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Yangtze Business Daily News● Yangtze Business Daily reporter Jiang Chuya

Jinke Holdings, which is actively promoting restructuring and debt reduction, has not yet resolved its operational risks.

On July 10, Jinke Holdings (000656.SZ) announced that it expects the net profit attributable to shareholders of the listed company (hereinafter referred to as "net profit") in the first half of this year to be a loss of 1.5 billion to 2.5 billion yuan, compared with a loss of 1.94 billion yuan in the same period last year; the net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") is expected to be a loss of 800 million to 1.8 billion yuan, compared with a loss of 1.08 billion yuan in the same period last year.

A reporter from the Yangtze Business Daily noticed that in 2022 and 2023, Jinke Holdings' net profit loss was 21.39 billion yuan and 8.732 billion yuan respectively. Combined with the loss in the first half of 2024, its cumulative loss in two and a half years exceeded 31.6 billion yuan.

As losses intensify, the company's debt crisis has not yet been resolved. The financial report shows that from 2021 to 2023, its debt-to-asset ratio will be 79.07%, 87.02% and 90.80% respectively, and will further rise to 91.06% in the first half of 2024.

As of April 30, 2023, Jinke Holdings had interest-bearing liabilities of RMB 73.693 billion, of which RMB 47.301 billion was due within one year. During the same period, the company had only RMB 11.64 billion in cash and cash equivalents.

Jinke Holdings stated that in the face of challenges, the company has adopted a working strategy of "three guarantees and one promotion", namely, ensuring delivery of houses, ensuring stability, protecting assets, and promoting transformation and upgrading, in order to focus on operating cost reduction and efficiency improvement and resolve liquidity risks.

Since the launch of the "Guaranteed Delivery of Buildings" project in 2022, Jinke has delivered a total of 254,000 units and a total area of ​​38.48 million square meters. The progress of "Guaranteed Delivery of Buildings" is far higher than the industry average. In the first half of 2024, the company delivered approximately 26,500 residential and commercial units with a total area of ​​approximately 4.21 million square meters.

It is worth mentioning that Jinke Holdings has successfully entered the reorganization procedure and is the first national listed real estate company in the A-share market to have been accepted for reorganization by the court since 2024.

The industry believes that if Jinke Holdings successfully implements the restructuring and completes the restructuring plan, it will be beneficial to optimize the company's asset-liability structure and significantly enhance the company's sustainable operations and profitability.

Continued losses and rising debt-to-asset ratio

Jinke Holdings is known as the "King of the Southwest" in the industry. Its sales exceeded 100 billion yuan for the first time in 2018, and its revenue exceeded 100 billion yuan in 2021. However, since 2022, Jinke has suffered large losses and fallen into a liquidity crisis.

In 2022, Jinke Holdings achieved operating income of 54.86 billion yuan and net profit of -21.39 billion yuan, down 51.15% and 694.13% year-on-year respectively. In 2023, the company's operating income increased slightly, but its net profit was still a loss of 8.732 billion yuan.

In the first quarter of 2024, the company's operating income was 7.504 billion yuan and its net profit was -1.116 billion yuan, down 24.59% and 293.12% year-on-year respectively.

On July 10, Jinke Holdings released its 2024 first half performance forecast, and the company expects its net profit from January to June 2024 to be between -1.5 billion yuan and -2.5 billion yuan, and its non-net profit to be between -800 million yuan and -1.8 billion yuan. In the same period of 2023, the company's net profit was -1.94 billion yuan, and its non-net profit was -1.077 billion yuan.

Jinke said that the reasons for the performance changes were mainly attributed to the impact of the industry environment and the company's own operating conditions, including a decrease in the delivery volume of real estate projects, a decrease in carried-over income, a decrease in interest capitalization projects, an increase in interest expenses, and losses such as the provision of liquidated damages.

In terms of debt, as of April 30, 2023, Jinke's interest-bearing liabilities amounted to 73.693 billion yuan, of which 47.301 billion yuan were due within one year. During the same period, the monetary funds were only 11.64 billion yuan. The financial report shows that from 2021 to 2023, its debt-to-asset ratio was 79.07%, 87.02%, and 90.80%, respectively, and further increased to 91.06% in the first half of 2024.

According to the court's investigation, Jinke Holdings is currently unable to repay its matured debts. Although its book assets are greater than its liabilities, its existing working capital is seriously insufficient and its main assets are difficult to liquidate. It can be determined that it clearly lacks the ability to repay.

