Sales: under the price reduction, the downward trend of commercial housing sales has slowed down, but the sustainability of sales recovery under the decline of house prices remains to be observed. In November, the sales area of commercial housing was – 13.97% year-on-year, and the former value was – 21.65%; The year-on-year sales volume was – 16.31%, and the previous value was – 22.65%; The average sales price was – 2.71% year-on-year, and the previous value was – 1.27%. We believe that the recovery of sales is mainly due to the release of accumulated demand due to the price reduction and promotion of real estate enterprises and the relaxation of mortgage policies. However, the overall sales situation is still severe. The negative attitudes of enterprises towards investment and consumers towards house purchase are difficult to reverse in the short term. The recovery of sales still needs more policies on the demand side.
Development Investment: the decline of new construction has narrowed, but it is still weak, and the completion has recovered significantly under guaranteed delivery. In November, the newly started area was – 21.03% year-on-year, and the previous value was – 33.41%; The completed area was 15.41% year-on-year, with the former value of – 20.56%; The development investment was -4.30% year-on-year, and the former value was -5.40%. Although the completed area has significantly warmed up under the “guaranteed delivery” and the accelerated completion of real estate enterprises at the end of the year, putting limited funds into the completion and delivery may lead to a further decline in the ability and willingness of real estate enterprises to obtain land and start new construction, and the data of new construction and land investment in the future will continue to be under pressure.
Funds in place: the financing side policy has made great efforts to promote the significant improvement of funds, but the decline in sales is still the biggest obstacle to the improvement of industry fundamentals. The funds in place in November were -7.01% year-on-year, and the previous value was -9.48%. In the funds in place in November, the mortgage increased significantly to 10.64% year-on-year. We believe that the central economic conference has set the tone that real estate is an important part of unblocking the national economic cycle, and the reasonable financing needs of real estate enterprises will continue to be met. However, due to the pressure brought by the collapse of sales in the short term, it is difficult to obtain financing in time under the credit stratification of real estate enterprises, and the liquidity risk of some real estate enterprises may continue to ferment.
Investment suggestions:
We believe that the focus of the policy is shifting from the risk of real estate enterprises’ capital to the risk of vicious circle caused by the stall decline on the demand side. The follow-up may accelerate the introduction of demand side care policies, stabilize buyers’ expectations and reverse the decline in both sales volume and price. The support of the financing side will gradually overflow to the stable private enterprises after meeting the stable central enterprises and real estate enterprises in the head.
We believe that the care policy of the financing section will promote high credit real estate enterprises to gain advantages in the land and M & a market. The continuous land acquisition and promotion ability and high-quality credit endorsement are also expected to seize the opportunity when the demand recovers and further improve the market share. Recommended China Vanke Co.Ltd(000002) , Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) . It is also recommended to continuously track the stable private real estate enterprises, such as Longhu group and country garden.
Risk tip: the risk of further tightening industrial policies, the risk of continued decline in profitability, and the risk of sales falling short of expectations.
