Since this year, Country Garden has been downgraded by three major international rating agencies.
Especially since the second half of 2021, the real estate market has experienced great fluctuations, and the profitability of the upstream real estate business has declined significantly.
The company is under great pressure to refinance.
During the economic downturn, the construction industry has been greatly impacted.
The semi annual report loss concern announcement shows that in the first half of 2022, Tengyue Construction’s total operating revenue was 18.169 billion yuan, down 23.65% compared with the same period in 2021; The company’s total profit was RMB – 609 million, down 224.34% year on year.
It is worth noting that this is the first time that Tengyue Construction reported a loss in the first half of the year.
Financial leverage level The analysis of the debt structure in Small Debt Market shows that Tengyue Construction mainly relies on current liabilities, accounting for 82% of the total debt, and the proportion of non current liabilities has risen rapidly.
The real estate industry experienced a severe shock, dragging the upstream and downstream industries into the cold winter.
On the whole, Tengyue Construction’s rigid debt is nearly 10 billion, mainly long-term interest bearing debt, with an interest bearing debt ratio of 18%.
Semi annual report loss On September 19, Lianhe Credit released a notice of concern about the semi annual report loss of Guangdong Tengyue Construction Engineering Co., Ltd.
In terms of asset quality, Tengyue construction receivables and projects that have performed but not settled account for a relatively high proportion, and the time of payment collection for construction business is uncertain..
The main reasons for Tengyue’s construction losses are that the company’s business operation has declined significantly due to the epidemic situation, the gross profit rate of the construction sector, which accounts for a high proportion of its income, has decreased by 3.75 percentage points year-on-year to 3.35% due to the impact of factors such as the small output value of the projects resumed in the first half of the year, the increase in fixed expenditure, and the rising trend in the cost of raw materials and labor costs.
The rating outlook is “stable”.
It is worth noting that the existing bonds of Tengyue Construction are all guaranteed by Country Garden (02007.
According to the statistics of Small Debt Market, currently there are 6 existing bonds of Tengyue Construction, with the existing scale of 7.562 billion yuan, all of which will mature within 1-3 years.
In the first half of the year, the company’s net operating cash flow outflow was 1.703 billion yuan, and its profitability deteriorated rapidly.
In fact, since 2020, the performance of Tengyue Construction has continued to decline.
Net profit attributable to the parent company By 2022, Tengyue Construction had total assets of 73.278 billion yuan, total liabilities of 53.902 billion yuan, net assets of 19.376 billion yuan, and asset liability ratio of 73.56%.
The company’s credit qualification has continued to deteriorate, which may adversely affect the repayment security of the above bonds.
Compared with the scale of short-term debt, Tengyue Construction has abundant liquidity.
In recent years, the financial leverage level of Tengyue Construction has kept rising, which is higher than the average level of the industry, so there is a certain leverage risk.
with a shareholding ratio of 100%, the indirect controlling shareholder is Biguiyuan, and the actual controller of the company is Yang Huiyan.
It can still cover short-term debt after removing restricted funds, and the company has little short-term debt repayment pressure.
01.
Tengyue Construction has an annual construction capacity of more than 15 million square meters, and its business covers 20 provinces and cities, including Guangdong, Jiangsu, Hunan, Hubei, Hainan, Guizhou, Sichuan and Chongqing.
Since 2021, Tengyue has repaid short-term loans after the recovery of construction receivables and commercial acceptance bills.
From the perspective of equity structure on the official website of Tengyue Construction, the direct controlling shareholder of Tengyue Construction is Dongyaokang Investment Co., Ltd.
It is worth noting that in the first half of this year, Tengyue’s construction operating cash, investment cash and financing cash all showed a net outflow.
Deterioration of financial indicators According to public information, Tengyue Construction is the most important real estate construction enterprise under Country Garden, mainly undertaking the construction of real estate development projects under Country Garden Holdings.
At present, the total short-term debt of the company is less than 200 million, and the scale of short-term interest bearing debt is 2.167 billion yuan.
However, in terms of cash flow, the scale of Tengyue’s construction financing activities has shrunk in recent years, and the financing net cash flow has continued to flow out.
02.
In addition to the credit line, Tengyue Construction also has non current liabilities of 9.654 billion yuan, mainly bonds payable, and its long-term interest bearing liabilities totaled 9.669 billion yuan.
In addition, the credit impairment loss of Tengyue Construction in the first half of 2022 was 259 million yuan, and the provision for bad debts in this period increased significantly compared with the same period last year, mainly from the provision for bad debts of receivables.
Note to observer: This article is authorized to be published by the small bond market watcher (ID: little bond).
HK) with unconditional and irrevocable joint and several liability in full.
In terms of reserve funds, as of the end of March 2022, the total credit line of Tengyue Construction has reached 6.298 billion yuan, and the unused credit line has reached 2.836 billion yuan, which shows that the financial flexibility of the company is general.
According to the latest rating report, at present, the credit rating of Tengyue Construction is AA, and the credit rating of related debts is AAA.
From the perspective of financing channels, Tengyue Construction mainly relies on bond financing, in addition, it also finances through accounts receivable, bank loans and equity pledge.
In 2023, Tengyue Construction will have 5.562 billion yuan of bonds that reach the sale back period or mature, and the company may face greater pressure on centralized repayment.
In 2020 and 2021, its net profit attributable to the parent company was 330 million yuan and 236 million yuan, respectively, down 24.95% and 28.7% year on year.
As of the same reporting period, Tengyue Construction’s current liabilities amounted to 44.249 billion yuan, mainly consisting of notes payable, accounts payable, other payables and contractual liabilities.
(hereinafter referred to as “Tengyue Construction”) in 2022.
The scale of short-term loans has declined rapidly.
The ownership structure chart shows that the construction industry is cyclical.
Its monetary capital on the account is 6.003 billion yuan, which is lower than that at the end of 2021.
