Event: according to the financial Associated Press, the national measures for the supervision and management of commercial housing pre-sale funds have been formulated and promulgated recently. According to the press release, the management measures make it clear that when the funds in the account reach the regulatory limit, the funds exceeding the limit can be withdrawn and used freely by real estate enterprises. Improve the flexibility of pre-sale funds on the premise of ensuring delivery.
Easing the liquidity run at the local level from top to bottom requires the appropriate relaxation of pre-sale funds. The outbreak of credit events of private real estate enterprises in 2021 led to the stress contraction of the risk appetite of the whole industry (the dual concerns of debt default and guaranteed housing), and led to the liquidity run at the micro level to a certain extent, that is, real estate enterprises, financial institutions The disorderly competition of local housing construction system for stock funds and the fragile capital chain, especially the pressure of guaranteed housing delivery, have promoted the upgrading and overweight of pre-sale capital supervision at all levels, forming a “prisoner’s dilemma” between local governments. In the “highlighting the winning rate at the end of the policy and increasing the odds at the game point” on January 6, we prompted three major policy game points in the industry in the future. The second point “the excessive superposition effect after the expected reversal needs to be alleviated” mentioned that “improve the liquidity run through top-down coordination and avoid excessive upgrading at the local level” was implemented as scheduled. In the first quarter, the industry fundamentals and credit faced a double test, and the time and intensity of the introduction of the management measures exceeded expectations.
Clarify the regulatory standards and extraction rhythm, and strengthen information sharing. According to our sorting of the current regulatory policies of key cities, most urban regulatory standards can be divided into three categories: 1. The project cost budget rises by a certain proportion (0% – 30%); 2. A certain proportion of the total amount of pre-sale funds (10% – 40%); 3. It is calculated according to the cost quota per unit building area (about 3000-5000 yuan per square meter). In addition, the capital withdrawal nodes and proportion are also quite different. The minimum retention proportion of the capping of the main structure of each city is between 20% – 55%, and the minimum retention proportion during the completion acceptance period is between 3% – 20%. The new method stipulates that “the city and county-level urban and rural construction departments shall verify the amount of funds required for the completion of the project according to the project cost contract, and the funds exceeding the amount can be withdrawn and used freely by the real estate enterprises, and the specific allocation nodes shall be determined by the city and county-level urban and rural construction departments”, At the same time, “strengthen information sharing among all parties, strengthen account monitoring by commercial banks according to the tripartite supervision agreement on pre-sale funds, and reconcile with local housing and construction departments on a regular basis”. We believe that the new standard is close to the lower limit of the existing regulatory rules, that is, it can meet the requirements of project completion funds. While unifying and clarifying the standard, it is expected to alleviate the problems of excessive regulatory base and proportion and unreasonable extraction rhythm.
The second tier private real estate enterprises benefit the most and are expected to activate the virtuous circle of the market. Most of the current methods in key cities are differentiated supervision, that is, high credit rating real estate enterprises can appropriately float down the supervision proportion, and can exempt the key supervision capital limit of the same amount through the outgoing bank guarantee. The private housing enterprises are faced with the strict implementation of regulatory policies, and even face layers of local overweight with the contraction of credit risk preference. We believe that if the national unified regulatory rules can be implemented in place at the local level, it is expected to alleviate the liquidity tension of private real estate enterprises, boost market confidence and activate a virtuous circle of the market.
How to look forward to the follow-up policies, we believe that the supply side: 1. Further improve the support for M & A; 2. Implementation of supervision and optimization of pre-sale funds; 3. Strong support for industry transformation. Demand side: 1. Credit support continues to be reflected in the easing of mortgage line, the decline of mortgage interest rate and the shortening of lending cycle; 2. Referring to the adjustment direction of provident fund policies in some cities, the housing and loan recognition standards of commercial loans are not ruled out to be relaxed, and moderately support the release of reasonably improved demand; 3. In combination with the population policy, provide more housing support for families with many children, and do not rule out the differential relaxation of purchase and loan restrictions; 4. Under the extreme situation of fundamental stall, the moderate easing of purchase and loan restrictions in the first and second tier cities cannot be ruled out. Whether it is a virtuous circle of the industry or a merger and acquisition type of industry clearing, it needs the stability of demand side expectations and the restoration of confidence.
Grasp the beta of loose policy structure and alpha industry beta of M & A. the overall valuation of the industry is expected to increase simultaneously with the improvement of pre-sale capital supervision and the expected rise of demand regulation. In addition, the relaxation of regulatory funds is also conducive to the improvement of the cash flow of head real estate enterprises and the repair of M & A and land acquisition investment. Continuous recommendation: 1) high quality growth: Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) , Xuhui holdings, etc; 2) High quality leaders: Gemdale Corporation(600383) , Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Longhu group, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ; 3) High quality property management: Country Garden service, xinchengyue service, Greentown service, China Merchants Property Operation & Service Co.Ltd(001914) , poly property, Xuhui Yongsheng, etc.
Risk warning: industry credit risk spread; Downward sales industry; Regulatory policies exceed expectations;
