This report makes a comprehensive study on the capital chain operation of the industry and the capital status of key real estate enterprises.
The fund tension at the industry level is close to the trough but not out of control:
By comparing the current and historical three rounds of industry bottom funds in 2008, 2011-2012 and 2014-2015, we believe that the current round of fund tension is close to the two rounds of industry lows in 2008 and 2014, and the fund tension level is higher than that in 2011-2012. Although the fund chain tension of the industry is high, the risk after considering the impact of scale has not significantly exceeded the previous level.
We believe that the capital surplus level of the industry may reach the bottom twice in the second quarter of 2022, mainly because the balance of land payment at the peak of centralized land supply in the third and fourth quarters of 2021 will be paid intensively near the second quarter of 2022, superimposed with the rigid expenditure at the peak of project payment, and the sales return, as an important source of capital inflow, is expected to improve in the middle of the year.
After dismantling the industrial capital flow at the financing and operation ends, we found that the current round of capital shortage not only comes from the capital outflow at the operation end, but also shows a certain pressure at the financing end, which is the first time in history; The sharp decline at the financing end was mainly caused by the decline in bank loans and debt financing at home and abroad.
On the operating side, we found that the current round of contraction of real estate enterprises’ expenditure on land and project funds is higher than in the past, indicating that real estate enterprises’ cognitive ability of the cycle is also improving, but the early tightening of expenditure also means that the elastic space of the industry on the operating side in the future is more limited than that in the same period in history;
In terms of companies, we screened 68 A-share and 50 H-share listed real estate enterprises, and conducted capital chain analysis at the level of the industry as a whole and individual companies:
Based on the cash flow statement of listed companies, we find that the capital outflow level of this round of industry is higher than that of the same period in the past, and the shortage of funds at the financing end also exists at the level of listed companies;
After grouping by revenue scale, we find that the capital outflow level of large and medium-sized real estate enterprises with revenue scale of 50-200 billion is the highest: on the one hand, some large and medium-sized real estate enterprises pay too much attention to scale and increase leverage, resulting in the accumulation of leveraged funds and risks in the company; On the other hand, some financing approval focuses on scale assessment, which provides objective conditions for large and medium-sized real estate enterprises with a certain scale to increase leverage; With the ebb tide of funds in the industry, risks are also rapidly exposed, resulting in more serious risk events in some companies than in history.
Based on the marginal change of the company’s cash flow, short-term and medium and long-term solvency, we have identified the risk of the capital operation status of 100 real estate enterprises, including 22 real estate enterprises in the low-risk group (the marginal cash flow is stable and the long-term and short-term solvency is up to standard), 42 in the medium-risk group (the short-term solvency is up to standard) and 36 in the high-risk group (the short-term solvency is insufficient).
Investment strategy: since the current round of industrial capital risk mainly comes from the tightening of funds at the financing end, and with the marginal easing of policies, the shortage of funds in the industry will be alleviated. The emergence of the policy bottom will support the valuation of the sector. In the future, the elasticity of the sector comes from the operation end. Based on the changes in the past cycle, we believe that the industry is expected to bottom and recover in mid-2022, The market expectation may improve in advance; At the level of real estate enterprises, give priority to stable real estate enterprises with healthy financing cash flow, and recommend Poly Developments And Holdings Group Co.Ltd(600048) , Longhu group, Gemdale Corporation(600383) . In addition, pay attention to some waist real estate enterprises with relatively safe capital, and recommend Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , China Construction Development International, Shenzhen New Nanshan Holding (Group) Co.Ltd(002314) .
Risk tip: macroeconomic changes and policy regulation of the real estate industry exceed expectations, which will have an impact on the commercial housing market and the epidemic situation.
