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produced by phoenix finance "company observation research institute"丨tu nan

on september 18, real estate developer rongqiao group co., ltd. (hereinafter referred to as "rongqiao group") issued an announcement stating that its subsidiary wuhan rongqiao real estate co., ltd. (hereinafter referred to as "wuhan rongqiao real estate") failed to repay two debts involving a total principal of 2.25 billion yuan to china orient asset management co., ltd. hubei branch (hereinafter referred to as "orient asset") on time. in this regard, rongqiao group stated that it was due to the fact that the progress of its project development and sales was not as expected.

two days later, on september 20, rongqiao group issued another announcement stating that lianjiang zhaochang investment co., ltd. had filed a lawsuit against it, demanding that rongqiao group return the loan principal of about 125 million yuan and pay the corresponding interest. the company issued two default notices within three days, and the relevant entities of the company were restricted from high consumption. this company, which once had the strategic goal of "100 billion in three years" and was one of the top 100 private enterprises in china, is now unable to hold on after a series of "thunderstorms".

nearly 2.4 billion yuan of debt is overdue, and the real estate company "big brother" has difficulty repaying the debt

in the announcement on september 18, rongqiao group disclosed the details of the overdue two debts held by orient assets in wuhan rongqiao real estate as follows. in 2021, orient assets signed an "asset transfer agreement" with chongqing international trust co., ltd. to transfer the principal of 1.05 billion yuan of debts and related rights and interests of chongqing international trust co., ltd. to wuhan rongqiao real estate. as of the announcement date, wuhan rongqiao real estate failed to repay the phased repayment of no less than 200 million yuan in principal on time as agreed.

the september 18 announcement also showed that in 2022, orient assets once again acquired the principal and related rights of 1.2 billion yuan of debts owed by ping an trust co., ltd. to wuhan rongqiao real estate. as of the announcement date, wuhan rongqiao real estate failed to repay the phased repayment of no less than 700 million yuan in principal on time as agreed. rongqiao group analyzed in the announcement that the two debt defaults totaling 2.25 billion yuan are expected to have multiple impacts.

(announcement of rongqiao group co., ltd. on overdue debts of subsidiaries and other matters)

first, orient asset management may declare the debt matured and pursue liability for breach of contract in accordance with the agreement. second, the overdue debt may have an adverse impact on rongqiao group's subsequent production and operation and debt repayment ability. currently, rongqiao group and its chairman and president lin hongxiu have been restricted from high consumption. rongqiao and other parties are communicating with orient asset management on the extension of the debt, but no results have been reached yet.

to make matters worse, within two days, rongqiao group issued another breach of contract announcement on september 20. the announcement showed that lianjiang zhaochang investment co., ltd. filed a lawsuit against rongqiao group as the plaintiff. it required rongqiao group to return the loan principal of about 125 million yuan and pay the corresponding interest. the plaintiff also required rongqiao group to pay liquidated damages, bear attorney fees of about 115,700 yuan, bear litigation costs, and claim priority right of repayment. at present, the first instance of the case has not yet been heard. rongqiao group stated that it will actively respond to the lawsuit and strive for a negotiated solution. it is not difficult to see that the liquidity problem currently faced by rongqiao group has gradually been exposed to the majority of investors.

liquidity problems have been exposed and the capital chain is in crisis

as one of the few real estate developers in fujian that is not listed, rongqiao group’s financing channels are limited. under the great financing pressure in the real estate industry, borrowing from the capital market to expand has become rongqiao group’s main means of financing.

according to the interim report of rongqiao group in 2024, as of june 30, 2024, rongqiao group's consolidated total assets were 41.639 billion yuan, total liabilities were 35.498 billion yuan, and the asset-liability ratio was as high as 85.25%. the asset-liability ratio of country garden, which had previously gone bankrupt, was 84.28% in the latest disclosure. from the perspective of asset structure alone, rongqiao group's current assets totaled 27.138 billion yuan, of which only 614 million yuan was in cash, while inventory was as high as 18.89 billion yuan, accounting for about 70%.

(2024 interim report of rongqiao group co., ltd.)

in addition to the greater risks faced by the asset-liability structure, the reduction in operating income has also exacerbated the debt repayment risk of rongqiao group. as of june 30, 2024, rongqiao group's total operating income was 831 million yuan, a decrease of 2.508 billion yuan from the same period in 2023, a decrease of 75.11%, resulting in a net loss of 789 million yuan. it is worth noting that this is the fourth consecutive year that rongqiao group has incurred losses since 2021.

according to the financial statements of rongqiao group in 2021, 2022 and 2023, the group's net losses were 119 million yuan, 9.342 billion yuan and 4.844 billion yuan respectively. with high leverage, a sharp drop in sales and a shortage of funds, the once brilliant real estate giant is now in a dilemma of liquidity risk after its prosperity.

the “thirty years of hexi” of a benchmark overseas chinese-funded enterprise

in 1989, the famous chinese entrepreneur lin wenjing founded rongqiao group in fuzhou, china. "fuzhou is half the history of rongqiao", this sentence reflects the important position of rongqiao group in the development of fuzhou city. "top ten influential enterprises in china's real estate industry" and "top 100 private enterprises in china" were also excellent labels of rongqiao group.

(lin hongxiu, chairman and president of rongqiao group co., ltd.)

today, rongqiao group has been inherited by lin hongxiu, the eldest son of lin wenjing. in the past ten years, under the leadership of lin hongxiu, rongqiao group has increased its leverage and expanded its land. as rongqiao group frequently goes bankrupt, the negative effects of aggressive leverage to acquire land are gradually emerging. whether rongqiao group will change its development strategy in the future and return to its original steady pace will also be the focus of attention from all walks of life.