New Town Company is a black horse in the real estate industry in recent years. With the extensive layout of the third and fourth tier cities, the company's scale has been rapidly expanding. In the eyes of people in the real estate industry, New Town has always been a company with low-key appearance and wolf nature. It has been working very hard. Since a few years ago, many departments of the company have been used to weekend meetings.


Wang Zhenhua, the founder of the company, holds a stake in A-share listed company Xincheng Holdings through overseas multi-level relations, including Hong Kong-listed Xincheng Development Holdings. Previously, Wang Zhenhua served concurrently as chairman and President of the company.


On the evening of August 24, 2018, New Town Holding Group issued the announcement of the change of the company's president. Wang Zhenhua resigned as president and hired his son Wang Xiaosong as president of the company for the same term as the current board of directors. Since then, Wang Zhenhua has continued to serve as chairman of the board of directors, member of the nominating committee of the board of directors and chairman of the strategic committee.


Over the years since the company was founded, New Town Holdings has been a local developer in Changzhou, Jiangsu Province. It has not attracted much attention from the outside world. Until 2016, when the expansion strategy was launched, it began to gradually enter the highlight of development.



New Town Holdings takes "Residential + Commercial" as its core business model, Shanghai as its center in urban layout and Yangtze River Delta as its core. It also develops around Bohai Sea, Midwest, Guangdong, Hong Kong and Macao Bay. During the reporting period, the company has entered 98 large and medium-sized cities in China, with sales area of 1812.06 million square meters, an increase of 95.21% over the same period of last year. Preliminary nationalization of the layout has been achieved.



With the rapid growth of scale and performance, New Town Holdings has become a bright real estate stock in A-share market.


But behind the unconventional development of New Town Holdings, there is no hidden danger. On the evening of April 2, the Shanghai Stock Exchange issued four inquiries on the company's annual report data, requiring further explanations on the stock increase, interest capitalization and changes in fair value of investment property.



In fact, the rapid expansion of New Town Holdings has been two consecutive years of total assets growth rate of more than 70%, inventory growth rate of more than 90%. However, under the trend of market sideways or shrinkage, the pressure of de-inventory faced by the group also surfaced. Especially, the company's large-scale layout of the third and fourth-tier cities also brings new challenges to the task of inventory removal.


The "Black Swan" is the most serious blow to tens of thousands of investors. But as far as companies are concerned, the more realistic question is how to continue.


The annual sales of this real estate giant exceed 200 billion yuan, ranking eighth in the industry, where will it go in the future? How much will development be affected? These questions cast a shadow on the development of the whole New Town Group.


New Town Holdings escaped the scourge on July 3, when negative news emerged that A shares had closed. But there will always be those who should come, and that's the response to the start of July 4. For future stock price trends, market expectations are also not optimistic. "At least two stops." Many buyer fund managers judge.



What is more serious is that the company's actual controllers fail to fulfill the company's management responsibilities due to accidents or coercive measures, which often directly triggers the default of the enterprise's lifetime financing, as well as subsequent financing.



"At present, the whole capital market is very tense, especially for real estate financing. When this happens, banks may choose to withdraw loans, and once banks choose to withdraw loans, it may cause a chain reaction." A banker told reporters.



Institutional concerns are even greater. "We are worried that this incident will continue to tighten the bank's financing of real estate, and the circle of new town holders are not very optimistic." A buyer fund manager said.


This is only now publicly visible. In recent years, due to the increasing demand for industrial cooperation and expansion, many companies will shift some of their highly indebted projects out of the balance sheet through equity changes, thereby reducing their total liabilities.

                                                   

The Shanghai Stock Exchange has questioned Xincheng Holdings, believing that there are several joint ventures (joint ventures) with a shareholding ratio of more than 50% that have not been included in the consolidated statements.


"We can generally only see the in-balance sheet liabilities of the housing enterprises, while the out-of-balance sheet liabilities can not be fully seen. The actual liabilities and capital costs of the housing enterprises are higher than those shown in the annual report." A listed real estate fund source disclosed.


"For real estate companies, brand and word of mouth are very important. The business model of the whole new town is to negotiate with local governments to get land through its own Wuyue Square, to get cheaper land prices and then to achieve revenue. This situation of the actual controller of the company will greatly reduce the credibility of the company, and will also make many local governments unwilling to cooperate with the new town. An institutional analyst told reporters.


This real estate company, which originated in Jiangsu Province, has a business model of almost Wanda. It negotiates with the local government in the mode of "Wuyue Square" complex through the two-wheel drive of business and real estate to obtain land with lower cost than its counterparts, and then recovers cash flow through rapid residential development.



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