Ping An View:
During the coexistence period of policy rescue and real estate enterprises, high credit real estate enterprises have an advantage. Since September 2021, policy easing has mainly focused on relief and correction, which has failed to boost market confidence. From January to February 2022, the national sales area decreased by 9.6% year-on-year. It is common for real estate enterprises to get out of danger. Many real estate enterprises such as Longguang and Zhengrong still got out of danger in 2022q1. At this stage, although the policy side has been loosened, due to the lack of policy strength and the continuous accidents of real estate enterprises, the market has not eliminated the concerns about the accidents of most real estate enterprises. The share prices of central state-owned enterprises and high credit private enterprises with good sales and smooth financing have performed better, and the range of poly and investment promotion has increased by more than 40%.
The period of substantial improvement of policies and fundamental repair ushered in sector opportunities. With the voice of many ministries and commissions in the “March 16” period, the strength of policies in many places has increased significantly recently, and the policies will move from relief to substantive improvement. Benefiting from the continuous improvement of the mortgage side and the frequent positive signals of policies, the trading volume of second-hand houses in 20 cities has rebounded for six consecutive weeks. It is expected that more urban real estate markets will stabilize in the second quarter. However, due to the differences in fundamentals and inventory, urban areas will show differentiation. We believe that at this stage, with steady growth and increased policy efforts, the game value of the risk or high-pressure real estate enterprises with large decline before is prominent, or shows higher stock price elasticity; At the same time, the central state-owned enterprises and high-quality private enterprises with strong credit will also benefit from greater policy repair, and the risk of stock price fluctuation brought by the policy game is less, with higher certainty of future sales and performance, and still have investment value.
During the period of policy expectation stability and model reconstruction, strong operating enterprises perform better. In the medium and long term, under the tone of “no speculation in housing and housing” and “three stability”, the policy and property market will enter a stable period. With the withdrawal or contraction of radical real estate enterprises and the lessons of this painful period, the traditional development model will shift from land and financial dividends to management dividends, and the performance of strong operating enterprises will be relatively better. At this stage, the investment logic will return to fundamentals. Although some real estate enterprises have successfully weathered the crisis, they are under pressure in terms of future scale and performance due to credit damage, poor financing and possible asset sales and investment slowdown in the painful period; The real estate enterprises that continue to obtain high-quality soil reserves at the low point of this cycle and have released the downward pressure of gross profit margin and asset impairment will have better investment opportunities. At the same time, this round of crisis also exposed the capital side risks brought by the traditional high leverage model. Strong operating enterprises with smooth external financing, stable internal operating cash flow and high capital utilization efficiency will have more potential to become high-quality enterprises in the future.
Investment suggestion: we believe that this cycle will evolve in three stages: Policy relief and the emergence of real estate enterprises, policy substantive improvement and fundamental repair, policy expectation stability and industry pattern reconstruction. At present, the industry is gradually moving from the first stage to the second stage. The policy side is expected to usher in greater improvement and the fundamentals are expected to stabilize gradually. This stage is expected to usher in sector opportunities. Individual stocks mainly grasp two types of investment opportunities: one is the relaxation of short-term benefit policies and the improvement of gross profit margin at the land acquisition end, and the strong operating and high credit enterprises that are expected to seize market share in the medium and long term, such as Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , etc; The first category is those with large adjustment in the early stage, certain support in fundamentals and elastic targets of policy game, such as Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , etc.
Risk tips: 1) reduce the risk of supply adequacy: if the local city continues to be cold and the new land storage scale of real estate enterprises is insufficient, it will have a negative impact on the subsequent supply of goods, and then affect the sales, commencement, investment and completion of the industry. 2) Large scale impairment risk of real estate enterprises: if the de industrialization pressure of the real estate market exceeds expectations and the sales are greatly changed from price to quantity, it will bring some impairment risk of high price in the early stage. 3) Policy care is less than expected risk.
