Main points
Market Review
Last week (December 27-december 31, 2021), the Shanghai Composite Index rose 0.60%, the Shanghai and Shenzhen 300 index rose 0.39%, and the real estate sector rose 0.65%. The real estate sector outperformed the Shanghai Composite Index by 0.05 percentage points and the Shanghai and Shenzhen 300 index by 0.26 percentage points. Key A-share real estate companies Gemdale Corporation(600383) (600383. SH), Shenzhen Overseas Chinese Town Co.Ltd(000069) (000069. SZ), Grandjoy Holdings Group Co.Ltd(000031) (000031. SZ) increased significantly, up 16.74%, 3.07% and 2.75% respectively. China Evergrande (3333. HK), rongchuang China (1918. HK) and Rongxin China (3301. HK), which are the H-share real estate companies focused on, led the increase, with increases of 7.43%, 5.37% and 4.90% respectively
Industry dynamics
Commercial housing transactions in 30 large and medium-sized cities were 3.7991 million square meters, with a cumulative year-on-year increase of 5.57%. Among them, 1.0354 million square meters of commercial housing were sold in first tier cities, with a cumulative year-on-year increase of 15.05%, 2.0595 million square meters in second tier cities, with a cumulative year-on-year increase of 15.76%, and 704200 square meters in third tier cities, with a cumulative year-on-year decrease of 14.73%.
Industry news
On December 29, the general office of the national development and Reform Commission issued a notice on accelerating the work related to real estate investment trusts (REITs) in the field of infrastructure. The notice points out that according to the current situation of regional infrastructure, the project’s own conditions and preliminary preparations, carefully sort out the intended projects and reserve projects, and make classified reserves for qualified projects. The national infrastructure REITs pilot project library shall adhere to the functional positioning of statistical monitoring and coordination services, so as to achieve the project “as much as possible if willing and as much as possible”, and shall not refuse the project warehousing for any reason. Timely provide classified guidance for projects, strengthen the whole process services such as project planning, reserve and application, and promote the preparation for issuance.
Related subject matter
The credit environment still needs to be improved, and the Matthew effect on capital is prominent. In the later stage, three types of real estate stocks deserve attention: (1) leading real estate enterprises with low interest rate financing costs and relying on state-owned enterprises to continuously obtain land in first and second tier cities, such as green City China (3900. HK) and Longhu group (0960. HK); (2) Real estate enterprises that are less affected by the “two concentration” land policy and have strong land application ability, such as Seazen Holdings Co.Ltd(601155) (601155. SH), Baolong real estate (1238. HK), etc; (3) Leading enterprises in the property management industry and enterprises laying out high-quality segments of the property management industry, such as Country Garden Service (6098. HK), Xincheng Yue service (1755. HK), China Resources Vientiane life (1209. HK), Baolong Commerce (9909. HK) and Xingsheng Commerce (6668. HK).
Risk statement
Tightening of real estate regulation policies; Guard against financial systemic risks.
