When you mention Country Garden, what do you think of first?
Is it the ridicule of the industry status of "the world's number one real estate company", or the high-pressure working status of "you will never get into Evergrande, you will never get into Vanke, you will never get into Country Garden", or it is "I will give you a five-year career". The advertising slogan of "a star-rated home", or the owner's complaints about "a poorly decorated home"?
But no matter what, under the current regulation of real estate companies, whether they are leading companies, established real estate companies or top local real estate companies, they have all encountered development difficulties to varying degrees.
Evergrande was exposed to defaults on commercial bills one after another, and had to cut off its arms to survive. It even had to sell its own properties, part of its car equity and its Hong Kong headquarters building to raise funds to repay the debt.
R&F Group has stepped on three red lines in a row and can only shrink its front line with all its strength. The top 100 real estate companies in the country that have acquired land have long disappeared. Houses were sold at a discount, more than 40% of employees resigned, and the situation was difficult.
Blue Light Development, the first real estate company in Sichuan, has experienced frequent executive changes and personnel turmoil, as well as debt defaults in the public market. Yang Wuzheng, the second son of founder Yang Keng, "was appointed at the critical moment" to take over the heavy responsibility of the company's chairman. Become the worst "second generation house owner".
And Country Garden survived in its own unique way.
According to statistics from the Centaline Real Estate Research Institute, as of the end of July 2021, there have been a total of 352 controls on real estate across the country. With the successive introduction of major policies such as "Red Line" and "Concentrated Land Supply", "working hard to survive" has become the "competing goal" of major real estate companies.
According to the standards of the regulatory authorities, as of the middle of this year, Country Garden’s asset-liability ratio was 77. This indicator is still below the line, but the liability data on the financial statements continues to be optimized. At the press conference, Country Garden Chief Financial Officer Wu Bijun added that we are gradually reducing the debt ratio through asset operations, rather than immediately shrinking the balance sheet.
The net asset liability ratio is recognized in the industry as an indicator that best reflects the asset structure ratio, leverage ratio and long-term solvency of real estate companies. At the end of 2020, the average net debt ratio of the top 100 real estate companies was 94.6, while Country Garden’s figure was 55.6. As of the middle of this year, Country Garden's net debt ratio continued to decline, only 49.7, far lower than the 100 required by the three red lines.
The most eye-catching thing is undoubtedly its abundant cash flow. As of the end of June, Country Garden’s available cash balance was 186.24 billion yuan, and its cash-to-short-term debt ratio was 2.1 times, which was a certain improvement from the 1.9 at the end of last year. No worries about short-term debt repayment and risk resistance.
On August 24, Country Garden released the group’s interim performance report, which undoubtedly gave an answer that satisfied the market.
According to interim report data, Country Garden achieved attributable contract sales of 303.09 billion yuan in the first half of the year, a year-on-year increase of 14%; the attributable contracted sales area was 34.51 million square meters, a year-on-year increase of 8%, and sales performance increased steadily.
In terms of core profit indicators, the company's total operating income was 234.93 billion yuan, a year-on-year increase of 27%. Gross profit, net profit and core net profit attributable to shareholders increased to 46.28 billion yuan, 22.42 billion yuan and 15.22 billion yuan respectively. This is also among the best among leading real estate companies.
While profits are rising, interest-bearing debt data are also steadily declining, leverage levels are further declining, total loan balances continue to decline to 324.24 billion yuan, and the average financing cost at the end of the period is 5.39, a decrease of 0.17 percentage points from the end of last year. .
Country Garden’s equity property sales cash collection was approximately 272.79 billion yuan, and its equity collection rate reached 90%, which is significantly better than the industry average. This is the sixth consecutive year that Country Garden has reached 90% or above.
In terms of land reserves, as of the end of June 2021, Country Garden's business has covered 296 prefecture-level administrative regions and 1,408 districts and counties in all provinces in mainland China, with a total of 3,127 projects. In the first half of 2021, Country Garden *** acquired 219 pieces of land, with a total equity consideration of approximately 88.4 billion yuan.
In terms of value, 82% of the newly acquired land is concentrated in the five major metropolitan areas, and 62% is distributed in third- and fourth-tier cities.
It is worth mentioning that since April 2021, 22 cities have entered the era of centralized land supply. Among the first batch of centralized land supply, Country Garden has acquired 14 pieces of land, with a total equity consideration of 17.1 billion yuan. It was delisted at the lowest price in Chongqing, Zhengzhou, Wuhan and other cities. The overall premium rate is only 7. The land acquired The quality is significantly better than the average level of the first batch of centralized land supply.
In people’s minds, Country Garden’s image seems to have always been polarizing.
According to data released by CRIC, for the whole of 2020, Country Garden ranked first in the national sales list with a full-scale amount of 788.8 billion yuan.
According to the sales performance list of Chinese real estate companies from January to July 2021 released by the China Index Research Institute, Country Garden still topped the list with a sales area of ??500.8 billion yuan and 53.478 million square meters.
