the report, in 2020, Sunac China achieved an operating income of about 230.59 billion yuan, an increase of about 36.2% year-on-year; gross profit was about 48.40 billion yuan, an increase of about 16.9% year-on-year. ; the profit attributable to the owners of the company was approximately 35.64 billion yuan, a year-on-year increase of approximately 36.9%; core net profit was about 30.26 billion yuan, an increase of about 11.8% year-on-year.
From the revenue scale perspective, Sunac China, together with its joint ventures and associated companies, has contracted sales of approximately 575.26 billion yuan, representing more than 20 billion yuan below the 600 target. 1 billion yuan established by the president of the company, Sun Hongbin. year.
Furthermore, Sunac China will add around 58.77 million square meters of new land reserves in 2020, with an added value of around 726.1 billion yuan.Color ladderAccording to iFinD data, at the end of 2020, Sunac China’s land reserves are about 258 million square meters, and the value of land reserves is estimated at about 3.1 trillion yuan, of which about 78% are in the first and second. top-tier cities, and the average cost of land is about 4270 yuan per square meter. In this regard, Hongbin Sun said that the land supply in hotspot cities is still not enough. “Competition for land in hotspot cities will continue to be fierce. I think the impact on land may be greatest in the second half of the year or next year.” This or may explain your enthusiasm for acquiring land in cities. first and second level.
He also said that Sunac’s land acquisition comes primarily from the three sources of open market, mergers and acquisitions and industrial projects. Among them, the open market has the greatest advantage. There are 58 city companies that manage 120 cities and can seize the plate. Rotation opportunity.
The second difference is that when the 2020 semi-annual report is released, Sunac’s three indicators are all within the red line and will be classified as the red line. But in the last six months, Sunac’s capital structure and debt ratios have improved rapidly. The annual report shows that as of December 31, 2020, the total capital of the owner of Sunac China was about 177.83 billion yuan, a substantial increase of about 55.9% from the end of 2019; accounting cash was about 132.65 billion yuan, and total loans also decreased.
At the end of the reporting period, Sunac China’s debt-to-assets ratio after excluding advance receipts was approximately 78.3%, a year-on-year decrease of approximately 5.6 percentage points; the net debt ratio was approximately 96.0%, a year-on-year decrease of approximately 76.3 percentage points; the unrestricted short-term cash debt ratio was approximately 1.08, an increase of approximately 0.51 from the end of last year. Under the “three red lines” standard, Sunac China only stepped on one, which has been reduced to the yellow level.
The third is different, from the oldest grandson. Sun Hongbin once said: “Whoever can borrow more money, cheaper money, more money and money that can cross the cycle has a great advantage. If there is this opportunity, they will reduce their leverage.
But the old Sun who said this has changed since 2017, when Sun Hongbin indicated to the outside world that Sunac’s important goal is to reduce leverage. Since then, financial data such as cost of financing, debt ratio, cash flow and earnings have become Sunac’s key evaluation indicators. In March last year, Hongbin Sun also told the public: “Looking at our land bank, our sales will definitely grow steadily, but the current management is still a profit-focused management. After reaching this scale, profits will be They have become the first. It is in place, debt reduction and constant development are the first. “
At the performance conference on the 12th, Hongbin Sun told investors: “Now, the underlying logic of this industry has completely changed, because the ‘three red lines’ have accomplished a lot, along with the changes in the epidemic population. Under the new logic, we have a great advantage, it is very obvious. Now is the golden age of excellent companies. Ten years ago we sold only 8 billion and now we have different opinions on how to understand this industry. ” “New logic” will this be? Sun Hongbin did not elaborate. But the truth is thatThe era of achieving rapid growth and outperforming your peers through increased leverage is over.
It is understood that as early as January, Guosheng Securities, First Shanghai Securities,Tianfeng Values、Southwest ValuesMany brokerage firms released research reports, stating that Sunac China has achieved remarkable results in reducing leverage, and Tianfeng Securities also predicts that Sunac China is expected to achieve “two lines” of compliance this year. On January 11, Citi issued an investigative report indicating that Sunac China has made better-than-expected progress in optimizing its debt structure, with a rating of “Buy” and a price target of $ 46.8 from Hong Kong per share.
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