Greenland stumbles in Fortune Global 500 before rising again; top 100 ranking by 2020 seems doubtful (now #277)

So, what's up with Greenland Holding (or: Holdings) Group, the 70% owner (via its subsidiary Greenland USA) of the joint venture Greenland Forest City Partners? The JV is developing the Atlantic Yards/Pacific Park project, with the exception of the arena and the 461 Dean tower.

Bottom line: Greenland's not growing revenues as fast as it had hoped, even as the conglomerate, best known as a domestic property developer, has expanded significantly outside China into major world cities like New York, Los Angeles, Toronto, Sydney, and London.

Greenland's English-language logo

When I wrote in April 2015 about Greenland, it was clearly on an upswing. It had been ranked at 268 in the 2014 Fortune Global 500, with $60.7 billion in assets, $41 billion in revenue, a 29.2% rise in revenues and a 11.2% increase in profits. (The rank relies on revenue in the past fiscal year.)

That was a significant jump from 359 in 2013 and 483 in 2012. Since then, however, Greenland's rise has slowed, reversed, and then partly recovered, casting severe doubt on its goal--as of 2015--to rank among the world's top 100 companies in five years, by 2020.

Its assets have increased significantly, but revenues and profits have been much more variable. It remains owned significantly by the government of Shanghai, though since 2015 it's been listed on the Shanghai Stock Exchange, "part of Shanghai’s increasing efforts to make its state-owned enterprises more profitable, efficient and market-based, in keeping with China’s reform agenda," according to a February 2015 press release from Greenland Australia.

An unsteady path

Indeed, while Greenland rose ten slots to 258 on the 2015 Fortune Global 500 (announced in July 2015, after I last wrote), thanks to a 3% increase in revenue, that accompanied a 32% drop in profits, as further described in charts below.

In 2016, Greenland's Global 500 ranking reversed, declining to 311, behind both the 2014 and 2015 ratings. While profits rose 21.2%--from a low base--revenues went down 22.3%.

The just-released 2017 ratings indicate some progress, but not a full recovery for the Greenland. Fortune ranks the firm 277 on the 2017 Fortune Global 500, indicating a 12.8% increase in revenue, to $37.2 billion. That's a decent increase from 2016, but Greenland revenue remains below 2015 and 2014 levels.

2017 chart of historical Global 500 ranking, via Fortune

Doubts about top 100

Could Greenland reach the top 100? Its revenues would have to grow 91% to exceed $71.2 billion, the current figure for the company ranked 100 (China Southern Power Grid). That's highly unlikely, given the past pattern.

Moreover, Greenland's 2017 annual ranking described a 1% decline in profit. So expansion does not provide a cash cushion from profit, as opposed to cash from borrowing, which typically comes with more constraints.

2017 chart via Fortune

(For comparison's stake, Greenland dwarfs Forest City Realty Trust--parent of Forest City Ratner, aka Forest City New York--which, according to its latest 10-K annual report, had $929.5 million in annual revenue, based on $8.2 billion in assets.)

The impact in Brooklyn?

What does the Greenland ranking mean for Atlantic Yards/Pacific Park? Given Greenland's general opacity regarding the project--aside from saying new buildings will start (contradiction joint venture junior partner Forest City) or claiming the project would be done in eight years--we can't be certain.

But, as I'll discuss further at a later date, the tighter financials suggest less reason for Greenland to be as patient or as generous as it once was regarding the project. And, as slower than hoped-for sales at the 550 Vanderbilt condo suggest, local revenues could be coming faster.

Moreover, Greenland's peer developers, if not the company itself regarding Brooklyn, have reason to be cautious, as the Wall Street Journal reported 11/29/16:

Some Chinese real-estate developers are lowering their profit expectations on U.S. projects or shelving them entirely as frothy prices and rocky partnerships force them to rethink their strategies in the American market.

Greenland was China’s "most aggressive” developer, said the Wall Street Journal in an 8/5/14 article, because it could buy into projects--like Atlantic Yards--with its own equity rather than seek loans. But it seems unlikely Greenland would put up its own money just to get another building started; each of the towers in Atlantic Yards/Pacific Park has required financing.

2017 Fortune Global 500