So shocking! The Royal Court Plaza, a landmark in Shenzhen's CBD, has suddenly changed ownership, behind which lies a capital defeat worth 5.7 billion!
From Peak to Abyss: The Fall of a Landmark
Once hailed as the 'Diamond Heart of CBD', the Royal Court Plaza is now forced to 'settle debts with assets' due to an inability to repay 3 billion in debts! This core landmark in Shenzhen has ultimately been adjudicated as a debt settlement at a price of 3.053 billion, leaving 50,000 shareholders with nothing.
The Showdown of Father-Son Business Philosophy
This collapse began with a conflict in business philosophies between father and son:
Father Zheng Shijin advocates 'short and quick': rapid development, rapid sales, ensuring safety
Son Zheng Kanghao is ambitious: taking over at 29, determined to become a business giant like Li Ka-shing.
In 2005, Zheng Kanghao insisted on acquiring Royal Plaza; this gamble relied almost entirely on borrowing. He firmly believed that in the golden era of real estate, asset appreciation would definitely outpace debt interest.
The brutal reality strikes.
Ideals are abundant, but reality is alarmingly stark:
Royal Plaza's annual income is less than 1 billion, with a net profit of only 120 million.
It's tough to even repay interest on debts, let alone the principal.
Under the impact of e-commerce, physical businesses are further burdened.
The debt snowball grows larger, ultimately leading to an explosion.
Failed to save the market; friends are silent.
In a critical moment, Zheng Kanghao tried to save himself:
First listed at 7.49 billion, no one showed interest.
Reduced to 5.6 billion, still unsold.
Found an interested buyer, but the price negotiations collapsed.
The starting price for judicial auction was 3 billion, continuously unsold.
As the vice chairman of the Shenzhen Tongxin Club, Zheng Kanghao's circle of friends is star-studded, including big shots like Ma Huateng and Yao Zhenhua. However, in the face of real crisis, the luxurious circle collectively fell silent, and no one extended a helping hand.
Blood lesson
This case sounds the alarm for us:
Cash flow is the lifeline of a business; profits can be absent, but cash flow cannot be interrupted.
Excessive leverage is playing with fire; when the market turns, it is the first to be burned.
Connections cannot save a business; strength is the hard truth.
Investment must look at the fundamentals; no matter how beautiful the story is, it must return to reality.
The ending is lamentable.
Royal International's net assets changed from 172 million to -1.921 billion, triggering a delisting warning. The Zheng family may lose control, and 50,000 shareholders will go bankrupt.
This once-glorious business empire ultimately succumbed to the most basic business common sense. Its collapse is a microcosm of an era and serves as a profound warning to all entrepreneurs and investors.
#Business failure #Investment risk #现金流为王
The information in this article comes from authoritative media such as Southern Metropolis Daily, Securities Daily, and 21st Century Business Herald.
