Chapter 209 Analysis
“The old city renovation project involves a total of 42 old communities and shantytowns, with nearly 50,000 residents, a construction area of more than 700 million square meters, and a total area of nearly 10,000 acres, including streets and parks.
In terms of planning, capital investment reaches 34.78 billion yuan. The planning period is 4 years.
In terms of capital investment alone, basically no private enterprise can afford it independently. "
The person above who is doing project analysis is Huo Zhinian himself. He does not speak very fast. In fact, most of the people here know what he is talking about.
"Enterprises with national prefixes don't do this kind of thing, so this is a very hard nut. If you take it, it will not only be outstanding, but also establish the company's position in Yun Province in one fell swoop.
In other words, as long as this project can be completed within a few years, we will most likely be the only one who can handle similar projects in the future.
The original plan was to complete the demolition and reconstruction work within 4 years, which placed higher requirements on construction progress and financial stability.
Considering that these are residential environment improvement projects, the impact of the funds we invest and the contribution to local political performance must be considered by both the current and next leaders, so our plan is arranged like this.
The signing must be a blanket contract, but the work must be carried out in batches and can be completed within three and a half years.
Otherwise, our own capital costs and sunk costs will increase by at least 17 percentage points.
If we pool our capital advantages and cooperate with financial institutions, coupled with the government's credibility guarantee, we can shorten the cycle of recovering funds.
Generally speaking, the biggest fear of real estate projects is the unstable capital chain, but we do not have this problem.
In addition, there is another prerequisite to ensure the stability of funds, that is, the implementation of zoning must cover complete communities, rather than pouring money into all shantytowns like water.
Therefore, we recommend discussing with the government how to implement this.
We recommend that we still adopt the model of overall development and operation and project bundling and phased construction.
This time the scale is relatively large, and ordinary private enterprises do not dare to take such a big risk, especially those with insufficient liquidity, because they cannot afford the capital costs.
So for the specific operation process, first of all, regarding the government's collection and storage of funds for demolition, based on comparative estimates of Yuncheng housing prices and planned amounts, we believe that the planned capital investment data is on the high side, and is falsely high by 5 to 7 percentage points.
Analyzing Yuncheng's land prices, house prices and commodity price factors, the funds for the purchase and storage part should not exceed 4 billion yuan, but if we concentrate the funds on one-third or one-quarter, we won't need that much money.
We help the government advance the funds for collection and storage, and the next step is the construction of supporting facilities.
This part includes resettlement housing, daily necessities markets, streets, parks, greening, lighting, etc. It depends on the government's requirements.
It should be noted that for only the collection and storage of funds, the government will put this cooperation right out for bidding. This is the first time for bidding.
The content of the tender should stipulate the two major items: the amount of funds and the demolition and resettlement project.
We should be able to win this, because there are probably not many companies that are willing to put 4 billion yuan in cash into a government-designated account for at least half a year.
After signing the contract, we will advance the funds needed for demolition, collection and storage according to the contract. Of course, the interest will ultimately belong to the government, and we will get nothing.
The second bidding is a package bidding for all the supporting construction projects mentioned just now, including resettlement housing, land after demolition, acquisition and storage, etc.
We must also win the bid for this second tender.
Because the land and new construction in the second tender are the biggest source of profit for the project.
Otherwise there won’t be much profit.
The price of the second tender must be higher than the first. Part of the price difference between the two auctions will be taken away by the government, no matter what the name is.
If we win the bid for the first time, we will definitely strive for the second time, so it is certain that we will find someone to raise the price, and we must accept this.
After winning the first bid, when signing the contract, the use cycle of the collection and storage funds was proposed, which means that the government must clarify the time point for completion of the land collection and storage.
No matter how many processes and procedures they need to make the repossessed land eligible for sale, the time cannot be too long.
Otherwise, the interest alone on the billions paid in advance would keep them going.
…
To sum up, the most difficult part of the entire project is not the issue of advance funds.
The most difficult part is to get the government to agree to our plan, and to continue to maintain this plan during the subsequent demolition and renovation of more than ten communities. Only then can we use a larger amount of funds to gain the first-mover advantage.
The advantage of the project plan is that the government did not spend a penny. It not only solved the project's problems, but also earned a large sum of price difference and interest. This part of the funds is measured in tens of millions.
I don’t think the government will be unmoved. I think what needs to be paid attention to is how to prevent the remaining projects from being taken over by a consortium formed by local enterprises...
Finally, what needs to be added is that we are a newly arrived company and it is recommended that all demolition work be handed over to the government. As a company, we will not participate or interfere.
Just keep an eye on the collection and storage time.
…”
Chen Shaojie and Huo Zhiqiang sat side by side, listening but never asking any questions.
The purpose of Huo Zhinian's speech above is to unify his thoughts, which is what he is used to doing.
The whole process seems smooth and well-founded. No matter how you look at it, the PPT is really simple, just maps, photos, data and tables.
Everyone is listening carefully and recording the data and information they care about.
Chen Ping'an sat below, dumbfounded as he listened.
Isn’t this demolition and resettlement all the government’s business?
How come it suddenly became a business issue?
Another matter worth tens of billions has been decided like this?
Also, will there be any trouble during the demolition process? This kind of thing often makes the news...
He thought about it down below and always found this plan very interesting. It would have been impossible for him to come up with it himself.
He turned on his computer and searched for a while and found that this case was not very rare.
In fact, it is just a model of PPP.
But, he has never seen it!
In contrast, Chen Xiaolong showed no change in expression.
Apparently he must have known or at least heard of similar cases.
Seeing that he was listening very seriously, Chen Pingan asked in a low voice: "Do you know something?"
Chen Xiaolong shook his head slightly, "I don't know, I don't know the specific situation. Anyway, there will be internal communication at home after the meeting. You will know then."
Seeing that he had no intention of talking to him, Chen Pingan had no choice but to calm down.
The next thing is how the two teams work together.
Until the end of the meeting, Chen Ping'an didn't figure out that this project required so much money. How did the two companies plan to allocate the funds, which projects would they do, or how would they divide the money?
