Event: 1. On March 16, the financial stability and Development Commission of the State Council held a special meeting chaired by Liu He, vice premier of the State Council and director of the financial commission. The meeting pointed out: with regard to macroeconomic operation, we must implement the decision-making and deployment of the Party Central Committee, earnestly invigorate the economy in the first quarter, actively 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. 2. The cbcirc held a special meeting to convey, study and implement the spirit of the meeting of the financial committee of the State Council, encourage institutions to carry out M & A loans in a stable and orderly manner, focus on supporting high-quality real estate enterprises to merge and acquire high-quality projects of difficult real estate enterprises, and promote the virtuous cycle and healthy development of the real estate industry.
Monetary and local policies are expected to take the lead, and the general direction is expected to be relaxation. We expect that the follow-up real estate policy will continue to relax and intensify efforts for three core reasons: 1. Macro GDP 5 5% steady growth is inseparable from real estate; 2. In 2021, the narrow tax revenue and land transfer fee of the real estate industry contribute 36% to the national total fiscal revenue. The long-term downturn may drag down the real estate finance and affect the urban investment bonds; 3. The sharp decline in real estate and industrial chain will lead to an increase in unemployment. We believe that the focus of the policy, or the seven inches of the current industry problems, lies in the demand side (i.e. sales) and the enterprise capital side (mainly financing cash flow). Judging from the statements of various recent meetings, we expect that the foothold of the first administrative policy of this round may be the monetary end (in terms of new loans) and local policies (such as the relaxation of purchase and loan restrictions in Zhengzhou and the re mention of monetized resettlement). New citizens are expected to enjoy special credit policies, because the city’s policies are expected to open the space for purchase and loan restrictions in a disguised form.
Development loans and mortgage loans are expected to be released one after another to promote a virtuous circle of funds. On December 31, 2020, the people’s Bank of China and the China Banking and Insurance Regulatory Commission issued a notice to implement the real estate loan concentration management system, resulting in a continuous decline in the balance of real estate development loans from 2021q2, with a decrease of 120150 billion yuan per quarter; The balance of individual housing loans accelerated year-on-year decline, and the year-on-year growth rates of Q2 and Q3 decreased by 1.5pct and 1.7pct respectively. In February 2022, residents’ medium and long-term loans decreased by 45.9 billion yuan. Generally speaking, the main component of residents’ medium and long-term loans is housing loans. Today’s meeting proposed that new loans should maintain a moderate growth, real estate development loans and mortgage loans are expected to be released one after another, and even housing loans are expected to increase moderately, so as to promote a virtuous circle of funds.
The new development model may mainly be indemnificatory rental housing and REITs policy. The public service plan for the 14th five year plan jointly issued by 21 departments including the national development and Reform Commission and the Ministry of housing and urban rural development proposes that large cities with net population inflow should vigorously develop affordable rental housing, mainly to solve the housing difficulties of qualified new citizens, young people and other groups. 2021 is the first year of public REITs. At the end of January, the Ministry of Finance and the State Administration of Taxation jointly issued an announcement to clarify the tax deferral policy of original equity holders before and during the establishment of infrastructure REITs. We believe that the new development model mentioned in the meeting may be the model of simultaneous rent and sale, and more policy directions may be based on affordable rental housing and REITs.
M & a loan can promote project transformation, but it is not the main solution. At present, the enterprises that obtain M & A loans are mainly state-owned enterprises and a small number of private enterprises, such as Midea real estate. The direction of M & A loans is the high-quality projects of real estate enterprises with difficulties in M & A. The first mock exam is two difficulties: 1, the enterprises that use M & a loan should provide at least 40% free funds. 2. Whether the high-quality projects of difficult real estate enterprises are willing to be sold at a discount. From the perspective of actual conversion rate, we believe that M & a loan can solve some projects, but it is not the main solution.
Investment suggestion: the fundamentals are still at the bottom, but the direction of policy easing is clear, maintaining the “overweight” rating of the real estate development sector. We believe that this year is a large-scale policy easing cycle, which is a beta market. “Continued favorable policies – the bottom of industry fundamentals is expected to rise later – state-owned enterprises and high-quality private enterprises resume land acquisition and restore the gross profit margin of land acquisition” is the main logic of 2022, which will achieve three-level resonance upward in fundamentals, industries and enterprises in the later stage. Real estate enterprises with good credit qualification, sufficient liquidity, sufficient soil reserves and high quality are the main choice. It is suggested to pay attention to: A shares Poly Developments And Holdings Group Co.Ltd(600048) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , Vanke A, Huafa Industrial Co.Ltd.Zhuhai(600325) , Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) ; H-share China overseas development, green city China, China Resources Land, Longhu group, China Jinmao, Xuhui holding group, China Overseas Hongyang. Property management: Country Garden service, China Resources Vientiane life, green city service, poly property, Yongsheng life service, Jinke service, China Merchants Property Operation & Service Co.Ltd(001914)
Risk tip: the speed of policy introduction and implementation are lower than expected, and the fundamentals continue to decline, causing a chain reaction. The repeated impact of the epidemic exceeded expectations
