Dior Water Huahua Accepts Debt Repayment with Property Again, Will Receive Over 200 Properties from 19 Real Estate Companies

The debt issues of real estate companies continue to affect upstream and downstream enterprises. Recently, Diou Shuihua (SZ002798) announced that to accelerate debt recovery, the company plans to accept the debtor’s completed and under-construction properties (including residential units, shops, apartments, and parking spaces) totaling 161 million yuan (including VAT) to offset the 155 million yuan owed to the company, with the difference of 6.0649 million yuan to be paid in cash.

According to the announcement, the aforementioned debtor involves 19 real estate companies, including Vanke, Country Garden, China Jinmao, Huaxia Happiness, and Sunac China, with the debt assets involving over 200 properties in several cities such as Chengdu, Wuhan, Hefei, Guangzhou, and Kunming.

In response, Diou Shuihua stated, “Implementing debt settlement with properties can reduce the risk of bad debt losses for the company’s accounts receivable, improve the company’s financial condition, and have a positive impact on the company’s current and future financial condition and operating results.”

Not the first time accepting property for debt settlement

The reporter from Daily Economic News found that among the involved real estate companies, Vanke is the largest debtor, with the debt assets including dozens of residential units, 4 shops, 10 apartments, and over a hundred parking spaces, with a debt settlement amount of approximately 68.8824 million yuan; followed by Longfor Group and R&F Properties, with debt settlement amounts of approximately 28.5715 million yuan and 16.1188 million yuan, respectively; Country Garden and Rongsheng Properties exceeded 7 million yuan; the smallest, Huayuan Real Estate, had a debt settlement amount of 58,500 yuan.

There are two execution methods for this debt settlement: The first method involves the company reaching a written agreement with the debtor to register the relevant properties with the company for debt settlement and hiring Sichuan Tianjian Huaheng Asset Appraisal Co., Ltd., which has qualifications for executing securities and futures business, to appraise the properties involved that have been registered or are to be registered, with an appraised value of 64.5475 million yuan.

Diou Shuihua pointed out that there is a difference between the appraised value and the debt settlement amount of 94.5158 million yuan for the properties, and after careful consideration, the company believes it is appropriate to make concessions on the asset settlement. Its established asset management department will dispose of the settled properties as soon as the company acquires them to ensure timely capital recovery and avoid adverse effects on the company’s normal production and operation activities.

The second method is for the company to reach a written agreement with the debtor, allowing the debtor to sell the property within the agreed timeframe and use the sales proceeds to repay the company for debt settlement.

Regarding this acceptance of non-cash assets from the debtor for debt settlement, Diou Shuihua stated that this move aims to quickly realize the company’s debt recovery and mitigate potential bad debt loss risks from accounts receivable, ensuring asset safety for the company.

It is noteworthy that this is not the first time Diou Shuihua has accepted property for debt settlement.

As early as May 2024, Diou Shuihua announced that it had conducted debt restructuring with 13 real estate companies, including Rongsheng Properties, Lingdi Group, and Longji Properties.

The announcement at that time indicated that the aforementioned 13 real estate companies would use their completed and under-construction properties (including residential units, shops, apartments, office buildings, and parking spaces) to offset a total of approximately 220 million yuan owed to the company. The specific settled properties amounted to 106 units, some of which involved properties in first- and second-tier cities, such as shops in Longhua District, Shenzhen, and office buildings and apartments in Panyu District, Guangzhou.

In September 2024, Diou Shuihua announced that it agreed to allow its wholly-owned subsidiary Foshan Oushennuo Ceramics Co., Ltd. (hereinafter referred to as Oushennuo) to acquire 100% equity and debt of Shanghai Bipuzhiye, a subsidiary of Country Garden, to obtain three properties, with the transaction amount offsetting Oushennuo’s accounts receivable of 423 million yuan.

According to the reporter’s incomplete整理, the amount of asset settlements with relevant debtors by Diou Shuihua alone exceeded 600 million yuan in 2024. However, despite recovering debts, Diou Shuihua has also paid a certain price behind these asset settlements.

For example, in the asset settlement with Country Garden in September 2024, Oushennuo also signed a “Debt Waiver Agreement” with Country Garden, agreeing to waive 57.1187 million yuan of debt owed by Country Garden’s subsidiaries and affiliated companies for procurement, which was not included in the 423 million yuan debt mentioned in the “Equity Transfer Agreement.”

In fact, due to the industry downturn, extended payment terms, and rising bad debts have become the norm. Under the liquidity pressure faced by real estate companies, clients are unable to repay debts in cash, leading to increased difficulty in recovering Diou Shuihua’s accounts receivable. Accepting properties, shops, office spaces, parking spaces, and equity assets from real estate companies as compensation has become a reluctant choice. Compared to bad debt provisions, these fixed assets, although less liquid, still have the potential for future appreciation or operation.

Company expects continued losses last year

Data shows that Diou Shuihua, formerly known as Diou Home, is one of the leading research, production, and manufacturing enterprises for bathroom and architectural ceramic products in China, with two major brands, “Diwang” sanitary ware and “Oushennuo” ceramics. After 30 years of continuous operation and development, the product line has covered all categories of tiles and sanitary products.

As an upstream supplier, Diou Shuihua has been significantly impacted by the deep adjustment in the real estate industry in recent years.

In previous debt restructuring announcements, Diou Shuihua pointed out that since the second half of 2021, some real estate companies have experienced liquidity pressure. The tightening liquidity of real estate companies has led to difficulties in the payment of project funds and goods, increasing the operational risks associated with the timeliness and safety of accounts receivable recovery. The overall progress of accounts receivable recovery has been delayed, business capital recovery has been weak, and some accounts face repayment risks.

The reporter整理ed its past financial report data and found that from 2022 to the first half of 2025, Diou Shuihua achieved revenues of 4.112 billion yuan, 3.760 billion yuan, 2.741 billion yuan, and 1.176 billion yuan, respectively; the company’s net profit attributable to the parent was in a loss state, amounting to -1.509 billion yuan, -658 million yuan, -569 million yuan, and -84.32 million yuan, with cumulative losses exceeding 2.8 billion yuan. During the same period, Diou Shuihua recognized various accounts receivable and credit impairment losses of 672 million yuan, 342 million yuan, 295 million yuan, and 24.388 million yuan, most of which were bad debt losses from accounts receivable.

As of the end of June 2025, Diou Shuihua’s accounts receivable amounted to 652 million yuan, although this figure decreased by 68 million yuan compared to the end of 2024, it still accounted for nearly 40% of the company’s current assets.

Additionally, according to the performance forecast released by Diou Shuihua for the 2025 fiscal year, the company still has not shown signs of “stopping the decline,” expecting its operating revenue to be in the range of 2.25 billion to 2.35 billion yuan, a decrease compared to the same period in 2024; the net profit attributable to the parent is expected to be a loss of 460 million to 590 million yuan, with the loss still attributed to asset impairment provisions for various assets that may incur impairment losses.

Daily Economic News