Since the beginning of the year, Shenwan real estate sector has increased by 2.34%, ranking sixth in the industry (data as of January 5, 2022). We believe that the core driving factor is that the confirmation of the industry policy bottom determines the high winning rate of the policy game, and further highlights the price performance advantage of the sector under the rapid rotation market and risk aversion at the beginning of the year. In addition, the expected warming of policy adjustment also leads to the front of the game rhythm. We believe that high-quality real estate enterprises are expected to continue to benefit from the alpha opportunities brought by M & A and targeted easing of refinancing. At the same time, under the demands of industry pattern optimization, industry stable expectation and macro stable growth, the enrichment of policy game points is expected to bring a phased beta market by the end of the first quarter.
Game point 1: there are more possibilities for alpha generated by credit problems
The main realization path of market-oriented clearing is inter company M & A in the industry. Although the acquisition is under the pressure of three red lines, real debt ratio, asset cost performance and industrial fundamentals, the reinvestment expectation is still cautious. However, the targeted easing at the refinancing level has been fulfilled, and the marginal stability of the industry prosperity since November is expected to drive the marginal repair of investment confidence. In addition, the direction and attitude of regulators to encourage mergers and acquisitions remain firm, and the follow-up refinancing support (not excluding equity refinancing), debt ratio assessment and the improvement of local state-owned assets participation are worth looking forward to.
Game point 2: the excessive superposition effect after the expected reversal needs to be alleviated
The current industry liquidity crisis stems from the common superposition of industry cycle, credit cycle and policy cycle, and has led to liquidity runs at the micro level to a certain extent. We believe that the appropriate expected adjustment of financial institutions and regulators is a normal response and is also conducive to the fundamental solution of industrial structural problems. However, if it may lead to disorderly competition for stock funds in some regions, or even large-scale private real estate enterprises and regulators, it will add to the fragile real estate financial system. Therefore, it is also possible to improve liquidity runs and avoid excessive upgrading at the local level through top-down coordination.
Game point 3: the policy beta depends on the passive trigger of macro and fundamentals
The easing at the mortgage level has played a targeted interest rate reduction effect, and has successfully guided the stabilization of short-term sales, and the goal of supporting reasonable housing demand has achieved initial results. However, further relaxation depends on the forced trigger at the industry and macro levels: the phased demands of industry credit risk out of control, fundamental stall or stable growth at the macro level on real estate will be improved. In the first quarter of this year, the industry credit and fundamentals will usher in a big test. We are still optimistic about the three stability expectations and the moderate upgrading of urban implementation policies, and even the introduction of higher support policies in extreme cases.
Grasp the improvement of M & A on the left and concentration on the right
The future industry beta depends on the adjustment of industry structure, the pace of capacity clearing and the strength of policy support; Alpha focuses on the repair of the balance sheet and profit margin of key real estate enterprises by M & A, the accuracy of countercyclical plus leverage, and the long-term excavation of the value of housing scenarios. Suggestions: 1) high quality leaders: Gemdale Corporation(600383) , Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, Longhu group, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ; 2) High quality growth: Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Xuhui holding group; 3) High quality property management: Country Garden service, xinchengyue service, Greentown service, China Merchants Property Operation & Service Co.Ltd(001914) , poly property, Xuhui Yongsheng.
Risk warning: industry credit risk spread; The downward cycle of industry sales begins; Administrative regulation remained high-pressure, and the pilot strength of real estate tax exceeded expectations
