China's "Crazy" Property Developer Thaihot Surprises With Tripled Profit Amid Debt Crisis
Liao Shumin
/SOURCE : yicai
China's "Crazy" Property Developer Thaihot Surprises With Tripled Profit Amid Debt Crisis

(Yicai Global) April 15 -- Chinese property developer Thaihot Group has tripled its profit, exceeding market expectations, to lift its operating cash flow above zero. 

Thaihot increased its revenue over 27 percent to CNY31 billion (USD4.6 billion) last year, the Fujian province-based firm said in its earning report for 2018 and the first quarter of 2019. Its operating cash flow turned from negative to CNY13.9 billion. The firm's net profit increased three times to CNY972 million (USD145 million) in the first three months of 2019.

The company's funds reached CNY20.6 billion as of the first quarter of this year, more sufficient than the CNY14.9 billion logged at the end of last year. Thaihot made CNY2.8 billion by selling its equity in three projects to Shimao Property Holdings within six days in March. 

The firm, dubbed the "collector of most expensive lands," has been splurging since 2016, carrying out more than 40 mergers and acquisitions costing over CNY50 billion in 2017. The company's net cash flow has been negative since 2012, dropping over tens of billions of Chinese yuan below zero in four of those years. 

Thaihot's deleveraging journey has started later than that of Evergrande Group, Wanda Group and other Chinese top developers that stepped up risk control last year amid a tightening financing environment. "Huang is a bit crazy," property tycoon Ren Zhiqiang, the ex-chairman of Huayuan Group, posted on microblogging platform Weibo earlier regarding Thaihot's founder and Chairman Huang Qisen's moves. 

Thaihot's debt rose from CNY11.3 billion to CNY181.3 billion from 2012 to 2017. After no one signed up to buy the firm's equity in private placement, two major shareholders pledged some 61 percent of the firm's outstanding stocks as collateral for loans.

In 2018, Thaihot's net profit attributable to the parent rose over 20 percent to CNY2.6 billion. The company's total assets surpassed CNY240 billion (USD35.8 billion). 

The firm's short-term debt fell 20 percent to CNY46.1 billion in the first quarter from a previous one. The company's net gearing ratio, which measures debt to outstanding shares, dropped nearly three-fold in the first quarter. 

Last December, the firm had 4.1 million square meters dedicated for projects waiting to be kicked off, 58 ongoing ones covering 14.9 million square meters, and 70 projects on sale. The company has more than 90 projects in total in 29 Chinese cities, including Langfang in Hebei province and Zhongshan in Guangdong. 

Thaihot's stock price [SHE: 000732] rose 1.4 percent to CNY20.5 (USD3.10) in the afternoon.

Editor: Emmi Laine

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Keywords: Thaihot Group , Property