Category: Money Tips Date: 2007-07-27
Scenario analysis shows that when house prices in a certain range, the developers pay less or even not required to pay land value increment tax, and can maintain the same profit level. This is trying to build room Vanke in terms of industrialization, is a unique opportunity: the use of industrial approach, while increasing development costs, by doing so they may not pay or less pay land value increment tax, the profit from the project or only a very small the impact of Vanke may take this opportunity to expand its industry-leading edge
January 17, the State Administration of Taxation issued a "land-value-added tax on the liquidation of real estate development business management issues related to notification" (hereinafter "the" notification ""), the securities market to respond quickly to this, most real estate Industry shares of listed companies in order to limit-down at close. Immediately, the Vanke (000002 market, information, reviews, search), Financial Street (000402 market, information, reviews, search), etc. the company's announcement that clearing land value-added tax on company performance is not too great.
We believe that companies such as Vanke This argument is credible. If land clearing to be taken seriously the implementation of VAT, prices are likely to form a vacuum, so long as the Government always has the approval of the price of the land customs, housing prices could be curbed. Under such a policy environment, through the asset turnover rate was high rate of return of listed companies will form a more significant competitive advantage, which has a huge reserve of land, the product line of rich, industrialized production trials under way, financing and capacity-strong 10000 Division lead will be expanded.
Vanke, etc. affect the land value increment tax has been reflected in the income statement
Although the majority for "notice" and issued a public notice of the listed companies that have been prepaid in accordance with relevant provisions of the land value-added tax, but the question is the key to whether the statements, especially reflected in the income statement.
To Lujiazui (600,663 market, information, reviews, search) as an example, the company issued on January 22 announcement that "previously, Shanghai, tax administration by the requirements of the project in terms of sales of the taxable income of 1% of the land value of prepaid tax, yet to be liquidated. "However, from reports of view, the company ended the third quarter of 2006, yet the end of prepaid land value increment tax.
In contrast, Vanke and Financial Street of the data is more reassuring (Table 1). However, according to our previous analysis, the Lujiazui suspect a hidden profits (see Articles 2006, No. 49, "Morrow Lujiazui holding large amounts of cash dividends"), so no need to worry about their performance dropped sharply, but look forward to a huge revaluation of its land reserves investors can not help but be disappointed.
Real estate development enterprise business taxes include sales tax, urban construction tax and education surcharges, generally accounting for 5.5% of revenue. If the land value increment tax paid, according to provisions should be included in business taxes and surcharges. As can be seen from Table 1, Financial Street business taxes and surcharges and the income ratio of 7.13%, far exceeding the 5.5%, while the company's announcement also clearly states that "real estate sales when the required value of prepaid land tax and land value-added tax provision for the full. "As for the Lujiazui, the company even in the disclosure of accounting policies make no reference whatsoever to pay land value increment tax.
Three semi-annual report of listed companies in 2006 in the main business tax and additional relevant information is also sufficiently validated the above-mentioned judgments.
Vanke sales tax in the semi-annual report will be outside the main business tax and surcharges known as the surcharge can be seen from Table 2 of their main business tax surcharge and additional accounts for the proportion is far lower than the Finance Street, this may be because Financial Street of the real estate development business which led to higher-margin value-added tax of land a heavier tax burden, but also may be due to different accounting treatment.
Table 3 shows Finance Street, and Wanke currently standing in mid-2006 - the amount of land value increment tax is a negative one for that Financial Street business taxes and surcharges included in the amount greater than the actual taxes paid, Vanke the other hand, while the quarterly data from 2006 indicates that three Vanke in the third quarter, more taxes already paid there is no profit or loss.
However, the Vanke notice a sentence might be to dispel investor concerns, "Vanke has been based on land value-added tax policies and the various local government regulations, in the real estate sales, while the land value-added tax paid in advance, in accordance with relevant rules in the past gave the corresponding annual performance cost of withholding the same time, the development of new projects is also taken into account relevant factors. "According to media reports, from 2004 to 2006, Wan Branch, remaining reserves were 4,000 million, 9000 million and 300 million yuan.
From an accounting technical analysis, Vanke's gesture was established. As a rule, enterprises in the real estate development projects can be confirmed after the completion of sales revenue, while its costs before the completion of the project accounts can only rely on estimates, then the Vanke is the land value increment tax in this session will be factored into it, that is, their profits Table is already reflected in land value-added impact on performance, but Wanke and Financial Street of the accounting treatment in different ways.
