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 are still there, and the industrial financing policy accelerates the optimization of industrial capacity structure: the financing policy of real estate enterprises will 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 will the differential marginal relaxation be implemented? State owned enterprises and Green Housing enterprises have more financing space, industry capacity structure is optimized, and industry concentration rises after fierce stability – it is predicted that in 2022, the growth rate of sales amount is – 3%, the growth rate of sales area is – 5%, the growth rate of real estate development investment is – 1%, the growth rate of land acquisition area is – 10%, the growth rate of newly started area is – 10%, and the growth rate of completed area is + 10%. Mature market experience can be used for reference
In the mature market, the only way for real estate enterprises to develop is to turn to asset light service business.
Stock business, especially leasing business, can provide stable rental income, provide a 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 is helpful 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 garden service, China Resources Vientiane life, poly property, Zhonghai property, Xuhui Yongsheng service, Jinke service, Jinyang service, etc.
The recovery of the epidemic situation in 2022 has brought about the recovery of tax consumption. We believe that the business management targets also deserve attention: H shares – China Resources Vientiane life, Baolong business, Xingsheng business – risk tips: there is still pressure on domestic and foreign due debt repayment of real estate enterprises in 2022h1, 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 a property company that collects large-scale mergers and acquisitions combs the business and management framework of the acquired object, it may have the problem of poor cooperation of 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.
（ Zheshang Securities Co.Ltd(601878) ）
