The king of a generation of home furnishings bids a sad farewell

Author | Zhou Zhiyu

Having been in the market for nearly 40 years, the once unrivaled "China Mall King" Che Jianxin, who once shone in the market and even live-streamed with Gao Yuanyuan, failed to pull back his core asset, Red Star Holdings, from the brink of danger.

Even Red Star Macalline, which was once the most core asset in Che Jianxin's business empire, is accelerating its "risk cutting" with him to weaken the impact of Red Star Holdings' debt entanglement on the listed company.

According to Red Star Macalline's plan, at the extraordinary shareholders' meeting on August 6th, a proposal will be deliberated, mainly involving exempting Che Jianxin and his controlled Red Star Holdings from some voluntary commitments made earlier, as well as changing the monthly disclosed mall rental data of Red Star Macalline to be reported regularly in the annual and semi-annual reports.

According to analysis by AMC professionals on Wall Street News, the purpose of this proposal by Macalline is mainly to reduce the impact of Red Star Holdings' bankruptcy reorganization and Red Star Macalline's ongoing business adjustments on the listed company.

Since December last year, Red Star Holdings has continuously added information on persons subject to enforcement, with a total amount of nearly 2 billion yuan. In addition, all shares of Red Star Holdings held by Che Jianxin and his wife have been judicially frozen.

If Red Star Holdings can successfully reorganize, Che Jianxin may be able to start anew, but if the reorganization fails and leads to liquidation, then his once-founded Red Star Macalline may have no more association with him.

From a small carpenter in Jintan, Changzhou, to a frequent figure on the wealth rankings, Che Jianxin's legendary rags-to-riches story in the real estate industry over the past 40 years is a fascinating tale.

With the idea of running a home furnishing chain business, Che Jianxin transformed from a craftsman who produced and sold furniture himself to an operator of home furnishing malls.

In 2016, the development momentum of Red Star Macalline once surpassed Wanda, with over 200 home furnishing malls, making it the operator with the most large-scale commercial malls globally at that time. Che Jianxin was thus dubbed the "Global Mall King," and even at his 50th birthday seven years ago, he vowed to build 1,000 physical home furnishing malls in the future.

Such development prospects led Red Star Macalline to gain favor from Alibaba, which once held a 10% stake in Red Star Macalline through convertible bonds. However, as of this year's first quarter report, among the top ten shareholders of Red Star Macalline, Alibaba's shareholding has dwindled to 0.98% and is no longer the third largest shareholder of Red Star Macalline.

Che Jianxin, who was unrivaled in building home furnishing malls, also set his sights on real estate business. In addition to achieving a revenue of billions in 2020 with his own Red Star Real Estate, he also maneuvered in the capital market, generously providing 4.7 billion yuan in rescue funds to Huang Hongyun, the founder of Jinke Group, to jointly resist the acquisition by Sun Hongbin of Sunac.

Unexpectedly, in the blink of an eye, he and Huang Hongyun embarked on the same path, needing to constantly liquidate and seek external support.

In 2021, Che Jianxin first withdrew from real estate development business, selling 70% of Red Star Real Estate's equity and the logistics company to Greentown Group and Greentown Capital, and then sold 29.95% of Red Star Macalline's shares to Xiamen state-owned enterprise Jianfa Group for 6.286 billion yuan At this point, Che Jianxin is relinquishing the controlling rights of the two most core assets in his hands, demonstrating the courage to "survive by cutting off one's own arm" through specific actions.

However, despite Che Jianxin's multiple efforts, he has still been unable to alleviate the pressure brought by the huge debt. The audit report shows that as of the end of 2023, Red Star Holdings' total liabilities amount to 32.525 billion yuan, with a total of 6.083 billion yuan in principal and overdue interest on loans due within one year, and only 110 million yuan in unrestricted cash on hand.

In that year, Red Star Holdings' net loss reached 27.185 billion yuan, just one step away from insolvency. With the further decline in Red Star Macalline's stock price this year, the asset value of the shares held by Red Star Holdings has also significantly shrunk, making it unable to cover its liabilities.

This makes the restructuring of Red Star Holdings a key battle for Che Jianxin to emerge from the trough.

To a certain extent, this also requires the stabilization of Red Star Macalline's stock price and the achievement of a turnaround in operational performance.

The change in the disclosure timing of rental income by Red Star Macalline also has related considerations. Red Star Macalline stated that disclosing rental income monthly is not conducive to the market's objective assessment of the company's business competitiveness, thereby affecting the interests of investors.

Some top commercial real estate professionals believe that this is because after Jianfa Group took over Red Star Macalline, it is accelerating the transformation of its business format, strategically adjusting underperforming shopping malls, which will be a continuous and relatively long-term task. If monthly disclosure of shopping mall rental data continues, it will affect the market's assessment of its business development.

According to the financial report, Red Star Macalline's revenue last year was 11.515 billion yuan, a decrease of 18.55% year-on-year, while the net loss attributable to shareholders was 2.216 billion yuan, a decrease of 496.78% year-on-year. Influenced by factors such as rental income and occupancy rate, at the end of last year, the investment properties of Red Star Macalline had a book value of 92.463 billion yuan, with a fair value change loss of 0.842 billion yuan.

However, after Jianfa Group took over Red Star Macalline, this largest home furnishing retail chain has undergone a series of changes at the business level. For example, Red Star Macalline is no longer just a store, but a collection of capabilities in the ecological chain, aiming to become the first entry point for home decoration traffic; in addition, it has also partnered with Jianfa Group's car dealership, Jianfa Auto, to enter the business of new energy and used car sales.

From the current implementation situation, the transformation of Red Star Macalline by the new controlling shareholder is still in the preliminary stage, and it will take time to reflect on the operating performance. In addition, it also needs to try to avoid the negative impact of the subsequent restructuring of Red Star Holdings on Red Star Macalline.

In just four years, under the spotlight of the "global Mall king," Che Jianxin's leveraged play to leverage scale in the past has become history with the start of a new cycle. Those capital giants who once dominated the market are gradually facing their own endgame