# Rongsheng development: keep steady and wait for recovery By [Sara](https://paragraph.com/@sara-15) · 2022-05-23 --- On April 30, several institutions released the sales performance of Chinese real estate enterprises from January to April 2022. Although the progress bar in 2022 has exceeded 1 / 3, the number of 100 billion real estate enterprises is only 3, a decrease of 2 / 3 compared with the same period last year. In fact, under the background of “no speculation in housing and housing” and reducing leverage, the most intuitive change in the industry is that the growth rate of sales scale of real estate enterprises gradually slows down. According to Kerui statistics, in 2021, nearly 40% of the top 100 real estate enterprises’ cumulative performance decreased year-on-year. When the industry falls into a cold winter, “maintaining stability” has become the first priority for the development of real estate enterprises. Stable sales At the beginning of 2022, a research report on Beijing, Tianjin and Hebei released by the China Index Institute pointed out that the market in Beijing, Tianjin and Hebei region cooled rapidly in the second half of 2021, the market entered the adjustment period, and customers’ wait-and-see mood increased. At the end of the year, although real estate enterprises increased preferential efforts and actively marketing, the market transaction scale did not significantly improve, and the power to restore confidence in the market was insufficient. The market environment is sluggish, and the pressure on Rongsheng development, which has heavy positions here, can be imagined. To this end, Rongsheng development timely adjusted its business strategy, controlled investment, timely reduced leverage, strengthened sales and increased the rate of payment collection. It is understood that Rongsheng development implements the two marketing platforms of “home in Rongsheng” and “rongyitong”. On the one hand, we will continue to cultivate deeply and maintain the leading position in the market of key regions. We will maintain the first market share in Cangzhou, Bengbu, Langfang City, Sanhe, Wen’an, Xinzhou, Zhangjiajie, Hanzhong, Zouping and other regions; On the other hand, the Yangtze River Delta region continues to develop and become the main sales area of Rongsheng development. Because of this, Rongsheng development has achieved positive growth in sales. On April 29, Rongsheng Development released its 2021 performance report. According to the financial report, in 2021, the contracted area was 12.0422 million square meters, a year-on-year increase of 2.53%; The contract amount reached 134.558 billion yuan, a year-on-year increase of 5.87%, and 103.51% of the annual contract plan was completed. When the external environment is under pressure, Rongsheng development’s performance is really hard won. According to Kerui data, the sales growth rate of large-scale real estate enterprises rarely showed negative growth in 2021, and the average target performance completion rate was less than 90%. Stable finance Under the condition of ensuring steady growth of performance, Rongsheng development is also making every effort to maintain financial stability. According to the data disclosed in the annual report, as of the end of 2021, the net cash flow generated by Rongsheng development’s operating activities was 16.915 billion yuan, a year-on-year increase of 1137.7%, realizing a positive net operating cash flow for five consecutive years. By the end of the first quarter of 2022, this figure had reached 2.27 billion yuan, a year-on-year increase of 145.33%. Under the background of the continuous tightening of industry funds, Rongsheng development has been able to maintain the operating cash flow in the inflow state for many years, which has strengthened its ability to resist market risks, and can also see its management’s determination to stabilize the enterprise’s finance. Moreover, its debt structure has also been continuously optimized to a certain extent. By the end of 2021, the interest bearing liabilities of Rongsheng development were 55.491 billion yuan, a year-on-year decrease of 24.09% compared with 73.099 billion yuan last year; The monetary capital is 19.699 billion yuan and the owner’s equity is 45.418 billion yuan. Among them, short-term loans have been declining for many years. According to tonghuashun data, from 2018 to 2021, the short-term loans of Rongsheng development were 9.186 billion yuan, 4.125 billion yuan, 1.969 billion yuan and 813 million yuan respectively, with a year-on-year decrease of 13.75%, 55.1%, 52.26% and 58.71% respectively. By the end of the first quarter of 2022, short-term loans fell again by 66.41% year-on-year to 609 million yuan. Rongsheng development said that in 2022, all work will focus on ensuring the safety of cash flow and further consolidate the foundation of financial security. On the premise of taking “Chuang” as the basic working attitude, we will reduce costs, reduce expenses and refinance. In addition, the company also proposed to ensure the delivery, quality and payment collection, pay close attention to internal management, stimulate endogenous power, squeeze water, tap potential and seek breakthroughs, so as to maintain the healthy development and stable operation of the company. Steady development Faced with multiple external environmental pressures in 2021, a group of real estate enterprises have indeed suffered a major impact. However, recently, the real estate market has been warm and positive. On May 4, the bank, the NPC and the CPPCC and other regulatory agencies collectively issued a voice to maintain the stability and order of real estate financing; On April 29, the meeting pointed out that under the positioning of “housing without speculation”, we should support all localities to improve real estate policies based on local conditions, support rigid and improved housing demand, optimize the supervision of commercial housing pre-sale funds, and promote the steady and healthy development of the real estate market. In fact, since this year, measures to stabilize the property market have been introduced in many cities across the country. According to the statistics of Zhongyuan Real Estate Research Institute, since this year, nearly 110 cities have issued new policies to stabilize the real estate market, including many new first tier and second tier cities such as Suzhou, Fuzhou, Zhengzhou, Foshan and Tianjin. The policy content is mainly to promote the release of rigid demand and improved demand. Among them, the number of various real estate regulation policies in the first quarter reached 157, while the number of stable real estate market policies in April (as of April 28) exceeded 60. Kerui Research Center believes that the property market has been “deregulated” in many places recently, and the “recovery” of the real estate market is still expected. It is expected that the core city market is expected to reach the bottom and stabilize in the third quarter. Under the warming of the policy side, with a balanced land layout, Rongsheng development will further stabilize the development of enterprises. It is understood that in 2021, under the basic strategy of prudent investment, it flexibly carried out investment and expansion according to the market situation, and reserved sufficient land resources in key cities such as the Bohai Sea, the Yangtze River economic belt, the Pearl River Delta and the central and western regions. During the reporting period, the company added 29 new land reserves, with a total construction area of 3.0319 million square meters; The amount of land purchase was 12.342 billion yuan, and the amount of equity land purchase was 8.019 billion yuan. By the end of the reporting period, the total construction area of the company’s land reserve had reached 34.689 million square meters, providing sufficient resources for development in the next few years. Yihan think tank pointed out that in 2021, the real estate industry will usher in a restructuring. Sound real estate enterprises will be able to enjoy certain dividends when the market starts to pick up if there are no major mistakes or the impact of external Black Swan events. --- *Originally published on [Sara](https://paragraph.com/@sara-15/rongsheng-development-keep-steady-and-wait-for-recovery)*