Relevant Documents:
Bond 2020 Report
USD Notes OM
Ratings Report
Unlisted Shenzhen real estate developer Excellence Group does not disclose its financials publicly. Nonetheless, its rapid expansion through aggressive land acquisition in an effort to attain its contracted sales targets and its rising debt level has attracted attention.
Founded in 1996, Excellence Group engages in real estate development, urban renovation, financial investment and asset management and currently has presence in 32 cities with about 70% of its land bank in the Guangdong-Hong Kong-Macau Greater Bay Area.
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The company has issued its onshore and offshore bonds via wholly owned subsidiary Excellence Commercial Properties Co., which engages in commercial real estate development and management.
Upcoming maturities include an RMB 2.515 billion ($389.5 million) corporate bond “18 Excellence 06” due Dec. 18 and $105 million 7.6% senior notes due Dec. 5. The company’s $100 million 6.8% notes due March 2023 were indicated around 99.99/100.2 today, June 30, yielding 6.8%/6.7%.
As of April 30, oustandanding onshore corporate bonds, offshore notes and asset-backed securities stood at RMB 12.133 billion, according to a report from Lianhe Credit Rating.
Total assets of Excellence Group are more than RMB 190 billion, including 50 million square meters of land reserves, according to the company’s website.
Since 2017, Excellence Group has accelerated land acquisition. Its beneficial owner Li Hua said in 2018 that the company will attain RMB 100 billion annual contracted sales within three years. It recorded RMB 99.4 billion contracted sales for 2020.
The company is known in the industry for its land acquisition pace. In 2020, it spent RMB 23.1 billion on acquiring land, up 168.6% year over year. During the first four months of 2021, it added RMB 54.81 billion new land inventory, more than what larger peers Greenland Holdings and Longfor Group added during the same period, according to a report from real estate research institute CRIC.
The company had tried to go public, in 2007 and 2009, to no avail. Its property management subsidiary Excellence Commercial Property & Facilities Management Group was listed on the Hong Kong stock exchange in October 2020.
Financials
In 2020, Excellence Commercial Properties Co. reported RMB 13.152 billion revenue, down 22.9% over RMB 17.066 billion in 2019. Net profit decreased by 32.7% year over year to RMB 3.241 billion due to the impact of Covid-19 epidemic and an overall decrease in profit margins for its carried projects.
As of the end of 2020, total assets stood at RMB 173.847 billion, up 6.8% over RMB 162.782 billion as of Dec. 31, 2019. Total liabilities reached RMB 117.782 billion, up 7.9% year over year. Cash and cash equivalents stood at RMB 15.59 billion, up 50% over RMB 10.395 billion as of the end of 2019.
As of Dec. 31, 2020, the company had a total of RMB 52.924 billion bank credit lines, of which RMB 18.107 billion was unused.
The company expects to collect RMB 20 billion from sales in 2021 and RMB 1.4 billion from rental income, which may be used for debt repayment.