Key investment points
The year-on-year data of industrial sales continued to decline: from January to February 2022, the amount of national commercial housing sales data of the Bureau of statistics was – 9.6% year-on-year, 26.3% month on month, + 11.4% compared with 2019 and + 17.95% compared with the average value from January to February 2019 / 20 / 21. The year-on-year growth rate of national commercial housing sales of + 4.79% in 2021 exceeded the growth rate of – 19.28% of the sales of Kerui top 100, and this trend continued from January to February 2022. Excluding the sales of real estate enterprises that have been out of danger, the sales growth rate of the top 100 real estate enterprises is still far lower than the industry growth rate given by the Bureau of statistics. Although the industry’s sales volume was higher than the top 100 by – 9.6% year-on-year, excluding the impact of the epidemic in 2020, the sales data from January to February 2022 was the lowest growth rate since 2015 (January to February 2015 – 16.30% year-on-year).
The year-on-year growth rate of investment in real estate development is + 3.7%. What do you think: from January to February 2022, the investment in real estate development is 1.45 trillion yuan. Completed investment in real estate development = construction works + installation works + equipment + other expenses. Taking the data of 2021 as an example, construction projects account for 68%, other costs account for 27% because they include land transaction costs, and the remaining two account for 5%. The land acquisition area decreased by 42% year-on-year from January to February 2022. Construction Engineering = construction area construction cost, and the growth rate of construction area is only + 1.8%. Only when the construction cost growth rate is above double digits can it support the growth rate of construction engineering and development investment. In the upstream materials of real estate, the prices of rebar, cement and glass increased by 10%, 11% and 1% respectively from January to February 2022, which is related to the rise of construction costs. Although the growth rate of real estate development investment is positive, the indicators affecting the follow-up supply of the industry still decline significantly. The year-on-year growth rate of land acquisition area from January to February 2022 was – 42.3% (the decline expanded, compared with the average value of 20192020) – 39%), the newly started area was – 12.2% (the decline expanded, excluding the epidemic in 2020, the lowest since 2015, compared with the average value of 20192020 – 3%), and the completed area was – 9.8% (from positive to negative, the decline expanded, compared with the average value of 20192020 + 3%). The negative year-on-year growth of land acquisition area for nine consecutive months means that there will still be a shortage of commercial housing supply in the next six months, and the new housing market may still face the problem of insufficient supply.
The financing situation has improved month on month, but the year-on-year average of 20192021 is still low: the funds in place of real estate from January to February 2022 were – 17.7% (compared with the average value of 201920 + 0%) and + 41.5% month on month; Among them, China’s loans were – 21.1% year-on-year (compared with – 16% of the average value in 201920), with a chain comparison of + 148%, personal mortgage loans were – 16.9% year-on-year (compared with + 8% of the average value in 201920), with a chain comparison of + 49.7%. From the month on month data, Chinese loans and personal mortgage loans improved significantly from January to February, but the year-on-year growth was still double-digit negative, and the year-on-year value was the lowest since 2014.
From the perspective of China’s real estate financing and mortgage financing, the main financing channels of China’s real estate investment (land construction) are summarized. Combined with the recent interpretation of market external factors disturbance + repeated epidemic + industry pessimism, we believe that local policies still need to continue to work at both ends of supply and demand in order to make the industry fundamentals bottom and then repair.
The shake and reshuffle process at the bottom of the industry cycle is arduous, but only by rationally seeing the medium and long-term development trend of the industry can we have the opportunity to grasp the future winner at a reasonable price. We believe that the medium and long-term development trend of the industry is relatively determined in three aspects:
1) under the trend of urban or regional policy relaxation, the total growth will change into structural growth. For real estate enterprises with net population flowing into cities and relaxed policies in cities, the fundamentals may be improved first.
2) this round of regulation has a long-term impact on the industry. Real estate enterprises are divided in terms of demand and credit. Companies entering the positive feedback cycle have the opportunity to obtain more market share.
3) the industry has entered a mature stage, urban renewal is an inevitable trend, and the metropolitan area needs to expand its enclosure to accommodate new citizens. Enterprises with strong comprehensive development ability have more opportunities to participate; Enterprises with unique land acquisition mode, such as TOD + zhukai, have more advantages.
In the long run, we believe that the final survivors after the end of this cycle will be divided into two categories: 1) National blue chip real estate enterprises: representative companies include Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , China Vanke Co.Ltd(000002) , China Overseas Development and China Resources Land; 2) Regional small overlord real estate enterprises: the representative companies include Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , China Construction Development International, Yuexiu real estate, etc.
Risk tip: the strength and speed of policy relaxation are weaker than expected, resulting in a long repair time for the industry.
