Event: on February 17, 2022, Beijing completed the first batch of centralized land supply in 2022, launched a total of 18 residential land, and finally successfully sold 17 and sold 1, with a transaction premium rate of 4.5%.
Key investment points
Compared with the end of 2021, the heat of land auction in Beijing has rebounded significantly: 1) the rate of land auction has decreased: the rate of land auction in the first batch of centralized land supply in Beijing is 6%, which is 11 PCT lower than that in the three batches of centralized land auction at the end of 21. 2) Recovery of transaction premium rate: the transaction premium rate of this centralized land supply is 4.5%, which is 3.4pct higher than that of three batches of centralized land auction at the end of 21. 3) Increase in premium land plots: 9 premium land plots for centralized land supply this time / accounting for 50%, which is significantly higher than 3 plots / accounting for 25% of the three batches of centralized land auction at the end of 21. At the head of this local auction, central state-owned enterprises and real estate enterprises gained more, such as Greentown, poly, Jindi, China Resources and China shipping, while local government platform companies took less land. We believe that the rebound in the popularity of local auction in Beijing is caused by multiple factors. In addition to the first batch of land plots that can be converted into sales within the year, the reduction of the threshold of local auction and the solid market fundamentals of Beijing as a first tier city are also the main reasons for the strengthening of the investment willingness of real estate enterprises.
Lower land acquisition threshold + rational land acquisition by real estate enterprises, and the profit margin may continue to improve: this centralized land supply still continues the trend of loosening the land auction rules since the end of 21, which is mainly reflected in the reduction of land acquisition costs of real estate enterprises: 1) reduction of allocation area: only 3 of the 18 plots contain the allocation requirements of a small amount of affordable housing, The reduction of allocation area is conducive to reducing the hidden cost of land acquisition by real estate enterprises. 2) Land price reduction: take the cuigezhuang plot where the land price hit the top this time as an example, the starting price of the plot was 40906 yuan / m2 and the transaction floor price was 47042 yuan / m2, while the starting price of the comparable plots in the first batch of the same sector in 21 years won by Jindi, poly, China Resources consortium and China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) and Beijing urban construction consortium were 43023 / 43026 yuan / m2 and 49472 / 49474 yuan / m2 respectively, Both the starting price and the transaction floor price were reduced by about 5%. In addition to reducing the cost of land acquisition, the participating real estate enterprises maintained rational bidding, strictly controlled the bottom line of profits, and did not conduct blind bidding. In the end, the house price and land price difference of 17 plots were more than 20000 yuan, and the average house price and land price difference was 34017 yuan, while the average house price and land price difference of three plots of centralized land supply in 2021 were 27171 yuan, 34576 yuan and 35682 yuan respectively.
Central state-owned enterprises are the main force of land acquisition, and Xuhui has become the only seedling of private enterprises: the real estate enterprises participating in this local auction are mainly central enterprises (China shipping, poly, Greentown, China Resources, etc.), local state-owned enterprises (construction development, Yuexiu), and some local government platform companies. Among them, there were 3 cases of land acquisition in Greentown, including one case of land with land price reaching the top. Finally, Greentown sold 41000 square meters of existing houses. In addition to Greentown, China Resources, China shipping and poly Jindi consortium took two cases respectively, and among private enterprises, only Xuhui won one case at a low premium. We believe that under the policy correction, the capital of private enterprises has gradually eased, but there is still pressure. Xuhui actively supplemented the soil reserve to show its financial toughness.
Investment suggestion: we believe that as an important first tier city, Beijing’s market trend and policy evolution may serve as a wind vane for the whole country. In our February in-depth report “industry detector: what are the repair paths of the real estate industry”, we mentioned that the two centralized land supply will make a moderate “compromise” to the real estate enterprises that can obtain land in 2022. We maintain our view that central state-owned enterprises and high credit private enterprises that can seize the land acquisition window in 2022 and actively supplement land reserves have a greater probability of profit restoration in the future. Under the trend of policy correction, it is suggested to pay attention to the subject matter with strong elasticity of waist valuation repair: A shares Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) ; H shares: Xuhui holding group and Baolong real estate. As well as the leading real estate enterprises with good correction of continuous income policy: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , Vanke A, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Resources Land, China Overseas Development and Longhu group. In addition, the cost performance of material enterprises is still high, and they are optimistic about Xuhui Yongsheng, Jinke service and Xincheng Yue.
Risk tip: the repair needs are less than expected.
