Aoyuan, which has been out of the news for a long time, has released an eye-catching piece of news.
Recently, China Aoyuan announced that the Middle Eastern investment group Multi Gold Group Limited has become a new strategic investor and has obtained a seat on the board of directors as the chairman.
Driven by this news, China Aoyuan's stock price soared on September 23. As of the close, China Aoyuan reported 0.27 Hong Kong dollars per share, up 126.89%, with a total market value of 1.018 billion Hong Kong dollars.
Although it shows a lot of good news in terms of sentiment, the main goal and core data of this transaction involving Aoyuan are very unclear. This is mainly reflected in the difficulty of confirming the identity of Aoyuan's strategic investor in public channels, and the consideration for the share transfer in the transaction, as well as the payment method, have not been disclosed, making the essence of the transaction very confusing.
The biggest change this transaction has brought to Aoyuan is that its founder, Guo Ziwen, has given up control, adjusting from an executive director to a non-executive director and no longer serving as the chairman of the board.
Due to these uncertain factors, investors are also cautious about this transaction involving Aoyuan. At present, Aoyuan's operating conditions are still poor. Although there has been some progress in debt restructuring, Aoyuan's domestic debt has been extended for the second time, and its own cash flow is also very tight.
For such a private real estate company, the motive for Middle Eastern capital to take over Aoyuan is indeed worth investors' attention.
Middle Eastern capital enters the gameAfter this transfer, the proportion of shares held by Guo Ziwen will continue to decrease.
According to the announcement, Aoyuan's major shareholder Ace Rise Profits Limited agreed to transfer 622 million ordinary shares to Multi Gold Group Limited.
After the transaction is completed, Ace Rise and Multi Gold will hold approximately 502 million and 622 million shares of Aoyuan, respectively, accounting for about 13.31% and 16.48% of the total share capital.
At this point, Aoyuan founder Guo Ziwen will hold 16.38% of Aoyuan's shares through Ace Rise and Joy Pacific, and Multi Gold's shareholding ratio exceeds Guo Ziwen, becoming the single largest shareholder of Aoyuan.
It is worth noting that Aoyuan did not disclose the detailed delivery method and debt subordination of this transaction in the announcement, and even the transaction consideration was not disclosed to the outside world.
The biggest change brought by Multi Gold may be the change of Aoyuan's chairman. With the entry of Multi Gold, Guo Ziwen will be transferred from the executive director of Aoyuan to the non-executive director and will no longer serve as the chairman of the board of directors. However, Guo Ziwen will continue to provide guidance on Aoyuan's development strategy and will receive a director's remuneration of 400,000 Hong Kong dollars per year from Aoyuan.
Subsequently, Aoyuan also appointed Alobeidli, the actual controller of Multi Gold, as the chairman of the board of directors, who will receive a director's remuneration of 800,000 Hong Kong dollars.
According to Aoyuan's announcement, Alobeidli has more than 20 years of experience in various fields, including technology, real estate, and strategic consulting. Since 2023, Alobeidli has served as the general manager of Magnuvest Investment. Prior to that, Alobeidli served as the CEO of M5 Telecom and M5 Consultancy from 2001 to 2015 and from 2015 to 2023, respectively.
It is difficult to find evidence of the above-mentioned career experience of Alobeidli from public channels, and the mentioned companies are not well-known companies, and Alobeidli himself is not a well-known investor, which is one of the reasons why investors are reserved about him.
A person from a rating agency told a reporter from the 21st Century Economic Report that given Aoyuan's current operating conditions, whether this transaction is a "real investment" still needs to be observed. "It is not ruled out that it is one of the means of capital operation."The chairman of a private equity firm also holds the same attitude. He told the 21st Century Economic Report reporter that because Aoyuan has not disclosed specific transaction terms, he remains cautious about the nature of this transaction. "Only by seeing the specific terms and these falling into substantive objective facts can we see what the two parties of the transaction have exchanged."
Aoyuan has not yet emerged from the trough.
The arrival of Middle Eastern capital has pushed up Aoyuan's stock price, but the current survival status and operational quality of this real estate company are not optimistic.
In the first half of this year, Aoyuan once recorded a paper profit due to the success of debt restructuring. According to Aoyuan's 2024 interim report, during the period, China Aoyuan achieved a turnover of 4.643 billion yuan, a net profit of 22.1 billion yuan, and a net profit attributable to the parent company of 22.312 billion yuan.
This does not match the physical feeling. As of the end of June 2024, China Aoyuan's total assets were 188.6 billion yuan, and total liabilities were 190.4 billion yuan. The net assets have already become negative, involving an amount of unrepaid foreign debt of 45.083 billion yuan, in a state of severe insolvency.
In addition, Aoyuan's sales in the first half of this year were only 5.8 billion yuan, and there were no public large-scale revenues, which also made it difficult to contribute effective profits. Aoyuan explained that this was due to the profit brought by the completion of foreign debt restructuring. If this impact is excluded, Aoyuan still recorded a loss in the first half of the year. It is worth noting that Aoyuan is a rare real estate company that handles debt restructuring through this accounting method.
At the same time, Aoyuan's debt pressure has not been reduced. As of the end of June this year, China Aoyuan's cash and bank deposits were about 1.6 billion yuan; as of August 31, 2024, the principal amount of overdue debt that Aoyuan Group failed to repay was about 43.077 billion yuan, an increase of about 1.66% from the end of the previous month. The amount involved in unresolved litigation is about 56.951 billion yuan.
Due to the almost drying up of cash flow, the redemption of Aoyuan's public debt is also not very optimistic. Last year, after the overall extension of Aoyuan's domestic debt was successful, it still failed to proceed according to the new redemption plan. In the first half of this year, Aoyuan's domestic debt also sought another extension.On September 10th, China Aoyuan also issued an announcement, declaring an extension of the holding period for its overseas debt restructuring plan by six months to March 20, 2025.
Amid a backdrop of negative net assets and debt repayment not meeting expectations, the survival prospects for Aoyuan remain unclear. Under these circumstances, whether the entry of Middle Eastern capital into Aoyuan can improve the situation remains highly uncertain, and investors and the capital market will continue to watch this transaction closely.