Viewpoint Network Since the launch of the “Third Arrow” in the fourth quarter of last year, the real estate market has started a wave of fixed increase financing. After Poly Development’s 12.5 billion yuan fixed increase was accepted, Vanke’s 15 billion yuan fixed increase plan also surfaced.
On February 12, Vanke released the 2023 non-public offering of A shares stock plan, saying that the company plans to carry out private placement to no more than 35 specific objects, the total amount of funds raised will not exceed 15 billion yuan, and the number of issued shares will not exceed 1.1 billion. Accounting for 9.46% of the current total share capital.
According to Guandian New Media, the issue price of this non-public offering is not lower than 80% of the average trading price of Vanke’s A shares in the 20 trading days before the pricing base date (excluding the pricing base date).
Currently, Vanke has a total share capital of 11.631 billion shares and 9.717 billion shares in circulation. On February 10, the closing price of Vanke A shares was 17.67 yuan per share, and the average price on the 20th was 18.27 yuan per share.
If the additional issue is carried out at the current price level, there will be a situation where the additional issue price is lower than Vanke’s net assets per share of 20.73 yuan. For Vanke, which has already fallen below its net worth, additional issuance at an underestimated node is also likely to cause dissatisfaction among small and medium shareholders.
As of February 12, Vanke’s non-public offering has not yet confirmed its target audience. At the same time, it is worth noting that although Vanke’s fixed increase was proposed by the major shareholder Shenzhen Metro and limited by the refinancing rules, Shenzhen Metro was not among the targets of additional issuance determined in advance.
According to the “Implementation Rules for the Non-public Issuance of Stocks of Listed Companies” implemented in 2020, the largest shareholder who is not a controlling shareholder is not an issuer that the board of directors can determine in advance.
Shenzhen Railway Group holds 3.243 billion shares of Vanke, accounting for 27.88% of the total share capital, and is the largest shareholder of Vanke. Even if it intends to participate in the fixed increase, Shenzhen Railway, as the largest shareholder of Vanke but not the controlling shareholder, cannot be identified in advance as an issuer at the current stage.
Vanke’s non-executive director and general manager of Shenzhen Railway and Huang Liping mentioned at Vanke’s extraordinary shareholders’ meeting on December 16, 2022 that Shenzhen Metro supports all measures that are conducive to the healthy development of Vanke. “We believe that equity financing at this point in time will help Vanke seize current development opportunities for the future and bring about better development.”
Whether Shenzhen Metro will participate in the private placement is still attracting the attention of the market, but it is a surprise that Vanke chose the A-share private placement.
In comparison, authorized allotment of H shares is more convenient and faster. The board of directors only needs to obtain the routine general authorization of the annual general meeting of shareholders, and the time interval from the last issuance of shares is not less than 12 months, and it can place shares on its own without regulatory approval. The process of A-share fixed increase is relatively lengthy, and the lock-up period for large-scale funds is often extended from one year to three years.
Judging from past financing, Vanke has more experience in H-share allotment.
In April 2019, Vanke allotted 263 million shares at HK$2.968 per share, raising HK$7.81 billion; in June 2020, it allotted 316 million shares at HK$25 per share, raising HK$7.89 billion.
Vanke stated that the purpose of this non-public offering is, on the one hand, to respond to the call of the national policy, solidly promote the high-quality construction of the project, and help the company transition to a new development model; Its own capital structure further enhances its financial strength and anti-risk ability, laying the foundation for the subsequent long-term stable development.
Specifically, the projects invested by the raised funds involve Zhongshan Jinyu International, Guangzhou Jinmao Vanke Charming City, Zhuhai Maritime City, Hangzhou Xingtu Guangnianxuan, Zhengzhou Cuiwan Midtown, Zhengzhou Future Time, Chongqing Starlight Sky City, Chengdu Jingrong City, Xi’an Vanke Dongwang, Changchun Xiwanghui, Anshan High-tech Vanke City, the remaining 4.5 billion yuan will be used to supplement working capital.
Zhongshan Jinyu International, Zhengzhou Cuiwan Zhongcheng, Chongqing Starlight Sky City, Xi’an Vanke Dongwang and Anshan High-tech Vanke City plan to invest no less than 1 billion yuan, and the project investment yields are 9.57%, 7.17%, 13.64%, respectively. 7.91% and 4.94%, the first four projects are scheduled to start delivery in 2023 and 2024.
But there are also some low-yield projects, such as the Guangzhou Jinmao Vanke Charm City project located in the Xintang section of Zengcheng, Guangzhou. The estimated net sales margin is only 3.32%, and the project yield is 3.49%, which is the lowest-yielding project among the projects raised this time. . In contrast, the Changchunxi Wanghui project is slightly higher, and the net sales rate is expected to be 3.50%, corresponding to a yield of 3.80%.
The inflow of 10.5 billion yuan into real estate projects will provide a certain guarantee for the sustainable development of the business. This is also the second 10-billion-level transaction released by Vanke within this month. On January 16, Vanke and China Construction Bank announced the establishment of a 10 billion yuan Jianwan Housing Leasing Fund, which will mainly invest in the stock assets of Vanke.
The financial risk reminder may give a glimpse of Vanke’s pressure.
According to the data, as of the end of 2019, the end of 2020, the end of 2021 and September 30, 2022, Vanke’s consolidated asset-liability ratios were 84.36%, 81.28%, 79.74% and 77.85%, respectively, and the asset-liability ratios were relatively high.
As of September 30, 2022, Vanke’s net inventory was 982.184 billion yuan, accounting for 53.59% of total assets, and the scale of inventory and the proportion of total assets were relatively high. If the real estate industry is sluggish in the future, the profit of the project will decline or the development of the project cannot be completed smoothly, Vanke will face the risk of inventory price loss, which will have an impact on profitability.
In January 2023, Vanke achieved a contracted sales area of 1.673 million square meters, and a contracted sales amount of 28.63 billion yuan, a year-on-year decrease of 20.6% and 19.6%, and a decrease from December. Kaiyuan Securities believes that Vanke’s sales data is expected to stabilize and rebound in the second quarter under the expectation of the opening of purchase restrictions in high-energy cities and the decline in mortgage interest rates.
In addition, Vanke released an announcement on shareholder dividend return planning for the next three years (2023-2025).
The announcement shows that in the next three years, Vanke will continue to focus on cash dividends and shareholder returns. Under the condition of meeting the capital needs of the company’s normal production and operation, it plans to distribute profits in cash every year. Not less than 30% of the distributable profits realized in the year .
According to Guandian New Media, the dividend rate announced by Vanke in the past year has basically been above 35%. In 2021, Vanke’s cash dividend ratio will even reach 50.06%.