Banks refute rumors of billions of loans, nearly 50 A-share companies are asked about risks related to Country Garden: the establishment of specialized teams by suppliers | Country Garden | Risks

Since August 8th, Country Garden has been exposed for failing to pay US dollar bond interest. According to statistics from The Paper, as of August 21st, at least 49 listed companies in Shanghai and Shenzhen have been questioned by investors about their business dealings and accounts receivable with Country Garden.

49 listed companies are involved in upstream and downstream real estate industry companies such as design companies, home appliance suppliers, precision decoration companies, building material suppliers, as well as real estate development enterprises and banks cooperating with Country Garden.

Some suppliers claimed that they had "stopped supplying directly to Country Garden Company" before the debt issue of Country Garden surfaced; There are also rumors that banks are taking the opportunity to refute the rumor of a "hundred billion loan", and more companies are saying they will increase their collection efforts through means such as work to housing loans.

Supplier: Establish a dedicated response team

Pengpai News compiled information on investor interaction platforms in Shanghai and Shenzhen, showing that nearly 40 suppliers were asked by investors about their business dealings with Country Garden.

On August 21st, when asked by investors whether Jin Tanglang had used work as collateral to repay the accounts receivable of Country Garden, Jin Tanglang responded that there was very little cooperation with Country Garden, and there were also very few outstanding receivables. Currently, there has been no situation of mortgage repayment.

On August 18th, Baoying Shares responded to investors' questions about "business dealings and bad debt issues with Country Garden" by stating that Country Garden was a former cooperative client of the company, with a small proportion of business scale and no new business added in recent years.

Huida Bathroom, in its response to investors, stated that the company has had business dealings with Country Garden in recent years. Since Country Garden experienced temporary liquidity pressure issues, the company has established a dedicated accounts receivable management team to minimize potential risks and protect the legitimate rights and interests of the company and shareholders through measures such as cash and spot payments, high-quality housing for work loans, and legal litigation.

When responding to investors' concerns about the "Country Garden debt issue", Dior Home stated that the company has been highly concerned and has taken strong measures since the beginning of last year, significantly reducing accounts receivable through cash collection; At present, measures have been taken to further reduce accounts receivable quickly while maintaining continued supply, such as providing high-quality housing with work allowances and cash in stock. The current situation is generally controllable.

Mona Lisa stated that the company has had business dealings with Country Garden in recent years. Since the liquidity issues of some real estate enterprises have arisen, the company has strengthened its risk management of engineering business by establishing a dedicated team, actively shrinking orders for some high-risk real estate projects, and has made individual provisions for bad debts in accordance with relevant accounting standards. At the same time, the company has actively taken measures such as using work to offset housing and legal measures to recover funds.

An investor asked ASK whether it has any business cooperation with Country Garden and whether Country Garden's thunderstorm will lead to the company's large provision for bad debts. On August 18th, Ashchuang Energy stated that after preliminary investigation, as of now, the company has no accounts receivable, notes receivable, or other receivables from Country Garden, and the company has previously ceased direct supply business to Country Garden Company.

In addition, China Haicheng stated that the cooperation project with Country Garden is mainly for supervision business, with a small contract amount. The company has always strictly controlled the progress of project payments and receipts, so the impact of Country Garden's crisis on the company's performance is relatively small.

Daya Shengxiang stated that the revenue generated by the company's business dealings with Country Garden accounts for a relatively small proportion of the company's revenue, and the company continues to increase its control over sales proceeds and accounts receivable, with controllable risks.

Zhongtian Fine Decoration stated that Country Garden has just defaulted on its debts, and the company has very little cooperation with it, with only a warranty deposit of several hundred thousand yuan for its receivable balance; For Xuhui and Jinke, the company had already made individual provision for bad debts last year and actively adopted measures such as using work to offset housing to recover the funds.

Cooperative real estate enterprise: acquisition of equity in cooperative projects

In recent years, more and more real estate companies have collaborated on development projects, and Binjiang Group is one of them. An investor has raised the question, "Will the recent outbreak of debt risk in Country Garden have any impact on the project that the company collaborated with Country Garden at the beginning of the year? Will the company acquire the other party's equity?"

On August 16th, Binjiang Group replied that at the beginning of this year, the company completed the acquisition of 50% equity in the Wenzhou Binjiang No.1 project held by Country Garden. After the acquisition, the company's shareholding in the project was 100%. Currently, the project has been delivered, and except for the delivered project, there is only one cooperation project with Country Garden in Hangzhou. The project is currently under normal construction.

Another investor asked Binjiang Group, "At the time of the Country Garden Thunderstorm, your company's debt is also very high. May I ask if your company has the ability to repay the debt on time?"

Binjiang Group replied that the company's operations are stable, and all business operations are normal. In the first half of 2023, the company achieved sales of 92.58 billion yuan, a year-on-year increase of 35%. The cash recovery from equity sales was about 47.8 billion yuan, and the fund recovery remained stable. As of the end of June this year, the balance of the company's equity and interest bearing liabilities was RMB 38 billion, a decrease of 19% compared to the end of the previous year. The remaining direct financing due this year is RMB 1.54 billion. The company will allocate funds reasonably based on the maturity of the issued bond principal and interest, ensuring timely repayment of the principal and interest.

Cooperative Bank: Refusing Rumors: "Lending Over 100 Billion Yuan to Country Garden"

According to statistics from the interactive platforms of the Shanghai Stock Exchange and Shenzhen Stock Exchange, investors have asked at least nine banks, including Zhejiang Commercial Bank, Jiangyin Bank, Ping An Bank of China, Bank of Communications, Minsheng Bank, Zhejiang Commercial Bank, Bank of China, China Merchants Bank, and Industrial Bank, about Country Garden since August.

The issue involves Country Garden's risk exposure, bad debt amount, loan balance, and other issues in the bank. As of now, only Zhejiang Commercial Bank and Jiangyin Bank have responded to investor inquiries.

An investor asked Jiangyin Bank, "What is the company's risk exposure on Country Garden?" Jiangyin Bank replied that the bank does not have group credit for Country Garden. As of the end of 2022, the proportion of our bank's housing mortgage loans to the total loan amount was only 9.72%, which is relatively small in scale and the overall risk is controllable. Thank you for your interest in our bank.

For Zhejiang Commercial Bank, investors asked, "I heard that your company has lent over 100 billion yuan to Country Garden. Is this true? What is the loan balance for companies such as Evergrande, Country Garden, Rongchuang, and Binjiang? Can you explain?"

In its response, Zhejiang Commercial Bank denied rumors of "100 billion yuan loans". "As of the end of 2022, the largest single borrower loan balance of our bank was 6.3 billion yuan, and there was no situation of exceeding 100 billion yuan. Among the top ten loan customers, the loan balance belonging to the real estate industry was 18.1 billion yuan, accounting for 1.18% of the total loans and advances issued by our bank."