In recent months, the real estate landscape in China has seen significant upheaval, particularly for established players like Jindi GroupA notable shift occurred when the third-party consulting firm CRIC published a report on the land acquisition rankings for real estate companies in the first half of the yearWhile many companies are still navigating this challenging environment, Jindi surprisingly fell off the list of the top 100 land acquirers, indicating a troubling trend for the developer.

This absence serves as a bellwether for Jindi’s performance during the first half of the year, hints of which are detailed in their semi-annual reportFollowing a leadership change, the company reported its first half-year loss, marking a stark departure from its historically stable financial performanceThe downward spiral reflects the broader struggles facing the real estate sector, which continues to grapple with a down cycle.

No Land Acquisitions for Six Months

Recently, Jindi disclosed its interim results for 2024, revealing a staggering revenue decrease of 42.67%, amounting to approximately 21.13 billion yuan (around $3 billion). The company reported a net loss of 4.44 billion yuan, a staggering drop from the previous year, with the losses reflecting a 319.39% year-on-year decline in net profit attributable to shareholders, translating into a net loss of 3.36 billion yuan.

If we break it down quarterly, Jindi’s revenue for the first quarter was approximately 6.96 billion yuan, accompanied by a net profit loss of 276 million yuan

Advertisements

This data illustrates that a significant portion—around 67%—of Jindi's revenue was generated in the second quarterHowever, revenue growth did not correlate with profitability, as that quarter alone saw a net profit loss exceeding 3 billion yuan.

One crucial factor affecting profit levels is the ongoing impairments that Jindi has been compelled to recognizeDuring the reporting period, the company accounted for credit losses and inventory depreciation totaling 2.93 billion yuan, leading to a reduction in net profit of 2.28 billion yuanThis significant write-down is symptomatic of the challenges many developers face in the current climate.

Furthermore, the pressure on project turnover has contributed to declining gross marginsRevenue from project settlements plummeted by 54.72% year-on-year, totaling approximately 14.1 billion yuan, accounting for over 66% of total revenue

Advertisements

The gross margin from this business segment also suffered, dropping to 9.24%, down 5.63 percentage points from 14.87% during the same period last year.

The changing dynamics in the market have not taken most observers by surpriseThe overall property market remains under significant pressure, with new construction area across the nation seeing a year-on-year decline of 23.7%, totaling 38 million square metersAdditionally, the national real estate development investment has also plunged 10.1% compared to last year, amounting to around 5.25 trillion yuan.

During an earnings conference in April, Jindi's management openly acknowledged that the market remained stressed in the short term, with pressures on turnover scale and profitability expected to persist for the foreseeable future.

In the first half, Jindi reported a new construction area of only about 590,000 square meters, significantly down from the 1.79 million square meters recorded in the previous year

Advertisements

The company is also adjusting its yearly construction plans, now expecting to start around 950,000 square meters and complete 1.071 million square meters for the year.

Following these adjustments, Jindi has refrained from acquiring new landAmidst this climate, CRIC's report for the first half of the year lists Jindi's absence from the top 100 land acquirers, contrasting sharply with last year's 7.62 billion yuan investment, where the company held the 21st positionBy the end of June, Jindi had a total land reserve of about 35.89 million square meters, with 75% located in first and second-tier cities.

On the sales front, Jindi also faced challenges, securing a contracted area of approximately 2.403 million square meters and a contracted sales value of 36.11 billion yuanThe company's ranking on the sales leaderboard slipped to 14th, overtaken by China Railway Construction.

Significant Cash Flow Gaps

Outside of its core real estate operations, Jindi operates two additional business lines

• Japan's Cautious Stance on U.S. Rate Cuts
• UK GDP Grows Only 0.1% in November
• The Global Wave of Interest Rate Cuts
• Anticipating the Q4 Earnings Season for U.S. Stocks
• The Great Global Collapse: Reasons Uncovered!

The property management segment saw a year-on-year revenue increase of 2.58%, reaching 3.714 billion yuan, although the gross margin dropped by 2.42 percentage points to 5.64%, reflecting the lowest profitability among Jindi's three business linesMeanwhile, revenues from property leasing and other businesses declined slightly to 1.906 billion yuan, though this segment maintained the highest gross margin at 57.45%.

While these supplementary operations have offered some buffer against the real estate downturn, their impact has been limitedIn the first half of the year, cash receipts from sales of goods and provision of services plummeted by 41.35% to 21.34 billion yuanHowever, due to a decrease in receivables and tax expenses, the group recorded a notable increase in net operating cash flow to 4.59 billion yuan.

Maintaining stable cash flow remains a priority for Jindi

During the first half of the year, the company scrutinized its portfolio to raise capital, disposing of several projects including the Xi'an Xifeng Road Urban Renewal Project and shedding equity stakes in the Shaoxing Metropolitan Cloud ProjectAdditionally, Jindi engaged in collateralizing the Beijing Jindi Center and its property management stock with various banks, while accelerating multiple project management initiatives post-investment.

The need for refinancing remains pressingThis year marks a debt peak for Jindi with a total of nine domestic bonds, one offshore bond, and three asset-backed securities (ABS) maturing, translating to a total repayment obligation of approximately 18 billion yuan.

As of the reporting period, Jindi successfully serviced several mid-term notes, including the “20 Jindi MTN001B” and “21 Jindi MTN001.” On August 12, the group intends to fully repay the capital and interest on a $480 million senior note and $1.188 million in interest, marking a crucial milestone, as this dollar bond represents the largest portion of Jindi’s outstanding debt.

Despite these efforts, a financial gap persists

As of the end of June, the group reported a short-term loan balance of 333 million yuan, down 37.61% from the previous year, with approximately 39.16 billion yuan in non-current liabilities due within a year, against cash reserves of only 23.12 billion yuan.

Additionally, Jindi faces two upcoming bond repayments in the latter half of the year, amounting to 3 billion yuan combined, maturing in November and DecemberThe company has indicated that it will continue to ensure operational stability by exploring project collaborations and expanding financing channelsBy the end of June, Jindi had secured a total credit line of 252.1 billion yuan from various financial institutions, with 87.9 billion yuan already utilized, leaving an available credit limit of 164.2 billion yuan.

However, whether these credit lines will sufficiently alleviate Jindi's financial pressure remains to be seen.