With so many houses sold, it naturally attracted a lot of comments.
At this stage, the main contradiction in our society has transformed into the contradiction between the people’s growing needs for a better life and unbalanced and inadequate development.
It is often said that Country Garden has complied with the country’s urbanization development trend, deeply invested in third- and fourth-tier cities, and reaped a wave of national dividends. Judging from the results, choosing the differentiated strategic direction of the third and fourth tiers has indeed made Country Garden stand out from many real estate companies.
Of course, Country Garden does not lay out every third- and fourth-tier cities indiscriminately, but carefully selects them in its own way.
Prosperous city circle cities, cities that have successfully transformed, cities that are ecologically livable, and cities with excellent financial performance are all the focus of Country Garden's sinking market.
This is why Country Garden is deeply involved in 15 first-tier and semi-first-tier cities including Beijing and Shanghai. Hefei, Fuzhou, Zhengzhou and other 17 cities with outstanding productivity. There are 24 traditional industrialized cities including Tianjin, Changchun, and Wuxi. There are 28 livable cities including Shijiazhuang and Hohhot. Tangshan, Qinhuangdao and other 23 cities with outstanding financial performance.
Country Garden’s strategy of focusing on third- and fourth-tier cities can easily make people feel “unfashionable”. Most real estate companies like to play in high-end luxury homes. It was not until Country Garden opened up its situation by relying on the third- and fourth-tier markets and developed so rapidly that the major real estate companies woke up. It turns out that China’s truly huge market is not just in first- and second-tier cities, but also in vast third- and fourth-tier cities and even small counties, all of which have great potential.
The strategic policy of surrounding the cities from the countryside decades ago is still valid today.
Those who praise Country Garden are mainly residents of third- and fourth-tier cities.
For many counties, it is the norm that all five certificates are not available, it is the norm for developers to be involved in gangs, and it is also the norm for unfinished projects to be unfinished.
After Country Garden entered the third- and fourth-tier cities, these chaos have been largely improved, and Country Garden has also brought the housing construction concepts of big cities into the county towns, self-owned properties, and some of the properties will also have villas. Districts, high-rises, bungalows and other block-type areas, investment shopping malls. Property services, park greening, environmental education, etc. all perform well, which are things that local developers cannot or are unwilling to do.
The key to Country Garden’s success lies in its insistence on building “the most suitable house”. Whoever buys a house does not need to be a family effort and needs to shop around. House type, facilities, surroundings, kindergarten, etc., which one does not make a final decision after visiting more than a dozen houses in person.
Why sales are so high? It’s because among these owners’ choices, Country Garden is the best solution.
To give a typical example, we can clearly see the super large Lanzhou Country Garden through satellite maps. It is simply a city built on loess. Not only that, Country Garden also built the Yanbai Yellow River Bridge in Lanzhou.
Yang Guoqiang, Chairman of Country Garden’s Board of Directors, once issued instructions in an internal document saying, “High turnover is our invincible magic weapon.”
The price of high turnover is that many of Country Garden’s projects have been complained by owners due to quality issues.
Country Garden strongly promoted the advertising slogan "Give you a five-star home", which was complained by many owners as "Give you a five-star trap".
Since 2021, Country Garden has experienced incidents of owner dissatisfaction in Fuyang, Anhui, Dongguan, Guangdong, Maoming, Guangdong, Loudi, Hunan, Kunshan, Jiangsu, Taiyuan, Shanxi, Dengzhou, Henan and other places. Not only are quality issues repeatedly raised Moreover, some projects also involve chaos such as "yin and yang contracts" and illegal delivery.
In August, the Country Garden project in Urumqi experienced a housing shortage, and prospective owners had to jointly express their dissatisfaction. According to the feedback from the owners, the Country Garden Tianxi project is about to be delivered. After the on-site acceptance, the owners found many problems. First, the induced publicity, the greening scale did not match the sand table at the time of sale; second, the quality did not meet the delivery standards, the basement was not up to standard, and the cement pavement in the community was paved. question. After the incident fermented for half a month, Country Garden gave its response at the end of August.
Previously in July, Country Garden also had a very public "corpse water incident". On June 28, a property manager at Country Garden Community in South China, Guangzhou, fell into the pool of Country Garden Cuishan Lantianyuan in South China. Unfortunately, he drowned in the pool.
The property management company deliberately concealed the situation while knowing that the reservoir was full of corpse water. Only a "water cutoff notice" was posted, causing the owners to drink "corpse water" for many days without knowing it. The owners who learned the truth were furious and went to the property management office to ask for an explanation.
It was not until the end of July that official news came out. Country Garden Service President Li Changjiang responded: We have negotiated with the owner. The entire matter and handling process were explained to the owner and the owner understood it. , has been processed.
However, there are still Country Garden owners in South China who are dissatisfied with the result. Seven days after the "corpse water" incident occurred, Country Garden Property was forced to disclose the truth of the matter under pressure. It had been concealing this matter before. Quite bad in nature. Now when I mention this matter, I feel sick. I am very dissatisfied with Li Changjiang's response and do not accept Country Garden's handling of the matter.
