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| Daily falls of 8% and more is common with this stock. |
Central China Real Estate (CCRE) is one of my sizable investments. It is one of those "high risk, high reward" bets, and probably the riskiest. Here is a note to myself, perhaps as a reminder to never take such bets again.
It is well known that the company balance sheet is in great trouble. Its share price currently reflect a price to book of... 7 cents to 1 dollar of asset.
Looking at their interim report in late Sep 2022, the numbers look equally ugly.
Short Term Debt,
...of bank loans and other loans, 5761.86m
...of senior notes, 5354.493m
Long Term Debt,
...of bank loans 3551.778m
...of senior notes, 10972.022m
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Payables,
...51622.988m (!!!!), of which 40B of it does not involve associates or entities controlled by the owner.
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Assets
... stated as Inventories, of which are Properties, under development 88075.223m (could this figure be trusted, since property prices are falling?)
... of properties already developed: 6554.351m
Cash: 3622.412m
Restricted bank deposits: 2885.414
Receivables: 5548.762
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as of now, the only good news is very publicly known: Henan Tongshenzhiye would be issued 29.01% of the shares float for a convertible bond, yielding 5% at 708m HKD. IMO, this is not a large sum and conditions laid out are not publicly stated.
If we were to trust the asset value, it sums up to a total of 106686m, or 106.7B.
The liabilities (including the monstrous payables), total up to 77263m or 77.263B.
As such, it is clear that the market believes the property sales will suffer for a long time, and/or the value of the properties (be it developed or still developing) are overstated.
I am cautiously watching for news and believe that short of a miracle, it will be a long, winter-like wait till the company emerges from the weight of its troubles.
一年一年过。
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