Debt scale rises, cash flow is tight, Oct intensively sells assets to cash out nearly 10 billion

Shenzhen Overseas Chinese town Co., Ltd. (hereinafter referred to as overseas Chinese town; 000069. SZ) opened the asset sale mode is still continuing. On December 3, information from Chongqing United Property Exchange showed that Chongqing Overseas Chinese Town Industrial Development Co., Ltd. (hereinafter referred to as Chongqing Overseas Chinese town) and Wuhan overseas Chinese Town Industrial Development Co., Ltd. (hereinafter referred to as Wuhan overseas Chinese town) planned to transfer 80% equity and 320 million yuan debt of Chengdu overseas Chinese town Yingchuang Industrial Co., Ltd. and 2.6 billion yuan of Wuhan senyi Qingcheng culture and tourism entrepreneurial development center (limited partnership) respectively Limited partnership share (about 99.96% of the total share). Chongqing OCT Industrial Development Co., Ltd. is a wholly-owned subsidiary of Oct. < p > < p > according to the Yincheng international announcement on December 20, OCT has transferred 51% of the equity of Wenzhou OCT Investment Development Co., Ltd. (hereinafter referred to as Wenzhou OCT) to Wenzhou yinjiahui at a transfer price of 1 billion yuan, and the remaining 49% of the equity will continue to be held by Oct. < / P > < p > in fact, since 2020, OCT has continuously sold the assets of many of its subsidiaries. According to incomplete statistics, in October and November this year alone, Oct plans to dispose of and transfer up to 15 assets or equity of its companies, and has announced a transfer price of about 9.94 billion yuan. < / P > < p > behind the intensive sale of assets for cash out in Oct, it may be related to the company’s declining performance, rising debt scale and continuous negative cash flow. Investor.com contacted OCT on related issues, but has not received a reply from the company. < p > < p > on December 20, Yincheng International announced that Wenzhou yinjiahui would obtain 51% equity of Wenzhou OCT at a transaction price of 1 billion yuan, while OCT would continue to hold the remaining 49% equity. < / P > < p > according to the announcement, the main assets of Wenzhou OCT are a plot of land in Wenzhou City, Zhejiang Province and the properties built on it, with a total site area of 145700 square meters and a total construction area of 306600 square meters. < / P > < p > according to public information, Oct Wenzhou won the plot in 2018. At that time, Shenzhen Overseas Chinese town won 237 mu of Big Mac land at the price of 2.20462 billion yuan, with a premium rate of only 4.7%. According to the report at that time, Oct planned to invest in the construction of Niushan business and tourism project in the plot, and carry out the scheme design, so as to create a benchmark gathering place for urban healthy and slow life. < p > < p > Yincheng International announced that after entering the Wenzhou real estate market for the first time in the first half of 2020, the group has been actively exploring opportunities to further gain a foothold in Wenzhou through the acquisition of land reserves and expand its existing business of developing high-quality residential properties in the Yangtze River Delta. In view of the fact that the project company is now developing the land into a commercial and residential complex, the group proposes to acquire the equity ratio of the land located in Wenzhou, so as to bring ideal return on investment to the company. < / P > < p > by contrast, why does OCT Group want to transfer and sell 51% of its equity in Wenzhou OCT, which can bring ideal return on investment to Yincheng international? < / P > < p > for OCT, asset sale is the normal operation of its company in the near future. It is understood that in addition to the above areas, Oct will also transfer and sell the assets of Chengdu, Wuhan, Yunnan, Henan, Hebei and other regions. < p > < p > on December 3, Chongqing United Property Exchange disclosed two information about the equity transfer of OCT, namely, the equity transfer of the company under the wholly-owned subsidiary of Oct. According to the information of equity transfer, Chongqing OCT plans to transfer 80% equity and 320 million yuan of creditor’s rights of Chengdu OCT Yingchuang Industrial Co., Ltd., with a transfer base price of about 479 million yuan. Chengdu overseas Chinese town Yingchuang Industrial Co., Ltd. was established on May 5, 2017. The project of the enterprise has not started for more than a year, and the net profit in the first November of this year was -11.5458 million yuan. In addition, its real estate development and operation qualification has expired on September 4, 2020. < / P > < p > another equity transfer information shows that Wuhan overseas Chinese Town Industrial Co., Ltd. listed and transferred the limited partnership share of Wuhan senyi Qingcheng culture and tourism entrepreneurship development center (limited partnership) of RMB 2.6 billion (about 99.96% of the total share), and the transfer base price is about RMB 357 million. The target company was established on June 15, 2020, with a net profit of – 346200 yuan as of November 30. < / P > < p > it is worth mentioning that Wuhan senyi Qingcheng culture and tourism entrepreneurial development center (limited partnership) is not the only asset sold by Wuhan overseas Chinese town industry, and its Wuhan fashion Qingcheng culture and tourism entrepreneurial development center (limited partnership), which was established on the same