In addition to the owners’ doubts about Country Garden’s quality and properties being comparable to “fast-moving goods”, Country Garden’s biggest scandal at this stage should be its Forest City project.
There are 766 complaints about Country Garden on Black Cat Complaints. The latest ones all reflect Country Garden Forest City’s false propaganda and defraud consumers.
Anyone familiar with Country Garden knows that Yang Guoqiang has always been extremely persistent in Forest City.
“I have a dream to have a city that is three-dimensional and layered, with vehicles traveling underground and parks on the ground. The exterior walls of buildings are covered with vertical plants, just like living in a forest. It is a pollution-free overhead rail transit. Every day, people live in gardens, breathe in forests, and enjoy nature.”
Not satisfied with their own utopian vision, through Country Garden. With the pace of internationalization and the ambition to reposition the future city, Yang Guoqiang moved his dream of forest city to Malaysia.
“We are a company that strives hard for the modernization of society, urbanization, and for people to live a better life.” Country Garden gave its own expectations before going overseas.
In order to make this project an instant hit, Country Garden invested heavily in marketing channels. Forest City appeared in prime time on CCTV, Spring Festival Gala, NBA games, and the Rio Olympics, becoming a global advertising hotspot. The property with the most smashed-up properties was instantly known to everyone in Forest City.
However, in 2018, Malaysia’s new Prime Minister Mahathir Mohamad took office. Without the support of former Prime Minister Najib, the status of the Forest City Park project took a turn for the worse. The newly appointed Prime Minister stated in public more than once that Forest City was prohibited. Sales to foreigners.
In fact, attacking the Forest City project in Johor was also Mahathir’s campaign position. He once said that the Country Garden Forest City project and other Chinese-funded projects were the result of former Prime Minister Najib’s decision to put Malaysia into a state. Evidence of betrayal. For this reason, Mahathir has won the support of many Malaysians.
Malaysians in Johor also said in interviews that too many Chinese are snapping up real estate in Country Garden Forest City. They worry that the project will damage the environment and that land reclamation will have a significant impact on local fisheries.
In fact, this real estate project has been full of gimmicks from the beginning, focusing on "Next to Singapore, with freehold property rights." It has been repeatedly emphasized that after completion, the straight-line distance between Forest City and Singapore will not exceed 2 kilometers. According to the picture below, Forest City is indeed very close to Singapore.
However, the Forest City project is located in the Iskandar District of Johor Bahru, Malaysia. It is an isolated island reclaimed in Malaysia, and the construction of this project started one year after the reclamation, but According to relevant Malaysian laws, reclamation projects need to settle for ten years before construction. This issue will easily be used by relevant parties in the future. And 2 kilometers across the sea from Forest City is Singapore's Tuas Industrial Zone and large oil refining center.
When promoting the project, Country Garden also beautifully described the future to the owners, "Working in Singapore, living in Johor Bahru." However, Forest City is still 35-40 kilometers away from the center of Singapore. If you commute across the country, owners have to go through 4 checkpoints every day.
According to people living in Johor Bahru, Malaysia, the checkpoints between Singapore and Malaysia are very congested during peak hours. Border inspection takes at least 1.5-3 hours, and whether you drive, take a bus, or ride a motorcycle, you have to get used to seeing huge crowds of people.
Forest City owners complained on the Black Cat platform that the Singapore-Malaysia high-speed rail originally planned by Country Garden has not been launched until now. The cross-sea-Singapore-Malaysia Bridge originally planned to connect Forest City and Singapore is also missing. Country Garden Forest City’s independent customs, which has been promoted as having been approved, has not been launched either.
The modern new city with freehold property rights that was previously promoted has now become a commercial property with only a 99-year land lease. The surrounding supporting facilities are incomplete, medical treatment and shopping require a long drive, and the current occupancy rate is less than 8 .
Although it is a residential building, it has commercial water and electricity bills, and a certain amount of insurance premiums and management fees have been added out of thin air. The various charges are several times more expensive than those in first-tier cities in China.
Although the dream is good, the reality is a bit cruel. I wonder what kind of impact the Forest City project in Malaysia will have on Country Garden?
From a realistic perspective, in recent years when almost all real estate companies have been under great pressure, Country Garden has bucked the trend and "lived like a dog". Whether it is financial indicators, debt optimization, or multi-business collaboration, Country Garden is at the forefront of domestic real estate companies.
Even though many property owners describe Country Garden as selling "quick-selling properties," ridicules, dissatisfaction, and complaints are pouring in. But it cannot be denied that Country Garden has survived in its own way.
However, it is obvious that Country Garden is just stuck, and there is still no successful example in terms of business diversification and strategic growth engine transformation.
So far, the overseas Forest City project promoted by Country Garden has been in trouble, caused by the political whirlpool in Malaysia and the wave of property owners checking out.
The current Country Garden’s longevity is precious. But in the future, it has not yet found the "password" to unlock it.