LAM Raymond, CEO of Xuhui Group, described the recent real estate market. Indeed, all kinds of thunderstorm news continue, and the capital market does not give real estate stocks a good look. In addition, it has recently been reported that after three red lines and two centralized land supply, housing enterprises have ushered in strong supervision-

According to Cailian, dozens of key real estate enterprises that have been included in the "three red lines" pilot project, the amount of land to be purchased by the regulatory authorities should not exceed 40% of the annual sales, including land acquisition in the open market and land acquisition through mergers and acquisitions. If it is not satisfied, it will be restricted from financing.

Due to policy concerns, the share price of real estate enterprises fell first. In just two trading days, the share price of head housing enterprises generally fell by over 10%.

In fact, according to the previous "three red lines" pilot requirements, the ratio of land acquisition and sales is one of the two observation indicators. If the proportion of land acquisition and sales in the past year is higher than 40% or the operating cash flow is negative for three consecutive years, the housing enterprises need to explain the source of land acquisition funds.

LAM Raymond said that the five leading indicators (three red lines and two observation indicators) basically reflect the big risks of enterprises. This year, it has been tried out in dozens of housing enterprises, and it may be widely promoted in all large housing enterprises in the future. Once you exceed it, you will be forced to lose weight by the coach.

This time, on the basis that the proportion of land sales does not exceed 40%, the new proportion includes bidding, auction and hanging+acquisition and acquisition of land. Obviously, this is not a "new deal", but a repair of the previous regulatory policies, or a precise blow.

According to Kerry data, in the first half of this year, some middle and upstream housing enterprises have exceeded 40% of the sales amount. Although the number is small, they are basically housing enterprises that have taken more radical land in various cities. For example, China Merchants Shekou (SZ:00 1979) spent 147 billion yuan in Nanjing local auction market alone.

Another example is Greentown China (HK:03900), which has been frantically acquiring land in recent two years. In the first half of the year, the proportion of land purchase and sales was as high as 65%. In the local auction market in Ningbo alone, Greentown and its consortium spent 9.77 billion yuan, contributing 1/3 to the two centralized local auction markets in Ningbo.

This time, the precision of supervision stifled their scale ambitions.

15 among the mainstream real estate enterprises, 3 have sold more than 40% of their land, and 2 have negative cash flow.

One year before the introduction of the three red lines, housing enterprises are generally taking the initiative to reduce their liabilities to meet regulatory requirements.

However, judging from the heat of the land market in the first half of the year, individual housing enterprises have a strong willingness to auction. For example, Greentown, which changed its management, shouted that the scale should reach 500 billion in 2025, directly targeting the head housing enterprises. In the first half of this year, Greentown's land acquisition amount reached 88.84 billion yuan, which has exceeded the land acquisition amount in 2020.

At the same time, the two centralized land supply policies implemented in the first half of the year were intended to limit the reduction of land premium, thus cooling the whole market. As a result, the premium rate of land prices has been constantly hitting record highs, and land grabbing in first-and second-tier cities has intensified. Even individual housing enterprises have to take land, which is unprofitable.

It can be seen that the three red lines have not completely curbed the ambition of housing enterprises to borrow on a large scale. Therefore, there is a regulatory "patching" move.

According to Cailian, dozens of key real estate enterprises that have been included in the "three red lines" pilot project, the amount of land to be purchased by the regulatory authorities should not exceed 40% of the annual sales, including land acquisition in the open market and land acquisition through mergers and acquisitions. If it is not satisfied, it will be restricted from financing. Including the suspension of debt issuance, trust financing, asset management products and overseas financing will also be restricted.

The ratio of land acquisition to sales cannot exceed 40%, which means that housing enterprises will sell 654.38+0 billion yuan of houses this year, and they can only take 4 billion yuan of land at most. Housing enterprises can only "make a fixed investment by sales", which can be said to be a precise blow.

So, who is the goal of targeted housing enterprises? I have seen your statistics. 202 1 first half of the year 15 sales 1000 billion yuan of land acquisition amount/sales amount data of mainstream real estate enterprises. Among them, Greentown, China Merchants Shekou and China Resources Land (HK:0 1 109) all exceeded 40%, reaching more than 50%.

These three housing enterprises can be said to be the "big winners" in the local auction market in the first half of the year. In the local auction market in Ningbo alone, Greentown and its consortium won 6 plots of land at a cost of 9.77 billion yuan, contributing1/3 to the two local centralized auction markets in Ningbo; Merchants Shekou spent more than 654.38+0.47 billion yuan in Nanjing local auction market alone. In the first round of centralized land supply in Hangzhou, China Resources Land won the plot of Hangzhou Future Science and Technology City at the highest price of11.61100 million yuan.

In addition, according to the 2020 annual report data of these 15 mainstream real estate enterprises, the net operating cash flow of Greentown and Country Garden (HK: 02007) in 2020 is negative, while others 13 are positive; The net operating cash flows of Xincheng Holding (SH:60 1 155), Jindi (SH:600383) and Zhongnan Construction (SZ:00096 1) are on the verge of net outflow.

Based on the positive land sales ratio and operating cash flow, among the 15 head real estate enterprises, there are four that step on the first line, namely Greentown, China Merchants Shekou, China Resources Land and Country Garden, while Greentown steps on the second line.

If we look at the three red lines introduced last year, by the end of 2020, seven of the 15 real estate enterprises have stepped on a red line, 1 is in the third line, and seven have not. Among them, Greentown and Country Garden both stepped on the red line to observe the indicators. This means that if these two housing enterprises cannot meet the regulatory requirements before the end of the year, their financing will be restricted.

In the long run, among 15 head housing enterprises, 10 failed to meet the regulatory requirements, and there was pressure to continuously reduce financial leverage.

Be alert! As long as the scale is not profitable, housing enterprises will have a high probability of "getting smaller and smaller"

If the three red lines restrict the excessive expansion of high-leverage housing enterprises from the financial level, then the two observation indicators of correct land sales ratio and operating cash flow not only limit the expansion of high-leverage housing enterprises, but also limit the low-quality expansion of low-leverage housing enterprises.

In other words, housing enterprises can only "invest in sales", which directly cuts off the opportunity for housing enterprises with serious debts and tight cash flow to blindly expand their land; Low-leverage housing enterprises can't expand by adding leverage, but can only maintain endogenous growth through the profits earned by selling houses every year.

Specifically, the supervision requires that the proportion of land sold by real estate enterprises in the whole year should not exceed 40%, which means that real estate enterprises can only acquire land by endogenous growth, not by debt. Housing enterprises can only get more land in the second year if they get land cheaply enough this year and sell houses expensively enough, otherwise they will be restricted from getting land in the second year.

To give a simple example, this year, Housing Enterprise A sold land of 654.38+0 billion and took land of 4 billion. Next year, this 4 billion land must sell more than 654.38+0 billion sales revenue. If the 4 billion land is only sold for 9 billion, I'm sorry, I'll get 3.6 billion land at most this year.

By analogy, if the profit rate of land acquisition by housing enterprises is too low, housing enterprises will be "smaller and smaller". At the same time, this regulation also makes it impossible for those housing enterprises with stable operations to do large-scale projects quickly in the short term. Because no matter whether the housing enterprises have money or not, they will be limited to the proportion of land acquisition, thus controlling the expansion speed.

Do you think this is over? In addition to the proportion of land sales not exceeding 40%, it is also required that the operating cash flow of housing enterprises is positive, otherwise it will still limit the financing of housing enterprises.

This means that when housing enterprises take land, they should not only consider the profit of this land, but also consider whether they can recover cash in time after selling the house. In other words, in the future, low-leverage housing enterprises must not only have profits, but also have profits from cash inflows if they want to grow steadily.

On the whole, the superposition of three red lines and two observation indicators will completely change the business logic of the whole industry. Let financial leverage fail to meet regulatory requirements, first reduce leverage and then seek expansion; Housing enterprises whose financial leverage meets the regulatory requirements should not blindly increase leverage expansion, but should rely on the profits earned every year to achieve high-quality endogenous growth.

In the long run, the whole real estate industry may become more and more like manufacturing, just like Vanke Yu Liang said, to make slow money, to make honest money.