Chinese landscaping billionaire Qiaonv He appears to be facing a liquidity crunch. As one of China’s wealthiest self-made women, He chairs Beijing Orient Landscape Ltd., the largest interior design and landscape architecture company in China. She was worth $1.1 billion as of March when Forbes published the 2012 World’s Billionaires list.  Analysts are concerned over the financial risks facing the company.  Li Kongyi, an analyst at Essence Securities in China, said the market has been suspicious about the company’s financial pressure for a long time. Since the company’s initial public offering in November 2009, Orient Landscape has signed a number of large government contracts for public infrastructure projects in second- and third-tier cities around the country. Nevertheless, due to financial arrangements, the company usually received extended payment terms. As the company keeps expanding, it has also been faced with a shortage of fund and increased credit risks.  In 2011, the company recorded a negative operational cash flow of 396 million Chinese yuan(US$62 million), though the operational revenue doubled to 2.9 billion Chinese yuan(US$455 million). Accounts receivable, which indicates money earned but not yet collected, have increased 159% year-on-year to 1.26 billion Chinese yuan ( US$198 million).  In the first quarter of 2012, the company registered both a negative net income of 30.4 million Chinese yuan($4.8 million) and a negative operational cash flow of 383.9 million Chinese yuan($60.3 million).  On Thursday, the Shenzhen-listed company announced that it has set the issuance price at 47.93 Chinese yuan(US$7.50) per share for a secondary public stock offering, expecting to raise 1.65 billion Chinese yuan ($260 million) at maximum. Proceeds from the share offering will be used to replenish working capital and fund its expansion nationwide.  The company’s representative for Securities Affairs Haijun Tang said in a phone interview on Wednesday that the plan of share offering, first raised in June, 2011, is still pending approval from China Securities and Regulatory Commission, the Chinese securities regulator.  Just a month ago, the company announced a plan to issue short-term financing bills with a value of 250 million Chinese yuan($39.2 million).  Yongchao Xu, an analyst at Minzu Securities in China, said financial risks mainly come from payment collections. He said late payments through extension of payment terms is compounding credit risk for the company who is faced with a longer cash conversion cycle and has to deal with credit tightening nationwide.  As part of efforts to reduce non-payment risks and ease cash pressure, Qiaonv He announced in June, 2011 that the company had been requiring governments to provide land collateral for payments.  Li suspected it might be one of the reasons why Qiaonv He set up a property development firm in 2011, known as Orient Land, as a subsidiary of Orient Landscape Group. Details about the firm have been kept under wraps. “They might be preparing for bad debts.” Li said. Nevertheless, he remained cautious about the outlook of property markets when the central government continues regulations.
Analysts are concerned about a cash crunch Beijing Orient Landscape, run by Chinese billionaire Qiaonv He. The company denies such allegations.