1.Evergrande and Fuli Defaulted on Land Payment
A total number of 41 the property developers including Evergrande and Fuli, are ordered to settle the Land payment by Lanzhou government. Lanzhou Natural Resources Bureau issued a notice about 41 companies missed payment of land-use transferring fees. Half of the total debt amount are affiliated with companies of Evergrande. Meanwhile Huaibei Mining Holdings Co Ltd.’s lawsuit against Evergrande says that a division of the company missed payments and Huaibei Mining is now seeking about 400 million yuan for fees and breach of contract.
According to the notice there are also a number of Fuli Real Estate’s affiliated company involved, including Lanzhou Fuli City Real Estate Development Company and Lanzhou Chengbang Real Estate Development Company.
2.Five Cities Listed for Property Market Monitoring
Ni Hong, Vice Minister of Housing and Urban-Rural Development of Communist China, interviewed five city government officials in Yinchuan, Xuzhou, Jinhua, Quanzhou, and Huizhou on Thursday and announced that these five cities will be included in the list of key cities for real estate market monitoring. It is reported that the sales price of newly-built commercial housing and the price of residential land increased unexpected fast in these cities, and the market expectations were unstable, which caused widespread concern in the society.
These five cities stated that they will take the main responsibilities of strengthening the market monitoring and supervision, and quickly take measures to ensure that land prices, housing prices are all in control.
3.Tariffs of Some Steel Products Higher from August 1st
According to the CCP Ministry of Finance website on July 29, the Tariff Commission of the State Council issued an announcement on increased tariffs on the export of ferrochrome and high-purity pig iron from August 1, 2021. Similar to the adjustment at the end of April, this adjustment is also divided into two parts: tariffs and export tax rebates. Export tariffs for high-purity pig iron will be lifted to 20% from 15%, and for ferrochrome will be increased to 40% from 20%. Export tax rebates is cancelled for 23 steel products, including some cold-rolled coils and silicon steel which have higher added-value compared with carbon steel.
4.Bohai Insurance Unqualified for Solvency Regulations
According to second quarter solvency report of Bohai Property & Casualty Insurance, the company’s comprehensive solvency margin ratio was 123.75%, just above the 100% regulatory red line. The report shows that the company’s comprehensive risk rating at the end of the first quarter was C. This is the second consecutive quarter that Bohai Insurance has had a comprehensive risk rating of C. According to the relevant regulatory requirements, the risk composite rating measures the size of an insurer’s overall solvency risk (including capitalizable risk and difficult to capitalize risk) which should not be lower than B class. This means Bohai Insurance has been classified as an unqualified company for two consecutive quarters without meeting the regulation requirements.
In the report, Bohai Insurance mentioned that the company has set up a leading group for the rectification of reserve insufficiency to promote the implementation and completion of the rectification work required by the regulation, and has engaged an independent actuarial evaluation agency to review the results of the reserve evaluation.
5.Auto Dealers’ Survival Pressure Increases
China Automobile Dealers Association released a survey on the survival of national auto dealers in the first half of 2021, showing that most dealers did not complete their sales targets in the first half of the year, and only 33.7% of dealers completed more than half of their annual sales targets. Among them, the joint venture brands are most obviously affected by the shortage of chip supply, and the completion of their dealer sales targets is slightly lower than that of luxury brands and independent brands.
In terms of profitability,30.4% of dealers suffered loss in the first half of the year and 33.6% of them reported positive profit, fell by 5.8%. The report pointed out that the sales profit of dealers was affected by the shortage of chips supply. The stimulus policy after the epidemic has caused consumer demand to be overdrawn in advance, which has also had an impact on sales and distribution earnings in the second quarter. The profit of new car sales business is getting thinner and the car maintenance business is also facing greater competitive pressure.
6.Didi Denies Privatization Plan
In response to foreign media reports that Didi is considering privatization and delisting, Didi responded on Weibo on the evening of July 29 that the rumors about privatization are false and the company is now actively and fully cooperating with the network security review. Previously, foreign media reported that Didi was considering a privatization delisting and compensating investors for their losses. The IPO prospectus was publicly submitted to the SEC on June 11 this year, and the company was officially listed on the New York Stock Exchange on June 30 at an issue price of $14/ADS. At the latest trading this morning, Didi shares closed at $8.86.
7.Shimao Gongsan was Auctioned by Half Price
After four aborted auctions, Jia Yueting’s project of Shimao Gong San was finally sold out, according to the judicial auction platform of the Beijing Property Exchange data on July 29. The auction opened at 10 a.m. on July 28 with a starting price of approximately 1.64 billion yuan, attracting 25,664 viewers and only two registered buyers. After 24 hours biding, Beijing Jorui Property Management Co., Ltd. successfully bid for 1.645 billion yuan, nearly 1.3 billion yuan less than the project’s appraised price of 2.929 billion yuan. The settlement price was nearly half cut compared to the original purchase price.
The buyer, Jorui Property Management Co was established in May 2020, mainly engaged in property management, leasing office space, enterprise management and enterprise management consulting. The company’s major shareholder is Beijing Zhongzhi Resources Property Management, with 100% in control. It is a wholly-owned subsidiary indirectly held by Xie Zhigun, the founder of the “Zhongzhi Group” through Zhonghai Shengfeng (Beijing) Capital Management.
8.Goldman Lower View of China’s Offshore Equity Markets
Goldman Sachs on Thursday lowered its view of China’s offshore equity markets in the wake of a market rout prompted by Beijing’s sweeping regulatory actions. The bank cited a disproportionately high index representation by tech and privately owned companies for its adjustment of views on MSCI China to “market-weight” from “overweight”. Chinese shares recovered some ground on Thursday after a rout this week in the wake of Beijing’s sweeping regulatory actions that hit firms in the $120 billion private tutoring sector and technology behemoths.
By【G Translators- Financial Team】