Greenland Holding Group, parent of Atlantic Yards/Pacific Park master developer, rises in Fortune Global 500, along with Chinese cohort

The 2020 edition of the Fortune Global 500 ranking of the world's largest corporations illustrates the rise of China, with 124 companies based in China (including Hong Kong), versus 121 in the United States, the first such change in balance.

Amid that, Greenland Holding Group, the Shanghai-based conglomerate parent to Atlantic Yards/Pacific Park master developer Greenland USA, has risen to 176 from 202, part of a mostly steady rise that nonetheless lags behind previously stated ambitions.

Note that Fortune's ranking is based on revenue in the past fiscal year, and does not address issues of debt, which shadow ratings agencies' more tempered views of the company.

A new rivalry

Fortune, in a major story headlined in the August/September 2020 issue as "And then there were two" and online as Why the China-U.S. rivalry is at a crucial turning point—and what it means for business, suggests it remains to be seen which country will emerge from the pandemic with less economic and social damage, how the economic rivalry will play out, and which U.S. presidential candidate (and policy) will prevail.

From Fortune: Greenland's mostly steady rise

Given the size of the Chinese consumer market, U.S. companies likely won't leave China, Fortune suggests, while, despite new calls for U.S. on-shoring, Chinese companies may offer unique expertise and thus manufacturing advantage.

Then again, as Fortune points out, 68% of the Chinese companies in the Global 500 are state-owned enterprises, relying on governmental hands rather than open-market competition:

The nature of these companies makes a big difference to their power in the strategic rivalry. The key question is this: How have they grown so large? “Was it by innovation, smart managerial practices, and good corporate governance,” asks [Scott] Kennedy [of the Center for Strategic and International Studies], “or have they gotten there through the power of the Chinese mercantilism and largesse from Chinese state-owned banks?”

From Fortune

A state-owned enterprise?

Greenland, of course, is a significantly state-owned enterprise with a corporate identity its local representatives have been known to obfuscate. It is traded on the Shanghai Stock Exchange, and described by Fortune as private.

Ratings agency Moody's, in a 7/28/20 statement, called Greenland "a state-controlled enterprise that primarily focuses focuses on the real estate sector, with dealings in construction, finance and auto dealerships."

Moody's noted that, on 7/26/20, "Greenland Holding announced that Shanghai Urban Construction Investment and Shanghai Real Estate Group, the two state-owned companies that together own 46.37% of Greenland Holding's shares, plan to divest up to a 17.5% stake in Greenland Holding."

That would further lower their effective ownership, but, combined with 29% shares in an employee-owned equity fund (according to Wikipedia, without footnote), would retain effective control.

Moody's said it expects Shanghai SASAC (Shanghai Municipal State-owned Assets Supervision and Administration Commission) "will exercise prudence" in future transactions because certain bond financings require that state-ownership remain over 40%.

Steady growth

The statistics from Greenland indicate significant, steady growth, at least over the last three or four years.

From Fortune

Consider: its revenues reported in 2020 approach $62 billion, up from $52.7 billion, $43 billion, and $37.2 billion in previous years.

Its profits, $2.1 billion, have risen from $1.7 billion, $1.4 billion, and $1.1 billion.

That sounds like good news. On the other hand, Greenland's aggressive growth has led Moody's to set a Ba1 corporate family rating, which is the highest rank of speculative, or "junk," rather than investment grade. (I'll write more about this separately.)

From Fortune

A good year

According to a 4/27/20 news brief from Reuters, Greenland reported a 29.6% increase in net profit, with a total profit of $2.1 billion.

Overall revenue, according to this separate article, was up 23 percent, with assets up 11 percent, to $160 billion--a huge figure.

More recently, Global Capital reported that Greenland and another company raised a total of $900 million in high-yield ("junk") financing.

In larger perspective

Greenland's rise has been steady, but it did not meet its goal--announced in 2014, as in the screenshot below--to rank among the world's top 100 companies by 2020.

From Greenland's web site, 2014; the metric is surely the Chinese yuan

The Chinese yuan, in the past years, has generally traded between 6 and 7 per dollar. (It's now slightly below 7.) Even at 7 per dollar, a 50 billion yuan profit implies more than $7 billion. That's well more than three times the recently reported $2.1 billion in profits.

In business operating income, 800 billion yuan translates into $115.3 billion, which is nearly twice the $62 billion in revenue.

In 2019, Fortune rank

I didn't write about Greenland's rank in the Fortune Global 500 2019, but the company rose to 202 from 252, with $52.7 billion in revenue and $1.7 billion in profits, increases of 22.7% and 28.6% respectively.

From Fortune

From Fortune