Core view
New houses: the transaction continues to run at a low level; 1、 The second tier cities rebounded month on month, and the third tier continued to callback. The transaction area of new houses in 46 cities was 24.641 million square meters, an increase of 16.8% month on month and a year-on-year decrease of 24.0%. 1、 The month on month growth rates of the second and third tier cities were + 12.4%, + 28.0% and – 38.0% respectively, and the year-on-year growth rates were – 20.6%, – 4.2% and – 63.6% respectively. We believe that although December is the closing month at the end of the year, the supply rhythm of real estate enterprises has slowed down significantly due to the recent bleak market situation. It is expected that January 2022 will coincide with the off-season of the Spring Festival, and the overall turnover is expected to change from up to down. Considering the high base in January 2021, the year-on-year probability will also remain down. From the market trend of the whole year, the transaction area of new houses in 46 cities in 2021 was 300 million square meters, with a year-on-year increase of 3.6%. The transaction volume in the first half of the year was significant, and the market continued to cool in the second half of the year, with a year-on-year decrease of more than 30%.
Second hand housing: the transaction scale rebounded month on month and narrowed year-on-year. The transaction area of second-hand houses in 16 cities was 5.572 million square meters, an increase of 24.9% month on month and a year-on-year decrease of 35.0%. 1、 The month on month growth rates of the second and third tier cities were + 22.1%, + 29.3% and + 1.0% respectively, and the year-on-year growth rates were – 38.1%, – 18.0% and – 70.2% respectively. We believe that, based on the recent relaxation of credit policies in many cities, the increase in mortgage lending, the decline in mortgage interest rates, and the faster lending rate, the second-hand housing market continues to recover, but there is still a certain distance from the previous high, and it still takes time for market confidence to recover. It is expected that the second-hand housing market will remain stable in the short term, and the scale will continue to rise slightly. Due to the emphasis on controlling the second-hand housing market, the second-hand housing market was relatively cold in 2021, with double-digit negative growth (- 10.4%) year-on-year.
Inventory and decommissioning: affected by the continuous downturn in transactions, the overall inventory and decommissioning cycle increased month on month, and the decommissioning cycle in Shanghai was less than 6 months. As of December 31, the inventory area of new houses in 14 cities was 105.071 million square meters, a month on month increase of + 1.8% and a year-on-year increase of – 2.0%; The decontamination cycle was 11.3 months, with a month on month increase of + 5.8% and a year-on-year increase of + 18.2%. 1、 The month on month growth rates of inventory area in the second and third tier cities were + 2.8%, + 1.3% and – 2.2% respectively, and the year-on-year growth rates were – 0.2%, – 6.7% and + 10.0% respectively; The decontamination cycle is 8.9 months, 10.3 months and 12.7 months respectively, with a month on month growth rate of + 2.6%, + 5.8% and + 3.8% respectively, and a year-on-year growth rate of + 17.3%, – 11.9% and + 56.4% respectively.
Sales of real estate enterprises: in December, the sales of the top 100 real estate enterprises reached 1.09 trillion yuan, a year-on-year decrease of 36.4% (former value – 38.8%); In 2021, the sales volume of the top 100 real estate enterprises was 12.63 trillion yuan, a year-on-year decrease of 3.2%. The overall target completion of large-scale real estate enterprises is also far less than that of last year, with an average target completion rate of 87.4% in the top 20. Combined with the actual sales target completion of real estate enterprises this year, the overall sales expectation of real estate enterprises in 2022 is bound to be more cautious.
Land market: 1) volume fell and price rose, with a year-on-year turnover of – 63.6% and an average floor price of + 40.7%; Although the three batches of centralized soil auction rules were slightly relaxed, the low operation of the premium rate has not been reversed, and the premium rate is only 3.0% this month. In the whole year, the transaction area of land in 100 cities was 1.915 billion square meters, a year-on-year decrease of 4.1%, and the total transaction price was 4.93 trillion yuan, a year-on-year decrease of 6.8%. The overall market was cold. 2) From the second batch to the third batch, the local auction heat continued to decline, the profit margin continued to improve, and the government appropriately reduced the margin ratio. The premium rate of the third batch of concentrated land auction in 21 key cities decreased by 13.2 percentage points compared with the first batch and 2.0 percentage points to 2% compared with the second batch; Meanwhile, the expected gross profit margin of the three batches of centralized land transfer increased by 7.9 percentage points compared with the first batch and 2.0 percentage points compared with the second batch; The margin ratio of the third batch decreased by 0.2 percentage points compared with the second batch and 0.5 percentage points to 31% compared with the first batch. In 2021, the land transfer fee for residential buildings in key 22 cities will be RMB 2.63 trillion, with a year-on-year increase of 3.3%. The transfer fees for residential land in Hangzhou, Shanghai, Beijing and Nanjing exceeded 200 billion yuan, 255.6 billion yuan, 238.1 billion yuan, 211.2 billion yuan and 2015 billion yuan respectively. 60% of urban residential land transfer fees increased positively year-on-year, including Hefei (+ 79.9%), Xiamen (36.7%) and Changsha (31.7%).
Investment advice
From the perspective of sector investment, we believe that the beginning of the year is still a good investment time point, which is mainly based on: 1) although the current situation of sales cooling, financing control and capital supervision is difficult to change in the short term, and the painful period of the industry will continue, the core contradiction between sluggish industry sales and declining profit rate has been fully communicated to the management, We have seen obvious positive signals in terms of policy and attitude. It is expected that the liquidity and administrative policies at both ends of supply and demand are expected to be marginally loose. 2) Fundamentals are expected to improve at the end of the first quarter. We believe that the key to the virtuous cycle emphasized by the current policy lies in the operation of the sales investment sales chain. At this stage, the sluggish sales has weakened the current willingness of real estate enterprises to acquire land and start new construction. The decline in land transactions and new construction has reduced the number of subsequent market entry projects, and there is further continuous downward pressure on sales. The negative transmission relationship makes it impossible for the industry to operate healthily. We believe that with the arrival of the bottom area of Q1 sales, the investment may bottom out in Q2 and begin to improve, and the overall industry will gradually realize a virtuous circle in the second half of 2022. It is recommended to continue to pay attention to the opportunities in the real estate sector. We suggest to pay attention to: 1) development sectors: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Vanke A, Longhu group and China Resources Land. 2) Property sector: Country Garden service, Xuhui Yongsheng service, China Resources Vientiane life.
Risk statement
Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten
