2021 Industry Review
In the first half of the year, the regulatory policies of key cities continued to tighten, and the sales data of H1 industry maintained steady growth. H2 market has taken a sharp turn, Q3 real estate enterprises have frequent defaults, strengthened policy relaxation and increased frequency.
2022 industry outlook
The three red lines still exist, and the industrial financing policy accelerates the optimization of industrial capacity structure: the financing policy of real estate enterprises may continue in 22 years, conforming to the direction of "virtuous circle" proposed by the Political Bureau meeting and the central economic conference in December 2021, but the differential margin will be relaxed. Today, state-owned enterprises and Green Housing enterprises have more financing space, the industrial capacity structure is optimized, and the industrial concentration will first stabilize and then rise
It is predicted that in 2022, the sales amount will increase by - 3%, the sales area will increase by - 5%, the real estate development investment will increase by - 1%, the land acquisition area will increase by - 10%, the newly started area will increase by - 10%, and the completed area will increase by + 10%
Mature market experience
In the mature market, the only way for real estate enterprises to develop is to turn from development to asset light service business.
Stock business, especially leasing business, can provide stable rental income, provide certain income toughness for the company in special periods (financial crisis), and make the company more capable of going through the cycle
The improvement of income and profit contribution of long-term asset light business helps to improve the company's long-term profit margin and roe level
Investment suggestions and risk tips
Combined with the benefits of short-term policy correction and long-term development opportunities, we believe that high credit real estate enterprises deserve attention: A-Shares - China Vanke Co.Ltd(000002) , Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , Shenzhen Overseas Chinese Town Co.Ltd(000069) , etc; H shares - China Resources Land, China overseas development, Longhu group, Xuhui holding group, China Construction Development International, etc
The valuation and repair of the property sector can be expected and has broad long-term development prospects. Considering the possible risks in the repair process of the real estate industry in 2022, we suggest paying attention to the property companies whose affiliated real estate enterprises are high credit state-owned enterprises and high-quality private enterprises: A-Shares - China Merchants Property Operation & Service Co.Ltd(001914) ; H shares - country country service, China Resources Vientiane life, poly property, CNOOC property, Xuhui Yongsheng service, jinkeyue service, ocean month service, etc.
The recovery of the epidemic situation in 2022 has brought about a pick-up in consumption. We believe that the business management targets also deserve attention: H-share China Resources Vientiane life, Baolong business and Xingsheng business
Risk tip: in 2022h1, there is still pressure on domestic and foreign matured debt repayment of real estate enterprises, and individual risk events of real estate enterprises interfere with the valuation and repair of the sector; 2022q1 Spring Festival, repeated epidemic and other problems lead to low growth rate of sales and investment; The introduction of the pilot scheme of real estate tax affects the confidence of short-term buyers; When sorting out the business and management structure of the acquired object, the property companies that have received large-scale mergers and acquisitions may have poor cooperation with the acquired object; For material enterprises with high goodwill, if the performance of the acquisition target is not up to standard, the goodwill has the risk of impairment.
