Ping An View:
Japan’s leading real estate enterprises have a stable position through the cycle, and the industry concentration has been increasing. In recent years, the sales scale of commercial housing in Japan has been basically stable at 70000-80000 units / year, and the market concentration has been increasing under the stable total amount. Especially after the financial crisis in 2008, the oligopoly trend of large real estate enterprises has become more and more clear. In 2010, the market share of top 20 real estate enterprises increased to 55.9%, and then remained above 50%. In addition, the market share of top 10, top 5, top 3 and top 1 real estate enterprises increased significantly compared with 2008. Since the 1950s, the Japanese real estate market has gone through multiple cycles, and the pattern of head real estate enterprises has been shuffled several times. However, the main leading real estate enterprises (Sumitomo real estate, Mitsui real estate and Mitsubishi disuo) have stood firm through the cycle and have a stable position.
Sumitomo and Mitsui real estate: develop diversified asset light business around real estate and transform to comprehensive real estate enterprises. Affected by the real estate bubble burst, financial crisis, Japan earthquake, and other impact, the Japanese Housing enterprises’ original heavy assets model is not effective. The Sumitomo real estate development strategy is formulated in phases, such as developing agent construction, brokerage, information management business, and so on, and transforming the business model of more liquid and heavy assets. In terms of revenue structure, the proportion of high profit margin light asset business increased, while the proportion of low profit margin heavy asset business shrank, which also led to the repair of roe. Mitsui real estate transformation relatively relies on the real estate securitization market, and has formed a comprehensive business model of “agent construction + sales + leasing + management”. In addition to maintaining the operation of the development department during the industry downturn, the agent construction business can also contribute to brokerage, property management opportunities, building materials revenue, etc; Managed 4 REITs and other private equity funds, with assets under management reaching 4.35 trillion yen in fiscal year 2021; The brokerage sector Mitsui fudosan Realty Group has ranked first in the trading volume of second-hand houses in Tokyo for 35 consecutive years.
U.S. real estate enterprises rely on mergers and acquisitions to develop and expand, and layout subdivided tracks and derivative businesses. The three leading real estate enterprises in the United States (pult, Horton and Lena) have driven into the fast lane of growth with the help of M & A. pult has improved its pension and first-time home ownership product line through M & A and entered the real estate financial service business. Horton and Lena rely on mergers and acquisitions to catch up. At present, they have become the top 2 residential developers in the United States.
Pult: create fine management bonus and improve the full cycle service capability. Before the outbreak of the subprime mortgage crisis, pult reduced land purchase and survived the crisis smoothly; Establish a “life cycle and payment capacity matrix” to accurately portray customers, carry out targeted marketing services, supplement personalized design on the basis of standardized products, remove redundant design links, and achieve modular development while customizing products for all kinds of customers; In addition, it has built supply chain advantages in terms of raw material brand and cost, launched the “Pulte 10-year warranty plan” to improve the full cycle service capacity. Superimposed on the use of land options, the company’s asset liability ratio (46.2%) in 2020 has decreased by 26.1pct compared with the highest point during the subprime mortgage crisis. The company’s annual report puts forward the long-term management goal of asset liability ratio as 30-40%, and there is still room for further decline.
Enlightenment: diversify, expand income and reduce risks, and refine traditional development. “Cash is king” in the downward period of the industry; Strategic opportunity acquisition, cutting into segments and expanding derivative business; Develop diversified asset light business around real estate, such as asset management and brokerage, to form a virtuous cycle of comprehensive business model. In addition to dispersing risks, the high profit margin of asset light business is also conducive to the improvement of roe; At the same time, we will refine the traditional development and sales business, accurately match customer needs and product services, strengthen the whole supply chain control, establish the cost advantage of raw materials, ask for profits from management and operation, and comprehensively improve the full cycle customer service ability.
Investment suggestions: from the perspective of the measures and business model of us and Japanese real estate enterprises to deal with the crisis, it is necessary to ensure sufficient cash flow, stabilize the risk of market fluctuation, formulate medium and long-term development strategy and optimize business structure to realize the counter attack and strengthen the leading position. To break the situation, real estate enterprises need to recognize the development trend, strengthen financial security, adjust the medium and long-term development strategy of enterprises, and timely layout new business areas. At present, the sales side and capital side of China’s real estate industry are still under pressure. The high leverage driven model of real estate enterprises urgently needs to be changed and explore new development models. In the short term, real estate enterprises with stable finance and smooth financing channels are expected to take the lead in getting out of the dilemma, expand the advantage of “the strong is always strong” by virtue of multi-dimensional comprehensive strength such as finance, management and operation, and drive the market share to further improve. In the medium and long term, the diversified business development of mainstream real estate enterprises in the stock era is still promising, and high profit margin derivative businesses such as leasing and property management can still drive high-quality real estate enterprises out of the independent market. In terms of investment suggestions, the short-term industry liquidity crisis has not been eliminated, the policy game space is still in, and the sector valuation and low position have a strong safety margin. In the medium term, the industry bottoms out and stabilizes, the main investment line returns to fundamentals, and the improvement and rapid development of market share of excellent real estate enterprises under pattern remodeling and model reform are still worth looking forward to. It is suggested to pay attention to the leading real estate enterprises with strong short-term pressure resistance and prominent medium and long-term competitive advantages, Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Vanke A, etc. In terms of diversified business, it is recommended to continue to pay attention to the property management and business management sectors with broad space and independent development, and be optimistic about the property management leaders with outstanding comprehensive strength, country garden services, poly property, xinchengyue services, as well as the commercial operators with strong asset light output strength, Xingsheng commerce, etc.
Risk tips: 1) if the subsequent supply of goods is impacted due to the shortage of new soil storage, it will have a negative impact on the sales, commencement and investment of the industry; 2) If the pressure of property market deregulation exceeds expectations and sales continue to exchange price for volume, it will bring some early high price impairment risk; 3) The policy care is limited, and the adjustment range and time of the industry exceed expectations, which will have a negative impact on the development of the industry.
