Core view:
The market sales performance in January was poor, and the sales pressure in the third tier cities was the greatest. In January 2022, the sales area of new houses in 30 cities increased by – 30.24% year-on-year, 23.66% month on month, 34.17% year-on-year and – 27.44% month on month. The transaction area and number of sets in this month have decreased to a certain extent compared with the month on month, mainly due to: 1) most real estate enterprises slow down the supply rhythm near the Spring Festival; 2) Buyers’ wait-and-see mood is aggravated, resulting in insufficient effective demand. By line, the year-on-year growth rate of the transaction area of the first, second and third tier cities is – 30.33% / – 13.44% / – 51.53% respectively, and the month on month growth rate is – 18.47% / – 28.34% / – 17.93% respectively. The transaction area of the first, second and third tier cities has deteriorated on the same month on month basis. The sales pressure of the third tier cities is still the largest, and the differentiation between regions will continue in the future.
The annual centralized land supply ended, the premium rate showed “high, low and then low”, and the phenomenon of supporting the bottom of local state-owned enterprises was significant. As of this month, all 22 key cities have completed the transfer of the third batch of plots, with an average premium rate of 2.0%, which is -2.01pct compared with the average premium rate of the second round and -13.28pct compared with the average premium rate of the first batch of centralized land supply, and the overall popularity continues to decline. In the centralized land supply of the whole year and various batches, central enterprises and local state-owned enterprises are the main force of land acquisition, and the share of land acquisition has increased significantly, among which local state-owned enterprises show a strong supporting role. The amount of land acquisition in the whole year accounted for 61% of the amount of land acquisition by Chinese enterprises, and the proportion of land acquisition by private enterprises decreased to 32%. With the increasing financial pressure in some areas, it is not ruled out that the local auction rules will be relaxed this year, and profits will be transferred in terms of land price, house price, land transfer price, deposit ratio, etc.
The sector is under performance pressure, but it should not be the focus of attention at present. From the performance forecast or express report released by real estate enterprises, the performance of most enterprises is lower than market expectations, and some even have a significant year-on-year decrease of more than 90% in the net profit attributable to the parent. The main reasons for the decline in the performance of enterprises are as follows: 1) under the downward trend of fundamentals, the provision for falling prices is made; 2) Affected by the previous price limit and high land price, the settlement gross profit margin continued to decline; 3) Due to the shortage of funds, epidemic situation and other factors, the number of delivered projects has decreased. We believe that the current performance of real estate enterprises is the embodiment of the operation of real estate enterprises in the past three years or so. The market has long expected the performance of real estate enterprises to be improved. The current focus should not be on the current performance of real estate enterprises. The improvement of industrial policy environment and financing environment of real estate enterprises are the main catalysts of the market.
The valuation of the housing sector is still low, and the property management sector has rebounded sharply. As of January 31, 2022, the P / E ratio of the real estate sector is 7.24x. At present, the valuation of the sector is lower than the one-year moving average of 7.35x and the three-year moving average of 8.53x, which is still at the historical bottom. With the warmer real estate policy, the property sector rebounded sharply. In January, the Hang Seng Index (HSI. HI) and Hang Seng property service and management (HSPM. HI) increased by 1.73% and 9.56% respectively.
Investment suggestion: at present, the fundamentals are still on the way down, and the boom is the worst in history. Under the main line of “stable growth”, the expectation of policy game is increasing, and the market interpretation path is gradually clear, transitioning from state-owned enterprise housing to private enterprise housing and property management companies. At present, the industry policy supports the gradual transition from the supply side to the demand side. The relaxation of the management of guaranteed housing loans and the regulation and adjustment of pre-sale funds are the beginning of “stable growth”. Later, we will pay attention to the implementation of policies before and after the two sessions, the first batch of centralized land supply and the acquisition and merger of real estate enterprises. It is suggested to pay attention to the leading stocks of residential development: Poly Real Estate (600048), Gemdale Corporation(600383) (600383), China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) (001979), China Vanke Co.Ltd(000002) (00000 2), Seazen Holdings Co.Ltd(601155) (601155), Jinke Property Group Co.Ltd(000656) (000656); It is suggested to pay attention to high-quality property management companies: China Merchants Property Operation & Service Co.Ltd(001914) (001914), Country Garden Service (6098. HK), China Resources Vientiane life (1209. HK), Xuhui Yongsheng service (1995. HK), Jinke service (9666. HK), New Dazheng Property Group Co.Ltd(002968) (002968).
Risk warning: the risk that the fermentation of risk events exceeds expectations and the improvement of policy environment is less than expected.
