In February, sales continued to be sluggish, and the market pressure remained severe. In February 2022, the sales area of new houses in 30 cities increased by – 27.30% year-on-year, 42.10% month on month, the number of sold units increased by – 28.36% year-on-year and – 40.13% month on month. The transaction area and number of units decreased to a certain extent month on month. At present, the sales are in the process of bottoming out. By line, the year-on-year growth rate of the transaction area of the first, second and third tier cities is – 6.51% / – 23.14% / – 51.65% respectively, and the month on month growth rate is – 34.12% / – 42.38% / – 51.12% respectively. The transaction area of the first, second and third tier cities has deteriorated on the same month on month basis. It will take some time for sales repair. The sales pressure of the third tier cities is still the largest, and the differentiation between regions will continue in the future.
Expand domestic demand and maintain steady growth. Policies at both ends of supply and demand continue to work. Recently, the central government and various provinces and cities have continued to make efforts from both ends of supply and demand. Zhengzhou’s “subscription without loan recognition” is the first shot at supporting the real estate market by major urban policies. Specifically, the supply side policies mainly include: the supervision and correction of pre-sale funds, M & A loans and affordable housing loans are no longer included in the relevant indicators of the “three red lines”; The demand side mainly includes: reducing the down payment ratio of commercial loans and housing loan interest rate, increasing the strength of housing provident fund loans, etc. March is an intensive period of industrial policies. It is expected that more vigorous “steady growth” measures will be introduced after the two sessions.
The sector is under performance pressure, but it should not be the focus of attention at present. From the performance forecast or express report released by real estate enterprises, the performance of most enterprises is lower than market expectations, and some even have a significant year-on-year decrease of more than 90% in the net profit attributable to the parent. The main reasons for the decline in the performance of enterprises are as follows: 1) under the downward trend of fundamentals, the provision for falling prices is made; 2) Affected by the previous price limit and high land price, the settlement gross profit margin continued to decline; 3) Due to the shortage of funds, epidemic situation and other factors, the number of delivered projects has decreased. We believe that the current performance of real estate enterprises is the embodiment of the operation of real estate enterprises in the past three years or so. The market has long expected the performance of real estate enterprises to be improved. The current focus should not be on the current performance of real estate enterprises. The improvement of industrial policy environment and financing environment of real estate enterprises are the main catalysts of the market.
The valuation and repair of the residential sector is on the way, with large upward space. As of February 28, 2022, the P / E ratio of the real estate sector is 7.60x. At present, the valuation of the real estate sector is higher than the one-year moving average of 7.35x, lower than the three-year moving average of 8.51x, the P / B ratio of the real estate sector is 0.96x, slightly lower than the one-year moving average of 1.00x and lower than the three-year moving average of 1.23x. The valuation repair inflection point of the residential sector has initially appeared, but it is still at the bottom of history, The upward repair space is large.
Investment suggestion: at present, the fundamentals are still on the way down, and the boom is the worst in history. Under the main line of “stable growth”, the expectation of policy game is increasing, and the market interpretation path is gradually clear, transitioning from state-owned enterprise housing to private enterprise housing and property management companies. At present, the industry’s policy support is gradually transitioning from the supply side to the demand side. In March, the industry entered a policy intensive period. Follow up attention will be paid to the implementation of policies before and after the two sessions, the first batch of centralized land supply and the acquisition and merger of real estate enterprises. It is suggested to pay attention to the leading stocks of residential development: Poly Real Estate ( Poly Developments And Holdings Group Co.Ltd(600048) ), Gemdale Corporation(600383) ( Gemdale Corporation(600383) ), China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ( China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ), Vanke A ( China Vanke Co.Ltd(000002) ), Seazen Holdings Co.Ltd(601155) ( Seazen Holdings Co.Ltd(601155) ), Jinke Property Group Co.Ltd(000656) ( Jinke Property Group Co.Ltd(000656) ); It is suggested to pay attention to high-quality property management companies: China Merchants Property Operation & Service Co.Ltd(001914) ( China Merchants Property Operation & Service Co.Ltd(001914) ), Country Garden Service (6098. HK), China Resources Vientiane life (1209. HK), Xuhui Yongsheng service (1995. HK), Jinke service (9666. HK), New Dazheng Property Group Co.Ltd(002968) ( New Dazheng Property Group Co.Ltd(002968) ).
Risk warning: the risk that the fermentation of risk events exceeds expectations and the improvement of policy environment is less than expected