That being the case, we are under such Wanke and Financial Street expects the company's financial data, its future performance in a value-added tax will not have to worry about land acquisition will lead to profit margins. However, should the income statement, taking into account that some companies did not reflect the impact of land-value-added tax it is necessary to estimate the land value increment tax on the company's performance. We are still Wanke, for example.
We first assume that the number of table 4, do not take into account the cost of land value-added factor is: deductions = (obtain land use rights to pay the cost of + real estate development cost) × (1 +20%) + (selling expenses + administrative expenses + financing costs) + (sales tax + urban construction tax + stamp duty), according to report data on the above formula to estimate the data, you need to note that tax and accounting caliber caliber differences exist. China Vanke (parent company) does not engage in the development of a specific business, so their management costs can not be as deductions, and the management costs of provision for impairment of assets, there is no cash outflow due to the tax authorities are not given recognition.
Among them, obtain land use rights to pay the cost of + real estate development costs in order to estimate the cost of principal operations; selling costs in order to estimate the operating expenses; overhead costs in the consolidated statement of administrative costs - provision for impairment of assets - the parent company management cost to estimate; the financial costs in order to estimate the financial costs statements; sales tax + tax + stamp duty to urban construction business taxes and surcharges to estimate.
Thus, excluding the cost of the project = main business during the period × 1.2 + cost + business taxes and surcharges = 512539 × 1.2 + (37260 +47508-2093 +13-18097 +6605) +50043 = 736286 Wan Yuan.
The value-added = income - deductions = 846003-736286 = 1.09717 billion yuan, then the value added / deductions = 109717/736286 = 14.90%.
According to "Provisional Regulations on Land Value Added Tax," provides the taxpayer to build common standards for residential sale, value-added did not exceed 20% of the amount of deductions that can be exempted from land value increment tax, so if Vanke's total income came from an estate or all of the the added value of real estate for sale / deductions basically the same, then the Vanke not affected by the impact of land value-added tax settlement.
If Vanke report has been included in the cost of the land value-added tax withholding the results look like? Assume the amount of 3 billion yuan, while China Vanke may have to pay 437 million yuan of the land value-added tax.
However, the so-called value-added tax to pay 437 million yuan of land is based on income from an estate or all of the properties for sale on the basis of similar situations. If the company's revenue comes from two flats on a scale similar to, but slightly lower than a value-added deduction of 20%, while a slightly over 20% of the land will have to pay value-added tax could be drastically reduced almost by half, which means that the company estimates the land value-added tax earnings impact of the liquidation on performance, if its value added / net projects and 20% of the boundaries are very close, it was impossible to estimate the potential to pay the tax. Therefore, some market analysts in a simple, rough estimate of the results obtained by the models are not rigorous, investors and so is best not to invest.
House prices likely to be "vacuum zone"
Value-added tax of land on the liquidation of the impact on house prices, there are real estate developers will add to the burden of clamor and thus lead to higher prices, we believe that if the effective implementation of policies, general hand, housing prices may decline.
Suppose there is such a company, the company revenue comes from an estate, its development cost of 5 billion yuan, the cost of 1 billion yuan, accounting for income taxes, the ratio of 5.5%. In this case, the company will get if we raise the price of what kind of results?
Sensitivity analysis showed that sales income reached 899 million yuan real estate time (scenario 2), the companies just do not have to pay land value increment tax, the gross profit margin of 44.40 percent, after-tax profit margin of 18.62%, we should say that such a margin in the market the company has been part of a very high level. Of course, if all the costs accounted for the different ratio of costs and expenses, the gross margin level will be different, but the difference was not significant, it can be seen from part of the broker and the estimation results at Vanke be verified.
However, if the company continues to increase the price, you'll see rising incomes and falling profits, as shown in scenario 3, until income rose to 967 million yuan, with 899 million when compared to an increase of 7.56 percent, the profit would be re-achieve the original level of (scenario 4). The reason why this phenomenon occurs because the value added exceeded the deduction of 20% of a critical point, below the critical point of exemption from land value-added tax, but higher than the critical point is in full charge.
