Li Yige Column, Some Housing Prices Have Not Yet Given Up The Scale Of Obsession.

Yi Ge Li

Recently, I asked some real estate practitioners a question: did the boss cut the performance target this year after the epidemic? It's almost all the same: No.

Overall, the annual sales task of Housing enterprises has been basically determined and issued before the Spring Festival holiday. At that time, the vast majority of Housing enterprises did not expect the new crown pneumonia epidemic will be so serious, or in accordance with the general market trend of operation to make a judgement and formulate the 2020 plan. But why has not changed the original plan since the epidemic has been blocked at home for so long?

Because developers generally agree on the property market this year, that is, in various industries, the impact of the epidemic on real estate is relatively small, and the recovery is faster. After March, the sales offices of the local sales offices can be seen. Even the property market has been sold out for half a day.

In fact, the first wave of sales after the opening of the sales office in March was a concentrated release after repression. It can be understood that these consumers were originally prepared to buy a house, but were delayed by the epidemic. The demand for more than two months is released in one month, compared with February, which is not comparable. And the purchase of individual properties is only a case. In the bad market, there are "stocks" limit, and there is also the differentiation of regional performance.

March is the time when more annual reports of listed housing enterprises are released. I do not know whether it is affected by the market warming or observing the trend of the industry. We have come to an optimistic conclusion. In addition to the above, the owners of Housing enterprises have generally insisted that the task is not relaxed, and some housing companies have suggested that they can be regarded as a radical short-term performance goal.

I will not tell the names of these enterprises. Anyway, the characteristic is to rush to the scale and run to the rank. The reason why their goal is "radical" is that most of the mainstream housing companies have abandoned the scale theory, which can maintain positive growth or a few percent growth. A small number of housing companies hope to keep pace with the growth of their array.

The goal of radical housing prices is much higher than the average growth rate of the array. In the current situation, we have this confidence. In addition to the factors such as layout, cash flow, talents and so on, there is another judgement that the epidemic provides opportunities for overtaking corners.

As mentioned earlier, the new crown epidemic has had different effects on almost all industries outside the medical industry, but the impact of real estate may be smaller. The epidemic only delayed the transaction, and did not eliminate housing demand, especially rigid demand. Therefore, whether the epidemic has aggravated the driving force of a number of housing prices and become an opportunity for other enterprises to go ahead is still to be proved.

In fact, since the adjustment of the property market in the second half of 2018, a number of Housing enterprises, especially small and medium-sized Housing enterprises, have encountered difficulties in cash flow. Some of these difficult companies or their projects are mergers and acquisitions of large housing companies. For example, in the evening of April 7th, China's Austrian garden announced that it intends to buy 29.99% capital stock of Beijing Han stock by 1 billion 160 million yuan. After the completion of the acquisition, the Austrian garden will become the largest shareholder of Beijing Han shares.

On the face of it, this is the first case of a well-known Housing Enterprise Merger under the influence of the epidemic. But after consulting the public information, we will find that the Beijing Han share has been going downhill for a long time. The 2016-2019 year performance has been declining continuously, and the net profit of the first three quarters of last year has even lost about 40000000 yuan. Obviously, the merger can not be classified as the result of the epidemic.

Over the past 10 years before June 2018, real estate companies have been living very well. This has led some housing companies to have an illusion that they are making great decisions, but in fact it is likely that the industry and market will carry them forward, and the speed of development will mask the inherent defects of enterprises. When the market is really down, all their short boards are exposed.

In the early years of every regulation, public opinion likes to say "big shuffle". But why is it only a round of shuffling? The main reason may be that the speculative demand for real estate has been squeezed out under the severe restriction of the purchase price and the loan price fixing. The external lifting power is no longer relying on internal strength and strength, and some housing enterprises have been defeated.

The consensus of experts is that the number of Housing enterprises in China is still too large and needs to be eliminated. It is not a bad thing to concentrate market share on the hands of quality enterprises. M & A is an important way to enhance the concentration of mainstream housing companies. We should be happy to see its success.

I have said many times that China's real estate market still has a long development period, because it is only a rigid demand for housing and a substantial demand for improvement, which is enough to support the steady growth of a number of mainstream Housing enterprises. However, the growth of mainstream housing prices is, to a certain extent, a group of poorly managed enterprises withdrawing from the market and giving away their share as consideration.

However, when the overall development of the industry has slowed down, it is another matter that housing companies still have to pursue extraordinary growth. Scale often means leverage, and supernormal scale growth means extraordinary leverage. The opportunity for mergers and acquisitions is normal. But it is worrying that we should tighten up our finances, pry up our leverage, and do a lot to look for M & A targets.

High leverage must be characterized by high turnover. Although rigid demand and improved demand will not disappear, they will slow down. In the market where black swans suddenly fly out, you can not predict whether such delaying is 2 months or 6 months. The longer the delay, the greater the pressure of transmission to leverage. Sacrificing profits is a trivial matter. If the cost of the harvest is that the enterprise has to adjust for a year or two, the losses caused may offset your efforts in the past 5 years.

So my personal suggestion is safety. Cash flow to ensure absolute safety, product competitiveness, brand connotation, service no obvious flaws, this should be the next phase of housing prices must adhere to the principle. On this basis, we will seek quality growth. Or that sentence, in addition to the boss, how many people are now concerned about which housing enterprises scale first, which housing prices eleventh?

To add a word, the housing prices of more than 100 billion or above should be encouraged if there is a spare effort to find a new competitive track outside the main business of real estate development.