Date：30 April, 2022 2
Source: http://www.guandian.cn
guandian.cn “The freezing point of the market, or the worst situation has been over.” According to investors who participated in the LVGEM China Investor Conference on April 29, Mr.Jacus Chan, the CFO of LVGEM China, stated at the meeting.
As a real estate company holding the renovation project of Baishizhou in Shenzhen, the Greater Bay Area, LVGEM China is about to enter the harvest period.
“Standing at this point of time today, the Baishizhou Project has now officially set sail after years of cultivation.” According to the investor, who relayed the words of the management, the Phase I of the pre-sale site at Baishizhou has all four permits in place and is under construction, with pre-sale expected to commence in 2023.
Baishizhou Project under Construction
According to the new media (http://www.guandian.cn), the project is located in the core area of Shenzhen’s Nanshan District, north of Shennan Avenue, with an overall site area of about 460,000 square meters and a total construction area of about 5 million square meters, with a capacity area of approximately 3.58 million square meters.
At present, the Baishizhou Project can be considered as the largest and most concerned Urban Renewal Project in Shenzhen. It is reported that the price of the surrounding properties of the same level is as high as RMB150,000 per square meter, distributed with 4 metro lines and 6 metro stations.
It is worth noting that in in the planning of LVGEM China, Baishizhou Project is divided into four phases of rolling development, with a combined development cycle of approximately 8 to 10 years. After deducting the counter-signed area, the saleable area of LVGEM China is approximately 1.8 million square meters, with a distribution of residential, flats and commercial offices, with each of these three components accounting for 1/3 of the total.
In 2021, LVGEM China has completed the 100% signing of the Phase I, the implementation entity has been confirmed, and the Phase I has officially started construction. At present, Phase I has now been completely demolished, the foundation and earthwork has been completed, and Phase I has entered the main construction phase.
In addition, the signing rate of Liguang Project and Mangrove Bay No. 1 Project has also reached 100%. Among them, the main entity of the implementation of Mangrove Bay No. 1 Project has been confirmed, and foundation support, and earthwork construction have been started.
The Liguang Project has a volume of about 200,000 square meters, and LVGEM China expects that the project can be pre-sold before Baishizhou, or can be launched on the market in the first quarter of 2023; the LVGEM Royal Bay Project opened for pre-sales in September 2021, with about RMB6 billion to RMB7 billion of values left at present.
It is worth noting that some investors at the meeting asked if there would be new project plans in the near future. The management said that the existing land reserves of LVGEM exceeded 16 million square meters, and there were currently no newly-added renovation projects.
Apart from the Baishizhou label, what remains on LVGEM China is the goal of “turning green”. In this regard, the management said that the management of the three red lines is the same as that in 2021. The two lines of assets-to-liabilities ratio and net gearing ratio after excluding advance receipts have reached the standard, and only the cash to short-term debt ratio has not reached the standard for the time being.
The data provided shows that LVGEM China currently has a cash to short-term debt ratio of 0.68, which is below 1, a net gearing ratio of 81.2%, which is less than 100%, and assets-to-liabilities ratio of 64.8%, excluding pre-receipts, which is less than 70%.
As for when to “turn green”, LVGEM China expects to enter the green stage smoothly in 2023. The pre-sale of Baishizhou and Liguang Projects will bring certain income and cash flow. In addition, it will also implement an active refinancing policy and optimize the debt structure.
Not Taking New Projects
The investor relayed that LVGEM China further disclosed its assets and liabilities at the meeting, and the debt structure was relatively clearer from the figures.
Among LVGEM China’s RMB31.1 billion interest-bearing indebtedness, 80% belonged to bank and other project loans, and 20% belonged to public offerings, corporate bonds and convertible bonds. In terms of the interest-bearing indebtedness due within one year, the management of LVGEM China stated that the RMB9.8 billion interest-bearing indebtedness were mainly divided into three parts, including bank and other loans, convertible bonds and domestic small public offerings.
Specifically, RMB1 billion of bank and other loans were development loans due for rigid payment, while the remaining loans under outbound guarantee, project loans/property loans, etc. were basically secured by collateral, and there was a great chance of successful refinancing; the convertible bonds amounted to RMB1.46 billion and domestic small public offering amounted to RMB1.4 billion.
LVGEM China is in continuous communication with the investors of these two debts, indicating that the investors have a clear attitude and willingness to continue the debts as long as Baishizhou is available for pre-sale in the coming year.
In terms of finance costs, the data showed that the finance costs of LVGEM China decreased from 7.1% in 2020 to 6.4% in 2021, and the EBITDA decreased from 2.85 in 2020 to 1.94. It is noted that in the second half of 2021, LVGEM China completed refinancing of approximately RMB2.32 billion in total, including the successful issuance of two commercial acceptance bills and the onshore refinancing of approximately RMB5.08 billion.
As for LVGEM China’s current liquidity, the investor relayed Mr. Jacus Chan’s remarks that based on the cash balance and current saleable value, there is little problem in pushing forward with the existing renovation projects.
As of December 31, 2021, LVGEM China’s cash balance was RMB7.3 billion, a decrease compared with last year, mainly due to the repayment of land prices for some renovation projects in the second half of 2021.
For the Baishizhou Project, LVGEM China has a credit extension of RMB20.7 billion from China Everbright Bank, with an available quota of RMB17.5 billion, another RMB10 billion in saleable value and a credit extension of RMB7.3 billion, which can meet the project’s capital needs.
During the meeting, LVGEM China further analyzed the impact of the current Shenzhen market changes on it. According to those who participated in the Investor Meeting, LVGEM China’s management believes that the freezing point of the market has been over. “In the next third and fourth quarters, the market in Shenzhen and other cities will improve.”
Whether market changes have an impact on LVGEM’s investment in land acquisition is closely related to its business model.
As a real estate company mainly focusing on renovation projects, LVGEM China has not shown much in the bidding, auction and listing market. In today’s meeting, it also stated that it insists on focusing on the direction of urban renewal, but will not invest in new cities on a large scale in a short period of time, for reasons related to cash flow.
原文链接：年报观察 | 绿景中国跨越白石洲 – 观点网 (guandian.cn)
Original link: Annual Report Observation | LVGEM China Crosses Baishizhou – http://www.guandian.cn (guandian.cn)
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