sino-ocean group's losses narrowed in the first half of the year, saying that "the real estate market still faces great challenges"
2024-08-29
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
china overseas land & investment, which is promoting overseas debt restructuring, disclosed its performance data for the first half of the year.
according to cosco's announcement on august 28, the group's contracted sales in the first half of 2024 were 18.33 billion yuan, a year-on-year decrease of 49%; turnover was 13.313 billion yuan, a year-on-year decrease of 36%; gross profit was 297 million yuan, and the gross profit margin was only 2%; the loss attributable to the company's shareholders was 5.382 billion yuan, a year-on-year decrease of 71%; basic and diluted loss per share was 0.707 yuan.
regarding the reasons for the year-on-year decrease in losses in the first half of the year, china overseas land & investment stated that it was mainly due to the reduction in impairment provisions for property projects in the first half of the year and the reduction in the share of losses of joint ventures and associated companies.
sino-ocean's main business is still real estate development. among its turnover of 13.313 billion yuan in the first half of the year, property development business maintained the largest contribution, with turnover accounting for about 77% of the total turnover. among them, property development income from beijing, bohai rim, east china, south china, central china and west china accounted for 9%, 18%, 38%, 15%, 13% and 7% respectively.
therefore, the trend of the real estate market has a significant impact on its performance. in the view of sino-ocean group, the central government issued a package of policy measures in the first half of the year and encouraged state-owned enterprises to digest the existing real estate. the policy has changed positively, but it will take some time for the market to recover. real estate companies are generally affected by the reduction of sales proceeds, difficulties in asset disposal and refinancing, facing greater risks and challenges, and the industry continues to clear out.
sino-ocean also faces the above situation. affected by the overall downturn in the domestic real estate market, the total contracted sales of sino-ocean and its joint ventures and associated companies in the first half of the year were 18.33 billion yuan, down about 49% year-on-year; the average sales price fell by about 9% to 13,400 yuan per square meter, mainly due to the real estate market recovery not as expected, the overall sales price decline, and the small number of new projects in first-tier cities.
as sales slumped, sino-ocean's land reserves were also shrinking. in the first half of the year, sino-ocean and its joint ventures and associated companies did not purchase any new land, and the land reserves at the end of the period fell to about 34.139 million square meters, and the equity portion of the land reserves fell accordingly to 17.983 million square meters.
in terms of profitability, china overseas group's gross profit in the first half of the year was 297 million yuan, with a gross profit margin of approximately 2%. the gross profit failed to record a significant recovery during the period, mainly because the overall domestic real estate market atmosphere remained sluggish, the group's revenue declined, and the industry's gross profit margin did not improve significantly.
in addition, cosco's other losses (net) in the first half of the year were rmb 479 million, mainly including fair value losses on financial assets and financial liabilities measured at fair value through profit or loss and losses on the sale of interests in subsidiaries; a net impairment loss on financial assets of rmb 297 million was recorded; and an impairment loss on assets held for sale of rmb 1.707 billion was recorded due to the group's arrangement to sell its equity and debt in a joint venture.
in order to cut expenses, the number of employees of sino-ocean group decreased significantly in the first half of the year, with a total of 12,798 employees at the end of the period, and 13,942 at the end of 2023. the reduction in the number of employees was mainly due to its continued streamlining of personnel related to the development business. during the period, the group's employee salary expenses also fell to 1.182 billion yuan, compared with 1.187 billion yuan in the same period of 2023, mainly due to the decline in employee salary expenses in the development business segment.
in terms of assets and liabilities, as of the end of the reporting period, sino-ocean group's net debt ratio was as high as 650%, and it was 438% as of december 31, 2023. the increase in the net debt ratio was mainly due to the deep adjustment of the real estate market in the first half of the year. due to the combined effects of extreme factors such as reduced sales proceeds, difficulties in asset sales, and severe industry financing environment, the overall industry profits were eroded, and the speed of capital recovery was still slow, which led to an increase in the net debt ratio.
at the same time, the group's total cash resources (including cash and cash equivalents, and restricted bank deposits) totaled 4.709 billion yuan at the end of the period. sino-ocean said that in the second half of 2024, as domestic policies to stimulate the real estate market are introduced one after another, the group will continue to actively resolve debt risks, continue to focus on the delivery and collection of property development projects, and improve the net debt ratio.
based on the above, sino-ocean group admitted that the internal funds of the group are gradually shrinking and it is also facing liquidity pressure due to limited access to external capital to finance construction projects. compared with the past, the group may face more challenges in generating operating cash flow or refinancing secured notes, corporate bonds and bank and other loans.
the auditor said that it would not make a conclusion on sino-ocean's interim financial statements. the auditor said that as of mid-2024, sino-ocean recorded a net loss of approximately 5.32 billion yuan, with total borrowings of approximately 96.67 billion yuan, of which current borrowings were approximately 58.71 billion yuan, while cash and cash equivalents were only approximately 1.71 billion yuan; in addition, it also involved a number of payable loans, delayed project delivery and litigation cases, indicating that there are significant uncertainties, which may raise significant questions about continued operations.
at present, what sino-ocean urgently needs to promote is the restructuring of its offshore debts. on july 18, 2024, sino-ocean announced a proposal for overall debt management, with the restructuring scope covering several existing offshore debt instruments, including existing syndicated loans, an existing bilateral loan and several existing offshore us dollar securities, with a total outstanding principal amount of approximately us$5.636 billion, in order to promote the overall restructuring of its offshore debts.
the announcement stated that this restructuring is based on the draft liquidation analysis report issued by an independent liquidation analysis service agency, which divides creditors into four categories and allocates new loans or notes (new debts) in a prescribed proportion. for the remaining debt after deducting the new debts, creditors can choose to issue two-year mandatory convertible bonds (mcbs) or 1% interest-bearing new perpetual securities (perpetual securities).
after the successful implementation of the restructuring plan, sino-ocean group will issue new debt with a total principal amount of us$2.2 billion, with a term of 8 years, which will be repaid in different proportions starting from the 3rd year until the 8th year. however, there is an extension mechanism based on the returns of specific projects and the performance of the group, and sino-ocean group will repay the loan starting from the 4th year until the 10th year.
it is reported that as of august 22, 2024, holders of 72.5% of group a debt have joined the restructuring support agreement. "according to the company's understanding, many other creditors support the restructuring plan and are undergoing internal procedures to join the restructuring support agreement." sino-ocean expressed its sincere gratitude to the creditors for their support and encouraged and invited the remaining creditors to join the restructuring support agreement as soon as possible.
(this article comes from china business network)
