June 26, Monday, 9 am, Henglong Building Top Floor Conference Room.
Around the long conference table, nine people took their seats.
Liu Mingyu was sitting at the side, with the meeting agenda spread out in front of him.
He glanced at the clock on the wall and cleared his throat:
"Dear directors, the first meeting of the new Board of Directors Henglong Group will begin now."
He paused:
"First of all, please allow me to introduce the new members of Board of Directors."
He looked to the right:
"Ms. Zhang Qingxue, Henglong Legal Director, everyone is familiar with them."
Zhang Qingxue nodded slightly.
"Ms. Chen Xi, assistant Chairman, is in charge of financial supervision."
Chen Xi also nodded.
Liu Mingyu Turn to the opposite side:
"Ms. Shen Jue, a new shareholder after Shareholders' Meeting, holds 5.36% of the shares."
Shen Jue leaned back on the chair and raised his chin slightly as a greeting.
"Mr. Xu Yong, Vice President Southwestern University of Finance and Economics, a famous financial accounting expert, the newly elected Independent Director."
Xu Yong pushed up his glasses and nodded to everyone.
Liu Mingyu finally looked at another Independent Director:
"Mr. Sun Zhengping and Mr. Wu Hongyuan are familiar to everyone. Mr. Independent Director is re-elected."
Sun Zhengping and Wu Hongyuan smiled gently.
"Okay." Liu Mingyu closed the agenda,
"Let's move on to the first item on the agenda - the election of Chairman."
He looked at Zhao Chen:
"Based on Company Charter, Chairman is elected by Board of Directors.
Mr. Zhao Chen has been nominated, all directors please vote."
"Agreed."
"Agreed."
"Agreed."
Nine hands were raised in unison.
Liu Mingyu smile:
"The vote passed unanimously. Congratulations to Mr. Zhao Chen for being re-elected Chairman."
The applause rang out, not enthusiastic, but sincere.
Zhao Chen nodded slightly:
"Thank you for your trust."
Liu Mingyu quickly moved to the next step, "Next, Chairman Zhao Chen would like to speak."
Zhao Chen stood up and walked to the whiteboard.
He didn't take the manuscript.
"Next, let me talk about the strategic plan for the next six months."
He wrote several keywords on the whiteboard:
Off-Balance Sheet Liabilities, asset optimization, focus on main business
"First, Off-Balance Sheet Liabilities."
He turned around and said, "The remaining 2 billion will be completely resolved within the next six months."
Sun Zhengping nodded slightly:
"This rhythm is reasonable."
"Second, asset optimization." Zhao Chen continued,
"Clean up non-Core Assets, withdraw funds, and reduce the debt ratio."
He paused:
"Third, focus on the main business.
Real Estate is our foundation, and all resources in the future will be tilted towards the main business."
Xu Yong pushed up his glasses:
"Chairman Zhao, I would like to ask, what exactly does 'non-Core Assets' refer to?"
Zhao Chen looked at him:
"For example, a property company."
Meeting Room was quiet for a second.
Shen Jue's brows moved slightly, but he didn't speak.
Sun Zhengping's expression is thoughtful.
Xu Yong was silent for two seconds, then nodded and didn't ask any more questions.
Zhao Chen walks back to his seat:
"Now let's move onto today's core topic – the sale of the property company."
He looked at Liu Mingyu:
"Secretary Liu, put this issue on the agenda."
Liu Mingyu nodded. "Already listed."
Zhao Chen scanned the audience:
"Anyone who has any questions can ask now."
Xu Yong was the first to raise his hand.
"Chairman Zhao," he put down his hand, his tone was calm but sharp,
"Property companies are typical cash cows, with profits of 130 million last year and an estimated 150 million this year.
Why are you selling this High-Quality Assets?"
Zhao Chen nodded:
"Professor Xu has a good question. Does anyone else have questions?"
Sun Zhengping spoke:
"I also want to ask the same question.
Property companies not only contribute profits, but also stabilize cash flow, which is a ballast stone for real estate companies.
To sell it now is to cut off an arm."
Shen Jue didn't speak, just looked at Zhao Chen.
Zhao Chen waited for two seconds to make sure no one asked any more questions, and then spoke:
"Wantang, please help me divide the information."
Su Wantang stood up, picked up a stack of materials that had been prepared long ago, walked to each director, and put down one copy.
Shen Jue opened the first page and raised his eyebrows slightly.
That's a data chart.
