UPDATE 1: INVESTOR CALL: Jinke Property Proposes to Issue New RMB 2B Corporate Bonds With Proceeds to Repay RMB 1.25B Bond Due May 28, RMB 696M Bond Due July 8, Applies for Issuance Quota of RMB 690M ABS, RMB 4B MTN

UPDATE 1: 7:21 a.m. ET 5/6/2022: Management of Jinke Property Group said during an investor call this afternoon, May 6, attended by Reorg, that it plans to issue RMB 2 billion ($299.7 million) corporate bonds and use the proceeds to repay its RMB 1.25 billion bond due May 28 “20 Jinke 03” and RMB 696 million bond “19 Jinke 03” due July 8. The company has an RMB 2.55 billion issuance quota on hand, management added.

Jinke is discussing the planned issuance with credit ratings firms, stock exchanges and potential investors, according to management.

Management guided that for repaying bonds maturing in the second half of this year, Jinke plans to issue new bonds and optimize its presale supervision escrow accounts.

Jinke has obtained a “no-objection letter” from the exchange for the potential issuance of RMB 690 million asset-backed securities. It is also in the registration process for the RMB 4 billion medium-term notes issuance quota.

The company completed issuing two RMB 1.8 billion super and short-term commercial paper during the fourth quarter of 2021 and issuing an RMB 1.5 billion corporate bond in the first quarter of 2022. It also has redeemed RMB 880 million asset-backed securities and two corporate bonds totalling RMB 2.4 billion.

Management said that they deemed recent policy directives positive, citing the Politburo meeting held on April 29 during which the central government stated that it will support local governments’ efforts to improve real estate policies and optimize the presale escrow account supervision, as reported.

To improve cash flow, Jinke plans to accelerate property sales, revitalize projects and assets and dispose of certain low-efficiency assets.

As of Dec. 31, 2021, Jinke was in breach of one of the “three red lines,” with a 69.5% net gearing ratio, 69.2% debt to asset ratio excluding contract liability and its cash-to-short-term-debt ratio decreased below 1x due to the decline in cash balance and the company’s decision to include certain putable bonds in short-term debt.

Management said during the call that the company aims to raise the cash against short term debt ratio to above 1x by lowering its outstanding debt and improving property sales.

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Original Story 12:40 a.m. UTC on May 6, 2022

EARNINGS: Jinke Property Reports FY’21 Audited Operating Revenue of RMB 112.3B, Up 28.1% YoY; Operating Profit Down 28.6% YoY; Net Profit Down 31.1% YoY; Net Profit Attributable to Shareholders of Parent Co. Down 48.8% YoY

Relevant Document:
2021 Annual Report (Chinese)

Jinke Property Group announced last week its audited annual report for the financial year ended Dec. 31, 2021, reporting operating revenue of RMB 112.31 billion ($16.831 billion), up 28.1% from RMB 87.704 billion a year earlier.

Operating profit for the year was RMB 8.736 billion, representing a 28.6% year-over-year decrease from RMB 12.231 billion. Gross profit decreased by 29.6% to RMB 8.579 billion from RMB 12.179 billion in 2020.

The company reported net profit of RMB 6.688 billion, down 31.1% from RMB 9.704 billion a year earlier. Net profit attributable to shareholders of the parent company was RMB 3.601 billion, down 48.8% from RMB 7.03 billion a year earlier.

During the year, operating activities generated a net cash inflow of RMB 14.204 billion, down from RMB 14.508 billion in 2020. Investing activities led to a net cash outflow of RMB 1.794 billion, versus a net cash outflow of RMB 17.108 billion a year earlier. Financing activities cost the company RMB 27.299 billion, reversing a positive net cash inflow of RMB 10.462 billion a year earlier.

As of Dec. 31, 2021, Jinke’s current assets reached RMB 319.072 billion, down from RMB 332.114 billion in 2020. Current liabilities reached RMB 241.393 billion, up from RMB 239.952 billion a year earlier. Total liabilities down to RMB 293.63 billion as of the end of 2021.

As of Dec. 31, 2021, Jinke’s cash balance stood at RMB 28.908 billion, which included RMB 27.645 billion bank deposits and RMB 1.263 billion other cash. Of the total cash balance, RMB 1.057 billion was deposited offshore.

Jinke’s current maturities amounted to RMB 27.963 billion as of the end of 2021, including RMB 18.672 billion of long-term borrowings, RMB 8.249 billion of notes payable, RMB 963.4 million of interest payable and RMB 78.7 million lease liabilities.

Jinke Property’s capital structure is as follows: