In Meeting Room, only the core management of Henglong - Chen Wei, Chen Xi, Song Zhongping, Chen Qiming, Zhang Qingxue, and Su Wantang who was present.
Zhao Chen was sitting in the middle, with the resolutions passed by Board of Directors just spread out in front of him.
"Everyone, I've finished talking about Board of Directors. Let's talk about something else."
Zhao Chen picked up the tea cup and took a sip.
"You have all seen the recent policy signals of Real Estate regulation.
CBIRC Check the inflow of illegal funds Real Estate, Ministry of Housing and Urban-Rural Development Talk to cities where house prices have risen too fast, and the purchase and loan restriction policies in various places are still increasing.
It's not a gust of wind, it's a long-term mechanism."
Meeting Room was quiet for a few seconds.
Song Zhongping was the first to speak.
He has been operating at Henglong for more than ten years and is more sensitive to policy trends than anyone else.
"Zhao Zong, I agree. This time is different from the one in 2014.
That wave was a spontaneous market adjustment, this time it was a top-level design.
'Housing is for Living, Not Speculation' is written into 19th National Congress Report, it's not just words."
Chen Qiming pushed up his glasses and added:
"From the financing side, bank development loan quotas are tightening, trust channels are blocked, and the cost of bond issuance for real estate companies is rising.
Small and medium-sized real estate companies are already carrying the burden, but large real estate companies are not much better.
Henglong took the initiative to shrink last year, and it seems to be the right thing now."
Zhao Chen nodded.
"So I'm thinking one thing - we have to get out of the way before the market turns around.
It's not about running faster than others, it's about running earlier than others."
Chen Wei asked, "How far has the rush gone? Do you still want the profits?"
Zhao Chen leaned on the back of the chair and tapped his fingers on the table twice.
"Profits can be sacrificed. Secondary Market's stock price performance can also be ignored.
The first goal now is cash flow, and the second goal is to reduce debt.
As long as you can turn your inventory into cash, reduce your liabilities, earn a little less or even lose a little, you can accept it.
The debt reduction plan we made at the beginning of the year can be more aggressive when implemented."
Meeting Room was quiet for a moment.
Song Zhongping glanced at Zhao Chen, with a hint of surprise in his eyes.
He didn't expect Zhao Chen to be so decisive.
Sacrificing profits and regardless of stock price - this is rarely heard from Listed Company Chairman.
But then he thought about it, Zhao Chen started taking over Henglong, every step was half a step ahead of others.
Shrinking, Rights Issue, clearing the list, investing in new tracks - every time it seems too radical, but every time it is proved to be right.
This time, maybe it's right.
"Zhao Zong," Song Zhongping spoke,
"If you can ignore profits, I have a suggestion."
Zhao Chen looked at him.
Song Zhongping said:
"Henglong has inventory that takes a long time to be sold out, such as commercial late sales, parking spaces, and old office properties. The individual sales cycle is too long and it is difficult to find customers.
You can package it all at once to intermediaries and let them distribute it.
It doesn't matter if the price is lower, but the money will be returned quickly. Last year, the price of our card was so stuck that the price of one set was not reduced.
If we are willing to give up 15% to 20% profit this year, more than half of these goods can be sold out within three months."
Zhao Chen thought for a while. "How to set the base price when packaging to an agency?"
Song Zhongping said, "At 20% off the book value, the intermediary can earn a 10% to 15% price difference, so they have the incentive to promote it.
We collect cash, pay off debt, and have a clean balance sheet. A win-win situation."
Chen Qiming calculated an account beside him.
"Henglong currently has about 1.5 billion in inventory, mainly commercial tailgates and parking spaces.
If discounted by 20%, about 1.2 billion can be recovered.
The price was 300 million less than the normal selling price, but the price was more than twice as fast. It was worth it."
Chen Wei also spoke.
"Haoyu Construction has a similar problem over there.
We originally planned to develop the land at Banan in the second half of this year, but due to the current market situation, it may not be sold even after it is developed.
My suggestion is to postpone development and sell existing houses first.
Realize all the assets that can be liquidated, hold the cash in your hands, and wait until the policy becomes clear."
Zhao Chen looked at Chen Wei and nodded.
"It is okay to suspend development. But projects that have already started cannot be stopped. If they are stopped, they will be unfinished.
The six projects under construction will be completed and delivered on schedule. Deliver one, earn a sum of money, and repay a debt."
Chen Wei nodded. "Understood."
Chen Qiming pushed up his glasses and added:
"Zhao Zong, one more thing. Last year we sold Henglong Property for 2.6 billion.
Part of that money was used to inject capital into Haoyu, and part of it was used to pay off debts.
If we sell some non-Core Assets this year, for example, we still have two late-stage office buildings and a commercial project that has been suspended, the valuation will be about 1 billion.
If you are willing to lower the price, you can sell it quickly."
Zhao Chen thought for a while. "It is okay to reduce the price. What is the bottom line?"
Chen Qiming said:
"Based on 25% to 20% off the book value. Last year we were stuck at more than 10% off and couldn't reach an agreement.
If you relax a little this year, buyers will come."
Zhao Chen looked around and his voice became calmer.
"Then it's settled. Remove the inventory and package it to an intermediary for a 20% discount. If it is not sold by Core Assets, it will be 25% to 20% off.
Projects under construction are delivered on schedule without delay. Development of land reserves is suspended and cash is king."
He paused and looked at Chen Wei, Song Zhongping and Chen Qiming.
"You three, go back and refine the plan. The situation is special. The debt reduction plan at the beginning of the year may not be as easy to implement as imagined. We must be radical.
Staying alive and living better is our ultimate goal."
Chen Wei, Song Zhongping and Chen Qiming nodded at the same time.
Zhao Chen leaned back in the chair, his expression relaxed a little.
"I know these decisions will impact profits in the short term.
The first quarter report has just passed, and the second quarter report may not look good.
The stock price may also be affected. But I don't care.
The capital market only looks at the long term. When we reduce our debt to less than 20% and have billions in cash in hand, there will be plenty of opportunities."
Chen Xi remained silent beside him.
She didn't speak until Zhao Chen finished speaking.
"Zhao Zong, Henglong Capital, do you want to adjust your investment strategy?"
Zhao Chen thought for a while.
"No need. Henglong Capital operates independently and is not affected by real estate regulation.
Continue to hold the position of Shunxin Agriculture and continue to look for new investment opportunities.
The three directions of consumption, technology and medicine remain unchanged.
Real estate is real estate, investment is investment, the two lines are separate."
Chen Xi nodded. "I understand."
Zhao Chen stood up and walked to the window.
The sun shines in from the window, casting a golden strip of light on the table.
He turned around and looked at the people in Meeting Room.
Zhang Qingxue, Song Zhongping, Chen Qiming, Chen Wei, Chen Xi, Su Wantang--
They are the core management of Henglong and the people he trusts the most.
Today, getting rid of debt is not only his personal will, but also the will of the entire Henglong management.
The golden age of real estate will never return, and he needs to let the big ship Henglong adjust its course.