day, was also listed for sale as early as November 2. According to the information, 2.6 billion yuan of limited partnership shares (99.96% of the total shares) of the target enterprise were transferred, and the transfer base price was about 1.071 billion yuan. As of December 4, when the listing period expired, the intended transferee had not been collected. < / P > < p > according to the information disclosed by Chongqing United Property Rights Exchange, on November 19, Oct (Chengdu) Investment Co., Ltd., a wholly-owned subsidiary of OCT, was listed on the market and planned to sell 50% equity and 294 million yuan of creditor’s rights of Chengdu OCT Jinhua Investment Co., Ltd., with a transfer base price of about 294 million yuan. < / P > < p > “investor website” combs the recent asset sales of Oct. from the perspective of the operating scale of the target, the scale of the enterprises to be sold belongs to small and medium-sized enterprises, and there are different degrees of losses. In contrast, the sale of Wenzhou OCT by OCT is more unusual. < / P > < p > on the issue of the company’s large-scale sale of assets, Oct replied on the investor interaction platform that equity transfer is one of the specific measures to speed up the turnover of the company. In the process of project development, the company takes a variety of ways to speed up the project turnover. On the one hand, it improves the overall operation efficiency by improving the real estate business operation ability, optimizing the product structure, implementing the follow-up investment system and other measures. On the other hand, in some projects, it establishes strategic cooperation alliance with excellent enterprises in the industry, and realizes rapid project turnover through cooperative development, equity transfer and other ways. At present, the company’s operation is in good condition. Project share transfer is a way for the company to introduce partners to participate in project cooperation and normalize through share transfer. < / P > < p > in fact, Oct’s reply to investors’ transfer of project equity may only be due to one side of the moon, while the other side reflects the company’s current financial pressure. At present, the performance of OCT is still in the situation of increasing income but not increasing profit. According to the third quarter report of 2020 released by OCT, Oct a achieved revenue of 33.394 billion yuan in the first three quarters, an increase of 11.83% over the same period of last year; net profit attributable to parent company was 5.248 billion yuan, a decrease of 12.5% over the same period of last year. < p > < p > according to the annual report, OCT is strategically positioned as a leader of China’s cultural industry, a leader of China’s new urbanization, and a demonstrator of China’s global tourism. It has built five business segments, namely, cultural industry, tourism industry, new urbanization, electronic technology industry, and related business investment. However, according to the financial report, the main business of OCT is still tourism comprehensive income and real estate income, each accounting for about 50% of the total income. According to the data of the mid-term report in 2020, the comprehensive tourism income and real estate income of OCT were 9.949 billion yuan and 6.889 billion yuan respectively, with a year-on-year change of 73.79% and – 42.09%, and the real estate income decreased significantly. < / P > < p > nevertheless, the scale of OCT continues to expand. According to the third quarter report, Oct added 10.04 million square meters of land reserves in the first three quarters, a year-on-year increase of 25.1%; the total value of new land reserves was 35.12 billion yuan, with an equity ratio of 81.2%. According to the announcement, from January to November 2020, OCT has realized a total contracted sales area of 3.4117 million square meters and a contract sales amount of 82.624 billion yuan. < / P > < p > while OCT pursues scale expansion, the company’s debt scale continues to rise. According to the third quarterly report, as of September 30, 2020, the total liabilities of OCT reached 329.139 billion yuan, an increase of 9.569 billion yuan compared with the end of the previous period, and the scale of liabilities further increased. Among them, interest bearing liabilities amounted to 145.599 billion yuan, accounting for 44.24%. According to wind data, the asset liability ratio of OCT has increased year after year since 2015, rising to 76.07% in the first three quarters of this year. < / P > < p > it is worth noting that behind the debt expansion of OCT, the company’s cash flow is still slightly tight. From 2017 to the first three quarters of 2020, the net cash flow from operating activities of OCT was – 7.7 billion yuan, – 10 billion yuan, – 5.2 billion yuan and – 2.2 billion yuan respectively, which was negative for many consecutive years. (produced by thinking Finance) < / P > < p > Disclaimer: the purpose of reprinting this article is to convey more information, and it does not represent the opinions and positions of our website. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk. < p > < p > Chinanet is a state key news website under the leadership of the Information Office of the State Council and the management of China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website publishes information 24 hours a day. It is an important window for China to carry out international communication and information exchange.