<Planning and construction status of commercial complexes in major cities across the country from 2015 to 2017>
Zhao Chen walked to the whiteboard and picked up the marker:
"Let me just tell you a few numbers."
He wrote a number on the whiteboard:
"15 million"
"This is the area of Grade A office buildings that have been built in major cities across the country as of the end of last year. Unit: square meters."
He wrote down a second number:
"28 million"
"This is the area of Grade A office buildings that are currently planned, under construction or to be built."
He put down his pen and looked at everyone:
"In the next five years, the supply of office buildings on the market will be nearly twice the current stock."
Meeting Room was quiet for a moment.
Xu Yong looked down at the data in his hand and frowned slightly.
Zhao Chen continued:
"Let's look at the demand."
He wrote the third number:
"8.7%"
"In the past three years, the average vacancy rate of Grade A office buildings in first-tier cities.
In the first quarter of this year, the number was 9.2%."
The west number:
"10.3%"
"The average vacancy rate in second-tier cities. In the first quarter of this year, it was 10.8%."
He turned around:
"Supply has doubled and demand is weak.
What do you think the vacancy rate will be like in the next few years?"
No one spoke.
Zhao Chen walked to the conference table and picked up another material:
"This is the data of United States."
He opened one of the pages:
"United States The vacancy rate trend of commercial real estate in the past twenty years.
In 2000, the vacancy rate was 8%. After the financial crisis in 2008, it soared to 17%. In 2015, it fell back to 12%."
He paused:
"Why? Because the supply of office buildings is always ahead of the curve.
When the market is good, everyone works hard to build; when the market is bad, the built buildings cannot be rented out, rents fall, and the valuations of property companies plummet."
He closed the material and looked at Xu Yong:
"Professor Xu, you study financial accounting, so you should know better than me - what does the valuation of a property company rely on?"
Xu Yong was silent for two seconds:
"Rely on stable cash flow expectations."
"Yes." Zhao Chen said, "Cash flow expectations are based on the occupancy rate.
When occupancy rates fall, cash flow expectations will fall and valuations will fall."
He paused:
"Right now, the valuation of property companies is still at a high level. Why? Because the market has not yet reacted.
After two years, when the vacancy rate data comes out and investors find that office buildings cannot be rented out, how will the property company's valuation drop?"
He walked to the whiteboard and wrote the last number:
"15 times"
"This is our current external quotation. The general valuation of property stocks in the market is more than 15 times, and the top ones can reach 20 times."
He put down his pen:
"If we sell now, we can sell it for more than 2 billion. If we wait two years..."
He didn't finish.
But everyone understood it.
Shen Jue closed the material in his hand and raised his head:
"Chairman Zhao, you mean, now is the best time to take action?"
"Yes." Zhao Chen said, "It's not that I want to sell it, but if I don't sell it now, I won't have the chance to sell it in the future."
Sun Zhengping was silent for a few seconds, then nodded:
"The data is very convincing."
Xu Yong pushed up his glasses:
"I have one more question."
Zhao Chen looked at him:
"Please tell me."
"After the property company is sold, how will the funds returned be used?"
Zhao Chen answered:
"First, reduce debt. Second, reserve cash. Third, wait for opportunities."
He paused:
"In the next few years, the Real Estate market will undergo a major reshuffle.
Only those who have cash in their hands can survive. Only those who survive can get a bargain."
Xu Yong was silent for a few seconds.
Then he nodded:
"I have no problem."
Shen Jue leaned on the back of the chair, looked at Zhao Chen, and raised the corners of his mouth slightly.
She didn't speak.
But that expression said everything.
Liu Mingyu looked at the audience:
"The motion to sell the property company will now be voted on."
He paused:
"If you agree, please raise your hands."
Nine hands.
Passed unanimously.
Liu Mingyu smile:
"The motion passes."
Zhao Chen nodded:
"Thank you for your trust."
Zhao Chen After saying this, his eyes swept across the audience.
He picked up the water glass, took a sip, and did not put it down immediately.
This action made several directors present slightly stunned - the meeting is not over yet?
Shen Jue leaned back on the chair and looked at him with interest.
Xu Yong pushed up his glasses and waited for the next step.
Sun Zhengping closed the notebook in front of him and raised his head.
Zhao Chen Put down the water glass:
"This next issue does not require a vote. But I want to hear your opinions."
Meeting Room was quiet for a second.
No vote required?
Then why did you bring it up?