How far can Xincheng Holdings fly?
The threshold of 100 billion housing enterprises is high every year, and the list is changing year by year. In 2018, it was definitely a bumper year for Shanghai-based Xincheng Holdings. For the first time, this housing company has entered the top ten, with sales exceeding 220 billion. This data even left Longhu, Huaxia Happiness and other old-fashioned housing companies far behind.
New Town Holdings has just passed a bumper year
On March 8, 2019, Xincheng Holdings released its 2018 annual report. The company's annual operating income was 54.133 billion yuan, an increase of 33.58% over the same period last year. At the same time, debt has surged by hundreds of billions a year. Under this circumstance, the company lowered its 2019 performance target. Wang Zhenhua, the boss, said that the annual contract sales amount will reach 270 billion yuan, an increase of 22.17% compared with 2018.
Earlier, some media reported that the internal performance target of New Town Holdings in 2019 was 300 billion yuan. It is worth mentioning that in 2017 and 2018, the sales growth rate of Xincheng Holding exceeded 70%. At present, most of the land reserves of Xincheng Holding are concentrated in the third- and fourth-tier cities. The impaired risk of impaired risks, rising financing costs and surge in liabilities caused by the rapid increase of self-sustaining properties bring many uncertainties to its future operations. 2019, can New Town Holdings continue its rapid growth in 2018?
Big increase in revenue in two-wheel drive mode
From the disclosure of the annual report, the data of Xincheng Holdings is indeed very beautiful.
xxDuring the reporting period, the company's annual operating income was 54.133 billion yuan, an increase of 33.58% year-on-year, of which residential sales revenue was 29.284 billion yuan, commercial complex sales were 21.554 billion yuan, and property rental and management income was 2.213 billion yuan, corresponding to the company's three major Main business: residential, commercial-oriented commercial property, and Wuyue Plaza, which is mainly self-sustained, accounted for 54.1%, 38.82%, and 4.09% of revenue, respectively. As a development company that deepens the third- and fourth-tier cities, the sales of Newtown Holdings’ real estate bull market, which was marked by the monetization of the 3rd and 4th sheds in 2016, finally ushered in the settlement harvest season this year.
It is worth noting that property rental income has grown rapidly and its revenue share has increased year by year, as shown in the above chart. By the end of 2018, the total number of Wuyue Plaza, which has been opened and operated by Xincheng Holdings nationwide, has reached 42. In just 18 years, 19 new ones have been opened. It is estimated that 22 new projects will be opened in 2019. The annual rental and management fee income will be 21.16. 100 million yuan, an increase of 107.4%. The two-wheel drive revenue model of “City Real Estate + Commercial” in New Town Holdings will continue for several years, and the proportion of property rental income will gradually expand.
Is it a blessing or a curse?
Overall, considering the company's land acquisition in 2017 and 2018, respectively, the growth rate of 138.2% and 40.7%, respectively, the overall size of the new town holding TOP10 for the first time is expected to continue to climb in the next few years.
It is worth noting that the inventory turnover rate of Xincheng Holdings in 2018 is only 0.31, which is the lowest level since the company's listing. This is mainly because the company's land acquisition has been strong in recent years, and the inventory and construction inventories have increased, resulting in a decline in inventory turnover. This can be seen from the company's book advance receipts (in 2018, the subject is changed to contract liabilities), the contractual liabilities at the end of 2018 reached 118.231 billion yuan, about twice the revenue.
In terms of land bank, the company's land bank is mainly distributed in the third- and fourth-tier cities with the Yangtze River Delta as the core. According to the statistics of Minsheng Securities in the first half of 2018, the new land holdings of Xincheng Holding accounted for 84% of the third and fourth lines.
In terms of land acquisition, the company added a total of 164 new land reserves for the whole year, with a total construction area of 47.73 million square meters, of which 19.4 million square meters were added to the commercial complex project, and the average floor price of land acquisition was 2,330 yuan/square meter. The amount of land is 111.2 billion yuan (the data of Kerry is 88.38 billion yuan), which is 3.25% higher than that of 2017's 107.7 billion yuan. The growth rate has slowed down remarkably. The land sales accounted for 50% of the sales.
The new city holding cooperation land acquisition project has increased significantly. Among the new projects, the Changshu Shanghu brothel project in Changshu City has the smallest proportion of equity. The equity ratio is only 10.01%. Among the 164 new projects, the equity is 100%. There are only 7 projects, and the proportion of projects with less than 50% equity is as high as 28%. By the end of 2018, minority shareholders' equity and their proportions have rebounded significantly.
As the project is mainly concentrated in the third- and fourth-tier cities, with the end of the monetization bonus of the third- and fourth-tier cities, and the fall of the hometown of the Spring Festival in 2019, the new city holding a large number of land reserves on the 3rd and 4th lines is a blessing. It is still unknown.
Debt surges by 100 billion a year
Along with the big move, it is the scale of the debt that New Town Holdings is rapidly climbing. As of the end of 2018, the total liabilities of Xincheng Holding were 279.362 billion yuan, an increase of 77.32% compared with 157.545 billion yuan at the end of 2017; although the asset-liability ratio declined slightly, it was still as high as 84.57%.