Sales: the price of commercial housing is reduced, and the sales pressure is still large. From January to February 2022, the year-on-year decline in commodity sales area was narrower than that in December last year, but the average sales price fell sharply year-on-year, and the year-on-year decline in sales was still large. This shows that under the price reduction of real estate enterprises, the overall sales situation is still not optimistic. The price reduction has not brought enough sales to realize the recovery of sales. After the accumulated demand is gradually released, the wait-and-see mood of home buyers may be further aggravated in the face of the decline of house prices and the endless negative news of real estate enterprises. The subsequent sales situation may still be severe, and the recovery of sales needs more policies on the demand side.
Development Investment: new construction continued to be weak, the growth rate of completion fell sharply, and investment increased. We believe that the increase in investment may be due to the rise in construction and installation costs caused by the rise in the price of raw materials, the slight increase in construction area caused by the delay and resumption of construction, and the partial installment or delayed payment of land acquisition costs. We should not be too optimistic about the market environment because of the growth of investment data. In the first two months, the land purchase area and land transaction amount decreased by 42.3% and 26.7% respectively year-on-year, and the land market is experiencing a sharp decline. This shows that under the impact of tight capital and declining sales, real estate enterprises' expectations of the market are weakening significantly.
The continued sharp decline in land transactions is bound to bring great pressure to the construction and investment data in the future.
Funds in place: the funds are still under pressure, and the decline in sales is the biggest obstacle to the improvement of funds. Although with the development of the financing side policy, the situation of Chinese loans and self raised funds has warmed up compared with December last year.
However, the pressure brought by the decline in sales still makes it difficult to improve the capital of the industry. The decline in deposits, advance receipts and personal mortgage loans both expanded, indicating that there is a great pressure on sales collection at present. At present, many private enterprises are facing credit risk. Under the dual pressure of lack of refinancing ability and sales collapse, real estate enterprises are still facing great liquidity risk.
Investment suggestions:
According to the data of the Bureau of statistics, although the investment increased from January to February, the decline in sales was better than the market expectation. However, sales are still weak and residents' willingness to buy houses is low. The capital of the industry is still very tight, the investment willingness and ability of real estate enterprises have declined sharply, and the land market is deserted. Under the impact of shrinking demand and weakening expectation, both sides of supply and demand are facing great impact. The policy objective of "stabilizing land prices, house prices and expectations" will face great challenges, and it is still a top priority to further strengthen market stability. If the land market does not warm up and the market expectation does not stabilize, the probability of stability maintenance policies will be introduced one after another.
We believe that the central government's attitude towards real estate regulation has changed significantly. The current policy tone and encouragement direction are relatively clear, the support of demand side policies is expected to be more accurate and intensive, and the support of financial institutions to both ends of supply and demand is expected to be further strengthened.
We believe that the advantages of financing will promote high credit real estate enterprises to gain advantages in the land and M & a market. The continuous land acquisition and promotion ability and high-quality credit endorsement are also expected to seize the opportunity when the demand recovers and further improve the market share. Recommend Vanke A, Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) . The support from the financing side, after meeting the steady central enterprises and real estate enterprises in the head, will gradually overflow to the stable private enterprises, and the market will gradually restore confidence in the stable private enterprises. It is suggested to continue to track the leaders of the stable private real estate enterprises, such as Longhu group and country garden.
Risk tip: the risk of further tightening industrial policies, the risk of continued decline in profitability, and the risk of sales falling short of expectations.