Jinke shares also face a lot of litigation and arbitration issues. On June 28, Jinke shares announced that as of now, in addition to the litigation and arbitration cases that have been disclosed, the company and its holding subsidiaries have received new litigation and arbitration cases totaling 617 million yuan, accounting for 17.59% of the company's latest audited net assets.

It is reported that the above-mentioned litigation and arbitration cases involve financial loan contract disputes, construction project contract disputes, commercial housing sales contract disputes, joint venture contract disputes, labor disputes and other types.

Promote restructuring and introduce strategic investment and insurance delivery

Faced with huge losses and liquidity risks, Jinke Holdings chose to reorganize.

On July 31 last year, the company's board of directors and supervisory board approved the proposal to apply to the court for reorganization and pre-reorganization. In February this year, the company formally applied to the Chongqing Fifth Intermediate Court, and in April, the Chongqing Fifth Intermediate Court ruled to accept the application. Jinke Holdings has thus become the first real estate company with a market value of hundreds of billions of yuan in the A-share market to actively apply for reorganization. The industry believes that if Jinke Holdings successfully implements the reorganization and completes the reorganization plan, it will be conducive to optimizing the company's asset-liability structure and significantly improving the company's sustainable operation and profitability.

As the company was ordered by the court to undergo reorganization, Jinke Holdings announced that it would be subject to a delisting risk warning starting from April 24, 2024, and the stock abbreviation would be changed from "Jinke Holdings" to "*ST Jinke".

At present, the company's restructuring has received strong support from many parties, and the introduction of strategic investors has been progressing in an orderly manner. The company has signed a strategic investment framework agreement with Great Wall Guofu Real Estate Co., Ltd. and will actively promote related work and introduce strategic investors in the future.

After Jinke Holdings issued an announcement on market-based recruitment and selection of restructuring investors on June 25, the manager has received a letter of intent from CICC Capital Operation Co., Ltd. to participate in the restructuring investment. CICC Capital expressed its intention to join hands with cooperative institutions to participate in the restructuring investment of listed companies as a restructuring investor.

Jinke Holdings stated that in the face of challenges, the company has adopted a working strategy of "three guarantees and one promotion", namely, ensuring delivery of houses, ensuring stability, protecting assets, and promoting transformation and upgrading, in order to focus on operating costs reduction and efficiency improvement, strengthen financial balance, enhance sustainable operating capabilities, and resolve liquidity risks.

In terms of financing, Jinke Holdings has been communicating with various financial institutions. Since the Ministry of Housing and Urban-Rural Development and the State Administration of Financial Supervision jointly issued a white list mechanism to promote real estate financing, the company has actively applied for and sought support from financial institutions. So far, the company has 86 projects in 15 provinces (autonomous regions and municipalities) across the country on the white list, of which 14 projects have been approved for 496 million yuan and 9 projects have received 281 million yuan.

In addition, since June, Jinke Holdings' controlling shareholder, Jinke Holdings, has continued to implement its share purchase plan. As of July 1, the designated purchase entity of Jinke Holdings has accumulated 34.9806 million shares of the company, accounting for 0.65% of the company's total share capital, with a total transaction amount of RMB 36.273 million.

Jinke Holdings has always regarded ensuring delivery as its primary business task. Since the launch of the "Ensuring Delivery of Buildings" work in 2022, the company has delivered a total of 254,000 units and a total area of ​​38.48 million square meters. The progress of "Ensuring Delivery of Buildings" is far higher than the industry average.

In the first half of 2024, Jinke Holdings completed the delivery of 86 projects in 56 cities, delivering about 26,500 residential and commercial units with a total area of ​​about 4.21 million square meters. According to the company's plan, the delivery area in 2024 will be no less than 12 million square meters, the number of units delivered will be no less than 75,000, and the delivery rate will be above 92%, striving to reach 95%.

Jinke Holdings has also expanded its industrial layout. In June 2023, Jinke Holdings announced that it plans to purchase a 20% stake in Hengsheng Daye held by Keyi Microfinance, a holding subsidiary of its controlling shareholder Jinke Holdings, by issuing shares. After the transaction is completed, Hengsheng Daye will become an important shareholding subsidiary of the company, and the company will achieve industrial synergy of "real estate + construction technology".