In theory, companies will avoid setting the price at the revenue between 899 million to 967 million yuan, after all, real estate prices are low is more conducive to a quick sale, this price there will be a "vacuum zone." Of course, if the company in order to get higher profits can continue to raise prices, so that its land value increment tax burden will be heavier and heavier, with scenarios 7 and 8 to make a comparison between scenarios can be seen that scenario 8, the highest gross profit margins, but its profit margin is also lower than scenario 7.
Vanke's leading edge will be expanded
National Tax Administration of the liquidation of land value-added tax policy shows the Government's determination to control the real estate market, in view of its greater impact on high-margin business, so you can expect many more real estate development company's future is going to increase turnover way to compensate for the loss of sales profit margins, which is what we are advocating. Sinorama 2006 33 cover article, "Vanke: China Paldi," we wrote, "to implement similar strategies Paldi means companies will be through the development of additional real estate to meet the demand, while not the pursuit of be obtained in a single highly profitable real estate. For the Government, the right suppliers for the right buyers, such companies will undoubtedly be more popular. "
Obviously, aspires to become China's Vanke Paldi competition in the future to seize the initiative. Prior to this, Vanke had spoken more than 25% of their profits not do business on the grounds that is used to huge profits, the 5% of profits, things will not do so. Conceivable that, in the past who used to make ordinary residential mansion in the number of businesses there would be a process of adaptation, while the right product line-rich but to ordinary residential-based Vanke, if because of the land settlement policy of value-added tax will be replaced by ordinary mansion housing may be very natural.
Some market participants believe that the land value-added tax settlement with large land reserve policy on the listed companies are more negative, on the ground is nothing but low-cost access to land in the completion of the project will pay more tax. It seems absurd, because in any case have the land than the not good, access to land, a good low price than high. In fact, this is because these markets are in the use of NAV (Net Asset Value, net asset value) indicators for valuation of real estate companies.
NAV is a static target, compared to the position of enterprises in the competition is more important. In any case, funds in real estate development of enterprises that have an important role, since the land value increment tax will reduce corporate profits and cash flow, companies want to achieve the original business objectives are more difficult. In this case, in order to meet investor expectations for company performance, listed companies must develop some more projects, the only way the future in order to successfully melt into the capital from the market, financing and after you can buy more land to form the a virtuous circle. The question is, how much land reserves in the hands of enterprises do not have much lung power for the development of huge project?
Funds to the importance of the current real estate development enterprise is self-evident. Some media reported that Shanghai developers to prepare a number of joint "letter to," "want to think about business survival." In this story, but there is such a description, "people familiar with the general to determine the land value-added are mostly far from Shanghai far more than 50% of the amount of deduction. above a real-estate business also supports this determination. 'more than just a number! many projects in excess of 300% or more!' "300% What does it mean? According to the above estimates in Table 6, means that gross margins as high as 86.07%! such enterprises there will be survival, only show that its capital-chain problems. In contrast, the majority of listed companies on their announcement said little effect on land value increment tax, indicating information more open, transparent listed property companies to operate more standardized because of the financial storm better health in the more combat power, as the the most outstanding, not to mention of Vanke.
Terms of Vanke, land value-added tax settlement there is a unique role - to speed up its industrial production and money. In 2007, Vanke will be a new milestone in Shanghai two ways to use factory launched the construction of two 18-story high-rise residential. As a pioneer in the real estate industry, industrial production, Vanke's move is behind the existing pattern of China's cheap labor market, under the high cost of industrial production. Therefore, the implementation of industrial production of China Vanke means that short-term performance will be affected, although the long term, this could raise the construction quality and speed development. American scholar Alfred Rappaport in his "10 principles of creating shareholder value," will "enable the company expects to develop a strategic decision to maximize the value, even if the recent gains may be reduced" as the second, signifying its importance and difficult.
We believe that the land value increment tax policy in the future to speed up industrial production of Vanke test and has created conditions for the implementation of large scale, the product sequence from the "Ant Kobo" to "17 miles" Seaside Villas of the Vanke, will be able to find such a project: Although the use of industrial production increased development costs, by doing so they may not pay or less pay land value increment tax, the profit is not the final project, or only slightly affected. In this way, Vanke's management would not be to withstand the pressure of capital markets. Once a successful industrial production, and China Vanke can consolidate and expand its industry-leading advantages, long-term investors, there is no better things than this.
