Country Garden owes $1.76 trillion and still has extra money to invest?Why can’t Evergrande do that?
Foreword After the national regulation of the real estate industry, the situation of the real estate industry is much more difficult than before, among many real estate enterprises, Evergrande has a crisis, for example, Evergrande Wealth is in a difficult situation, evergrande real estate enterprises are not very optimistic development, Evergrande Automobile also has some difficulties.If evergrande does well in any field, it may be Evergrande Property.Why did Evergrande have so many problems?The main reason is that Evergrande owes $1.95 trillion in debt.In fact, in the real estate market, there are many real estate enterprises in debt, but when it comes to enterprises with very high debt, Evergrande may rank first, Country Garden second, and Vanke third, with debts of 1.76 trillion yuan and 1.52 trillion yuan.Here we can pay special attention to Country Garden because they owe so much money and still invest.So why not Evergrande?Evergrande’s current situation is not optimistic, but Country Garden seems to be developing steadily.In fact, we can understand the specific situation of these two real estate enterprises, although the debt scale is similar, but the real situation is also some differences.For this, Country Garden owes $1.76 trillion and still has extra money to invest?Why can’t Evergrande do that?Of the 1.95 trillion yuan evergrande owes, more than 500 billion yuan is interest-bearing debt. Although it has paid back more than 300 billion yuan, it eventually transferred all the debt to the contractors and developers. In essence, the problem has not been solved at all, while Country Garden only has 300 billion yuan interest-bearing debt.Let’s take a look at short-term interest-bearing liabilities. Evergrande has more than 240 billion short-term interest-bearing liabilities, accounting for about 50% of its liabilities.However, Country Garden’s share is 27%. On paper, Country Garden still has more than 180 billion yuan in cash, while Evergrande only has more than 80 billion yuan in cash, which shows how big the gap is.When we take a closer look at the data, we can see why Evergrande can’t repay so much debt now, while Country Garden can invest.In the first half of 2021, Evergrande lost more than 4 billion yuan, while Country Garden made a profit of more than 20 billion yuan.In order to recover the funds, Evergrande had to sell the house at a reduced price, which was also a reason for the loss of Evergrande.However, Country Garden adopts a prudent policy in operation. Although its profit has declined, it is still operating as usual.In fact, in the real estate market, profit decline is a problem that all enterprises have to face, not only Country Garden.In previous years, evergrande and Country Garden had similar sales scale and profits. But why is there such a big gap now?In the final analysis, there is a problem in the development of diversification.Country Garden is more traditional and has been focusing on the development of real estate business. Although it has invested in some projects recently, the projects involved are not cross-industry projects, so there will be no hidden security risks.However, Evergrande is different. Evergrande has a wide range of cross-industries, such as Evergrande Bingquan, Evergrande Automobile, Evergrande Football, and health, insurance, music and other fields, which of course will lead to problems.The development philosophy of Country Garden is different from that of Evergrande. Yang Guoqiang is low-key and believes that it is very important to focus on the development of his main business. He will not invest so much money in other fields because his company cannot have a better development prospect in other fields.And Xu Jiayin is very bold in business investment, involving many fields, for the real estate business will certainly have an impact.The development model of Country Garden is also different from that of Evergrande. Country Garden mainly adopts the model of cooperative development, that is, other people provide land and Country Garden manages it uniformly. In this way, Country Garden not only makes money, but also does not have so much debt burden.Many years ago, Wang Shi once said that Vanke could not diversify its development. If so, in fact, Wang Shi and Yang Guoqiang have similar business philosophy. After all, we can feel that many real estate enterprises will develop worse and worse after diversified development.Isn’t let companies not to diversify, diversified development or to thingk about can, after all, diversified development, the first thing to invest a lot of money, the second point is to make good development strategy, because of the development of every industry has its own rules, if always use their area of business strategy to develop other areas,So a long time is certainly not suitable for the development of this field.Conclusion according to understand, can slot in order to repay debt, have begun to sell off their assets, and low-cost sales, although the very for money, but compared to the huge debt project, it will only the tip of the iceberg, to be honest, want to had Evergrande at its peak is very enviable, but now reached the point where, really a pity.Country Garden is 1.76 trillion yuan in debt, but still has extra money to invest?What is worse than Evergrande?