Land King Fallout Begins, MOF Owned Cinda Swings to Loss

From June: Ministry of Finance Owned Cinda Real Estate Becomes Land King. In addition to an example of the trend covered in SOEs and Financial Companies Push Private Developers Out With Insane Land Grab, the story provided an important anecdote to explain the rush into land.
Cinda real estate so "crazy" wins the king, regardless of whether they make money in the end, it has completed the parent company China Cinda asset allocation needs, to some extent, it is more important than pure profit.
The land grab of 2016 is partially an asset allocation story , as SOEs and financial companies looked for "good" assets. That sentence from June proved prophetic though, as profits tumbled.

Reuters: Cinda Real Estate's H1 net profit down, plans bond issue
* Says it plans to issue up to 11 billion yuan ($1.65 billion)bonds

* Says H1 contract sales up 32.4 percent y/y at 6.2 billion yuan

* Says H1 net profit down 44.7 percent y/y at 130.4 million yuan
The headline from this article says Land Costs Soar 200%, Cinda's Main Business Sees Rare Loss
NBD: 抢地王致财务成本剧增200% 信达地产主业曝罕见亏损
n the first half, Cinda Real Estate operating income of about 3.07 billion yuan, an increase of 41.8%; net profit attributable to shareholders of listed companies 130 million yuan, down 44.66 percent. This is not all, excluding non-recurring items, Cinda Real Estate lost more than 70 million yuan, down 131%.
Financing land purchases helped crush earnings:
"Daily News" reporter found that the study of history data, since this is the letter of the backdoor listing of real estate by the end of 2008 the main business rare "loss" phenomenon, which with its frequency during the reporting period to grab the land king, higher financing costs swallowed operating profit and other risks seem inseparable.
The market is worried:
The outside world is more concerned that, in the current market environment and policy context of increasing uncertainty, how will these high lad king prices emerge in the secondary market?
From the introductory material, the estate is known as China Cinda Cinda's real estate development operation platform, the company is actually controlled by the Ministry of Finance, the prominent background is evident, but its operating results can hardly be called beautiful.
The land grab drove up financing costs by 200 percent:
"Because the land deal is more concentrated, the financial costs of financing generated during the reporting period, an increase of 193.26 percent." Cinda Real Estate Center Daily News said the case statements.
Cinda Real Estate's losses come amid a strong real estate market in the first half, the strongest in at least three years and better than what will unfold in the second half of the year.

Retuers: Cinda Real Estate's unit wins land auctions for 12.3 bln yuan in Hangzhou
SCMP: What Cinda’s financing model means for the property sector
When little-known mainland developer Cinda Real Estate snapped up a plot of land in suburban Shanghai in June for four times the starting bid price, it highlighted a new normal in the real-estate business — state-owned enterprises using their financial muscle to amass land as an asset, rather for its development potential.

The growing number of examples is now causing serious concern among traditional developers, who fear they will continue to lose out to deeper-pocketed state rivals who have access to cheap funding, and who do not necessarily need to show a quick return on their investment.

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