Forest: Across The Cycle, Xuhui'S Change And Invariance

Recently, the land market in Shanghai is hot. With the orderly progress of resumption of work and production, in the first half of this year, the land transfer fee in Shanghai exceeded 100 billion yuan, and even the first 10 billion yuan in a single day appeared.

In this wave of land grabbing tide, all camps of real estate enterprises showed great interest in entering Shanghai. In addition to Vanke, Zhonghai, poly and other leading real estate enterprises, Xuhui, Xincheng, zhaoshang, Jindi, yangyangcheng, Wanda, Zhengrong and other real estate enterprises have also made profits.

In early August, Xuhui Holdings (00884. HK, hereinafter referred to as "Xuhui") and Rongxin won a homestead located in gumeibei community, Qibao town, with a premium rate of 40.55%, a total price of 4.523 billion yuan and a floor price of 54800 yuan / m2.

On August 8, Lin Zhong, chairman of Xuhui board of directors, attended the 20th annual meeting of Boao · 21st century real estate forum. In an exclusive interview with the 21st century economic reporter, Lin Zhong pointed out that there is no so-called window period for land acquisition at present. All of them are opportunities to see every piece of land.

Lin Zhong, chairman of the board of directors of Xuhui holdings. Data map

The reporter noted that under the premise that the total price of land plots in first tier cities such as Beijing and Shanghai tends to be higher, most of the top 20 real estate enterprises tend to cooperate to acquire land in order to disperse the pressure of funds. Basically, developers will cooperate with high price land plots, while low price ones will develop by themselves.

This also includes Xuhui. "Beijing, Shanghai, the future trend of land acquisition is a few real estate enterprises to form a consortium model Lin Zhong pointed out that at present, Xuhui has a proportion of land, which is to take 50% of the sales value of the year. According to public information, Xuhui successively acquired 8 plots in Hangzhou, Nanjing, Suzhou and western cities in July.

Real estate window period disappears

In every market stage, there are enterprises overtaking on the curve. Lin Zhong believes that the real estate industry has passed the period of rapid growth, and there is no so-called window period. In fact, the whole industry has entered a period of stable growth since 2018. The challenge and risk of overtaking on curve are much bigger than those in the period of rapid growth. "The real estate industry requires that we can get twice the result with half the effort if we follow the trend; if we act against the trend, we can get twice the result with half the effort".

In Lin Zhong's eyes, China's real estate industry will continue to improve in the next 20 years. In order to find new quality growth mode in the era of micro profit refinement, many rules of the industry will change in the future, and enterprises need to adapt again. Those enterprises that want to become dark horse must be more difficult and challenging than the last 20 years.

Therefore, there will be a phenomenon in the stable growth period of forest prediction: "it is not easy to catch up with others, and it is not easy for others to chase you.".

"Like the Gobi March, you see him 500 steps ahead, but it takes a long time, even two hours, to catch him. Because everyone's speed is the same, some distances take a long time. If the growth rate is the same, the distance is eternal. " Lin believes that real estate enterprises enter the maturity period in the next 20 years, and the industry pattern they are facing is the same as the current household appliance industry, which is a relatively stable pattern. But he firmly believes that in the next 20 years, there are still opportunities for real estate enterprises. To grasp the opportunities in this industry, we must improve the operation efficiency.

Therefore, Linzhong believes that an enterprise should balance its management means: too low profit is no good, because there will be no accumulation and loss. In order to offset the scale, some enterprises prefer to sell at a loss. This is the consumption of capital, and eventually both people and land will be lost. "Therefore, we should do a good job in balancing. Each enterprise formulates its own different balancing techniques according to its own different stages, different strategies and different goals." Lin said.

In the stable period, the premise of Xuhui's high-quality growth is to make its products and services better. Lin Zhong disclosed that the core is to improve the operating leverage and reduce the financial leverage. While improving the operating efficiency, the financial leverage can not be improved. While improving the equity, the cooperative leverage should be lowered a little, and the investment leverage can be stabilized through the operating leverage. "The change, the efficiency and the mechanism of management are the next."

Xu Hui's four lever balancing techniques

As a representative of medium-sized real estate enterprises, Xuhui stresses the methodology of growth. According to the unverified operation data as of the end of July, Xuhui has achieved a total contract sales amount of 102.72 billion yuan in the first seven months of this year, which is almost the same as that in 2019. In order to improve operational efficiency, Xuhui has set up a set of balancing techniques of financial leverage, cooperative leverage, investment leverage and operating leverage.

"Some companies make full use of financial leverage, and can also achieve rapid development of scale in the period of rapid growth. However, Xuhui develops steadily through the balance of several levers. " Lin Zhong pointed out that in the period of stable growth, it is relatively difficult to go against the trend. Because the state wants to reduce leverage and reduce debt, it is very difficult for enterprises to increase leverage. There are not so many tools and opportunities.

In contrast, Xuhui's performance growth in the past two years, especially in 2019, is mainly due to the balance of the four levers. "No growth, no destruction." But Lin also stressed that growth should take into account the balance of scale, profit and risk.

Lin believes that in the process of growth, how to balance the scale, profit and risk is crucial. For example, sometimes when enterprises lower their profits, it will be easier for them to scale up, because they can take the initiative to lower housing prices; sometimes they can have more financial leverage, invest more, and scale up faster. Lin Zhong further points out that if enterprises grow fast, cash flow ability is strong, asset liquidity is good, payment collection time is short, and debt ratio is slightly higher, it is still safe; if turnover is very slow, for example, some large enterprises in Hong Kong rent property, the net debt ratio of these enterprises will be slightly lower.