Matters:
According to the financial Associated Press, relevant departments recently issued “relevant opinions on the supervision of urban commercial housing pre-sale funds”.
Ping An View:
The excessive supervision and correction of pre-sale funds is conducive to alleviating the capital flow of real estate enterprises. The opinion points out that the supervision amount of pre-sale funds is approved by the municipal and county-level housing and urban rural construction departments according to the project contract and project cost, so as to ensure the funds required for the completion of the project. The remaining funds after reaching the supervision amount can be withdrawn and used by the real estate enterprises, which is conducive to improving the flexibility of the use of funds by the real estate enterprises. Since 2021q3, credit incidents of some real estate enterprises have occurred frequently, and many governments have tightened the supervision of pre-sale funds out of “ensuring delivery and preventing uncompleted tail”, further aggravating the liquidity pressure of the industry. However, recently, Yantai has reduced the retention ratio of commercial housing pre-sale supervision funds of trustworthy real estate enterprises by 3-5pct, which has been relaxed. This opinion makes unified national provisions on pre-sale funds, which is also conducive to standardizing the use of pre-sale funds and consolidating the regulatory responsibilities of relevant local departments.
Sales and credit have not improved significantly, and the industry liquidity risk remains. Although the policy has warmed up since September 2021, the turnover of new houses in 50 key cities decreased by 30.2% year-on-year in January 2022; The monthly sales area of the top 100 real estate enterprises decreased by 44.4% year-on-year; In January, 742.4 billion yuan of medium and long-term loans were added to residents, a year-on-year decrease of 202.4 billion yuan. The slowdown in the release of mortgage loans reflects the relatively weak demand. At the same time, in December 2021, Chinese loans in the funds paid in by real estate enterprises decreased by 31.6% year-on-year, which also reflects that the external financing environment of real estate enterprises has not improved. The superposition of 2022h1 is the debt maturity peak of real estate enterprises, and the industry liquidity risk still exists.
Confidence is restored. In order to break the current dilemma, the policy side still needs to strengthen its efforts. Previously, the central government made it clear that “efforts should be made to stabilize the macro-economic market”, and real estate is an important support for the economy. However, in December 2021, the real estate investment decreased significantly by 13.9% year-on-year. Under the tightening of funds, the short-term real estate investment is still not optimistic. Recently, the policy side has been heated frequently from the exclusion of M & A loans from the “three red lines”, the notice on the exclusion of affordable rental housing loans from the concentration management of real estate loans, and the flexible adjustment of pre-sale fund supervision. At the current time point, financial institutions and home buyers lack confidence. Confidence reconstruction is still the key to breaking the dilemma. The policy side still needs to strengthen efforts to inject confidence into the market.
Investment suggestion: Although the credit side continues to warm up and many governments have also issued loose policies, the confidence of financial institutions and home buyers is still insufficient, and the cash flow of the industry has not improved significantly. Superimposed on the maturity peak of overseas bonds in the first half of the year, the capital pressure of some real estate enterprises remains. In the short term, whether from the overall situation of “stable growth” or avoiding systemic risks in the industry, there is still room for improvement in the follow-up policy side, which is expected to bring continuous repair to the valuation of the sector. The development sector pays 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) , Vanke A, etc. with strong short-term pressure resistance and prominent medium and long-term competitive advantages. At the same time, with the increase of policy improvement, it pays appropriate attention to the valuation repair of second-line elastic high-quality private enterprises, such as Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Longguang group, etc. In terms of diversified business, the current valuation of the property management sector has reached a historical low, with prominent cost performance. 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; 2) The fermentation and chain reaction of individual real estate enterprises’ liquidity problems exceed the expected risks; 3) The timeliness of policy improvement is lower than the expected risk
