On July 26, Gemdale Group (600383), one of the traditional real estate leaders “insurance and insurance”, successfully issued a 1.7 billion yuan asset-backed special plan. At the same time, Gemdale Group has remitted USD 205 million into its foreign account on the 26th to pay the principal and interest of the USD bonds due on the same day. In the next two years, Gemdale Group has no overseas bonds to repay.
In 2022, the real estate industry has experienced unprecedented challenges, with a sharp drop in the sales of commercial housing and frequent industry credit risks. Under the severe situation, Gemdale Group achieved balanced development through prudent business strategy and prudent financial management. On July 26, Shenwan Real Estate Index rose 3.82%, Gemdale Group rose 8.17%, with a total market value of 55.6 billion yuan.
No overseas bonds to be repaid in the past two years
On July 26, Gemdale Group successfully established the “CICC-Gemdale Plaza Phase I Asset Support Special Plan”, which was listed on the Shanghai Stock Exchange. The underlying assets of this project are Gemdale Commercial Properties Shanghai Jiuting Gemdale Plaza and Beijing Sohu Internet Building, with CICC as the plan manager, the issuance scale is 1.7 billion yuan, of which the priority scale is 1.69 billion yuan, the credit rating is AAA, and the term is 18 years. The issue rate is 4.8%.
Gemdale Group stated that the scale of this special plan is at the forefront of the recent open market financing products of real estate companies, demonstrating the capital market’s confidence in Gemdale Group’s main body credit and steady development, as well as its recognition of Gemdale’s commercial property management capabilities.
At the same time, Gemdale Group has remitted US$205 million to its foreign account on the 26th to pay the principal and interest of the US dollar bonds due on the same day.
So far this year, Gemdale has completed the repayment of bonds due in domestic and overseas open markets in full and on schedule for many times. These include the completion of the redemption of 1.28 billion yuan of corporate bonds in March, the completion of the redemption of principal and interest of an overseas bond totaling US$257 million in principal and interest in June, the completion of the redemption of principal and interest of 1.576 billion yuan of medium-term notes on July 5, and the completion of two transactions on July 13. 4.163 billion yuan of principal and interest of corporate bonds were repaid, showing good liquidity and strong solvency.
After the principal and interest of the above-mentioned bonds are repaid, Gemdale Group has no overseas bonds to be repaid in the past two years, except for the last bond due in August 2024 totaling US$480 million. In terms of domestic bonds, there is only one corporate bond of 2.726 billion yuan that will mature in October this year. Gemdale said that it has made arrangements for the repayment of all due debts in the next year.
In terms of bank credit, as of December 31, 2021, Gemdale Group has an unused credit line of 158.9 billion yuan, which reflects the company’s strong ability to resist liquidity risks.
Stable rating confirmed by rating agency unchanged
Affected by various risk events in China’s real estate industry in the past year, many real estate companies have suffered downgrades or outlooks by rating agencies.However, in the past two months, Gemdale Group has been unanimously recognized by credit rating agencies.
Rating service agency Standard & Poor’s announced on July 26 that it maintains Gemdale’s “BB” long-term corporate credit rating based on the company’s sufficient land reserves, better-than-industry sales performance and sufficient liquidity.
Standard & Poor’s said: Gemdale’s rating reflects the company’s ample land bank, strategic focus on high-energy urban development, and ample liquidity supported by solid banking relationships. Gemdale Group currently has enough land reserves to maintain its development needs for at least the next four years. Based on this, Gemdale adjusted its land investment strategy in the first half of this year, believing that it can effectively control its debt growth from 2022 to 2023.
Standard & Poor’s believes that given Gemdale’s focus on high-energy urban development, especially in the Yangtze River Delta region, its sales performance is expected to continue to outperform the industry average. In terms of liquidity, thanks to Gemdale’s effective centralized cash management system and solid bank relationship support, Gemdale’s parent company holds a large amount of cash, and against the backdrop of more difficult financing channels for Chinese developers in the first half of 2022, Gemdale is still Access to bank financing and maintain adequate liquidity. These factors support its “BB” rating unchanged.
On May 12 this year, Moody’s affirmed Gemdale Group’s “Ba2” rating with a stable outlook. On June 22, the domestic rating agency Lianhe Credit confirmed to maintain Gemdale Group’s “AAA” long-term credit rating.
In terms of sales data, Gemdale Group achieved sales of 28.3 billion yuan in June this year, and accumulated sales of 100.6 billion yuan in the first half of the year. Its sales performance was better than the average level of the top 100 in the industry.
In terms of financial leverage, as of the end of 2021, Gemdale Group’s cash short-term debt ratio was 1.4 times, the asset-liability ratio after deducting advance receipts was 67.6%, and the net debt ratio was 55.2%. It has been in the “green” category for 6 consecutive years.