The financial committee of the State Council held a special meeting to explain that the risk of real estate enterprises is not an individual problem, and it is urgent to resolve the risk. We believe that the policy of further promoting sales and encouraging Project M & A in the short term can be expected. Of course, to solve the problem of long-term development of the industry, there may be policies to promote enterprises to move towards a new model, that is, it may involve space holding, operation, renewal, leasing and service business.
Vice Premier Liu he chaired a special meeting of the financial stability and Development Commission of the State Council. The meeting pointed out that we should earnestly revitalize the economy in the first quarter, take the initiative to respond to monetary policy, and maintain a moderate growth in new loans; With regard to real estate enterprises, we should timely study and put forward effective risk prevention and resolution solutions, and put forward supporting measures for the transformation to a new development model. After that, the people’s Bank of China conveyed and studied the spirit of the special meeting of the financial committee of the State Council and asked to prevent and resolve the risks of the real estate market. The CBRC conveyed, studied and implemented the spirit of the meeting, required to improve the quality and efficiency of financial services and rural revitalization, and help “new citizens” live and start businesses in cities and towns; We will continue to improve the three stability and long-term opportunities, promote the transformation of the development mode of the real estate industry, encourage institutions to carry out M & A loans in a stable and orderly manner, focus on supporting high-quality projects of high-quality real estate enterprises that give up difficulties in M & A, and promote the virtuous circle and healthy development of the real estate industry. In addition, the Ministry of Finance said that considering all aspects of the situation, this year does not have the conditions to expand the pilot cities of real estate tax reform. This has a positive impact on stabilizing house purchase expectations and promoting the release of demand.
It is urgent to resolve the risks of real estate enterprises. We believe that the meeting of the financial committee of the State Council is aimed at the most critical topics in economic operation and the most concerned topics of the market. In addition to macro topics, the meeting successively mentioned real estate issues, China concept shares and overseas listing issues, platform economic governance issues and Hong Kong market stability issues.
Thus, from a financial perspective, the relevant risks of real estate enterprises are not the risks of individual enterprises, and it is urgent to resolve the relevant risks.
The means to resolve the risks of real estate enterprises are Project M & A, and the premise of Project M & A is stable sales. The cbcirc once again pointed out that it will focus on supporting high-quality real estate enterprises to merge and acquire high-quality projects of difficult real estate enterprises. We believe that project M & A is an important means to resolve pre-sale regulatory issues and delivery concerns. However, the premise of promoting Project M & A is the stability of market sales collection, and the premise of promoting sales stability is to encourage the release of reasonable real estate demand. We expect that the policy is expected to continue to make efforts to push sales out of the trough. In demand side means, for “new citizens”
The financial support of real estate demand may be worthy of attention.
The transformation of the new development model and the holding of operation and service businesses deserve attention. The meeting also stressed the transformation of real estate enterprises to a new development model. This shows that although the resolution of short-term risks may rely on mergers and acquisitions and loan investment, enterprises still need to adapt to the new era to solve the long-term problems of the industry. In short, the rise of house prices may be slower in the future (but it does not mean that house prices will fall), the development and construction area of new houses may peak, and the simple expansion of reproduction may face market challenges. We believe that the future of real estate enterprises mainly lies in the holding, operation and service of real estate space, including meeting the residential needs of new cities, meeting the rental needs, meeting the renewal and transformation needs of old communities, urban space service business opportunities, etc. We believe that the relevant measures to support the transformation of real estate enterprises to the new development model may include: continue to expand the infrastructure REITs market and include more categories of real estate basic assets; Distinguish the equity and debt financing of development business from urban renewal, operation and maintenance, leasing and services, and make greater efforts to support the development of new model enterprises; Fully revitalize idle funds, including idle provident fund and housing maintenance funds; Strengthen the predictability of real estate policies and keep the caliber of general regulatory policies stable.
Risk tip: the risk of default of real estate enterprises with financial difficulties; The risk of loss of profitability caused by continuous price reduction of development enterprises.
Investment advice. We believe that regulators fully understand the credit risks faced by real estate enterprises and attach great importance to resolving risks is the basic premise of the soft landing of the real estate market. We believe that the next few months will be a key time window for ensuring the industry’s credit. Investors should pay close attention to the implementation of urban policies, the continued implementation of demand side support, the changes in real estate market sales and the development of M & A. Although some enterprises have defaulted, some enterprises are still facing the difficulty of debt extension, and some enterprises may face the challenge of shrinking the table, the policy is expected to strongly support the bottom demand, and there should be no systemic risk in the real estate industry. We are optimistic about high credit real estate companies, including Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Vanke Co.Ltd(000002) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Midea real estate, Longhu group, China Resources Land, Greentown China and Hangzhou Binjiang Real Estate Group Co.Ltd(002244) . We are also optimistic about property management companies with strong independence, including poly property, China Resources Vientiane life, China Merchants Property Operation & Service Co.Ltd(001914) , Zhonghai property, Greentown service, Jinke service and country garden service. In addition, we believe that some real estate companies with large decline before, such as Jinke Property Group Co.Ltd(000656) , country garden, Seazen Holdings Co.Ltd(601155) , Xuhui holding group and other companies, although facing the challenge of shrinking the table, their performance may encounter phased challenges, but their sustainable operation ability is trustworthy.
