In 2021, the land auction was “hot cold cold”, and the transfer rules were tight before and loose after: in 2021, the supply area of residential land in 22 cities increased by 12% year-on-year, the transaction area decreased by 3%, and the proportion of transactions in 300 cities rose to the highest level in recent five years; However, affected by the cooling of 2021h2 market and the credit event of real estate enterprises, the transaction proportion of reserve price and the auction rate increased by 6.7pct and 21.3pct respectively compared with 2020. In 2021, the rule of three times of soil auction is “tight in the front and loose in the rear”, and the heat is “high in the front and low in the rear”. Due to the high heat of the first round of land auction, the rules of the second round of land auction were “patched”, superimposed with the “internal and external pressure” of 2021h2 real estate enterprises, and the second round of land auction “entered the winter overnight”, the land premium rate decreased by 11.1pct to 3.9% compared with the first round, and the land flow auction rate and the transaction proportion of reserve price increased significantly by 25.7pct, 30pct to 31% and 74% respectively. Since 2021q3, the industry fundamentals are still in a fast downward channel. The third round of local auction in many places has relaxed the threshold from the dimensions of bidding rules, development qualification and capital threshold, but most real estate enterprises still tend to wait and see with money. The premium rate of land in 22 cities further declined to 2%, and the turnover of reserve price increased 4pct to 78% in the second round.
Central state-owned enterprises have gradually become the main force of land acquisition, and the differentiation between cities has accelerated: at present, the operational and financing cash flow of the industry has not improved, and the uncertainty of market expectation is an important factor restricting the land acquisition of real estate enterprises. In 2021, the overall land acquisition sales amount ratio and area ratio of the top 50 real estate enterprises decreased by 10.8pct and 38.8pct respectively year-on-year. Among them, central state-owned enterprises are the main force of land acquisition for three centralized land supply by virtue of financing and other advantages. In terms of batches, the proportion of land acquisition by state-owned enterprises increases with the decline of land acquisition enthusiasm of private enterprises. With the continuous bottom of the market, local state-owned enterprises and urban investment actively enter the market to fill the vacancy of land acquisition. Among the third batch of local auctions, Yuexiu and shoukai were the biggest winners of local auctions in Guangzhou and Beijing respectively. On the whole, the third batch of soil photos only warmed up in some cities such as Hangzhou, and the rest of the cities continued to be low heat.
2022h1 local auction is difficult to be optimistic, and some urban policies may continue to be loose: despite repeated statements of supervision, the cash flow of the industry has not improved, the overall capital of real estate enterprises is limited, and the third batch of local auction continues to be low under the premise of relaxing the threshold. Considering that 2022q1-q2 is the peak of maturity of US dollar bonds of real estate enterprises, liquidity pressure is still a problem for real estate enterprises, and it is difficult to be optimistic about the local auction market in 2021h1. From the perspective of cities, we expect that real estate enterprises will comprehensively study and judge from the aspects of urban fundamentals, land price payment rules and land profit space. For cities with better fundamentals and more attractive land auction rules, the land market is expected to recover. However, it is expected that the underpaid phenomenon of central state-owned enterprises and local urban investment in most cities will continue, and the local auction market may continue to be depressed. Under the background of increasing financial pressure, the subsequent local governments will not rule out the adjustment rules for the first local auction in 2022, and further transfer profits in terms of land quality, land transfer price payment, land price and house price.
Investment suggestion: Although the central and local governments have frequently issued loose policies, the cash flow of the industry has not improved significantly. The superposition of q1-q2 is the maturity peak of overseas bonds, and the real estate enterprises are still cautious about investment and land acquisition under capital pressure. We believe that the policy side urgently needs to increase efforts to inject confidence into market participants and guide real estate enterprises to return to normal business behaviors such as land purchase. The short-term industry liquidity crisis has not been eliminated. Real estate enterprises will maintain a cautious investment attitude of “fixed investment based on sales”, basically facing regions with good and friendly local auction rules or more favored. The differentiation between cities continues. The subsequent local governments may further adjust the local auction rules to make profits under the background of increasing financial pressure. In terms of investment suggestions, we will continue to pay attention to the valuation repair of the sector brought by the improvement of the policy side, the development sector will pay attention to the leading real estate enterprises Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) with strong short-term pressure resistance and prominent medium and long-term competitive advantages, and pay appropriate attention to the second-line elastic targets Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) and Longguang group that benefit from the improvement of the policy. In terms of diversified business, the current valuation of the property management sector has reached a historical low, and the cost performance continues to highlight. We are optimistic about the property management leaders with outstanding comprehensive strength, such as country garden service, poly property, xinchengyue service, Jinke service, and commercial operators with strong asset light output strength, such as Xingsheng commerce.
Risk tips: 1) the short-term fluctuation of the real estate industry exceeds the expected risk: if the downward degree of the follow-up industry exceeds the expectation, the scale development of each real estate enterprise will be affected, which will lead to the risk that the performance will be lower than the expected risk. 2) The fermentation and chain reaction of individual real estate enterprises’ liquidity problems exceed the expected risks: in addition to affecting their own development, the occurrence of real estate enterprises’ credit events may also have a negative impact on the industry’s sales and financing, and then affect the overall development environment of the real estate industry. If the liquidity problems of individual real estate enterprises continue to ferment, it will bring more chain reactions than expected, which may aggravate the fluctuation of the industry and is not conducive to the sustainable and stable development of the industry. 3) The timeliness of policy improvement is lower than the expected risk: if the subsequent fluctuations in the real estate industry increase and the timeliness of policy improvement is low, the adjustment range and time may exceed the expected risk.
