Affected by the frequent positive policies of the recent property market, the real estate sector has performed well recently. Benefiting from the continuous rise of the sector index to new highs, most funds with heavy positions in real estate stocks achieved good returns.
The real estate sector continues to recover and rise. Is it suitable for investors to get on the bus? In this regard, the interviewed public offering investment researchers believe that the real estate sector has experienced frequent positive events in the near future, and the sector has risen sharply in a row. It is not suitable to blindly catch up in the short term, and wait patiently for adjustment before bargain hunting.
Looking forward to the future, public funders believe that the whole logic and clues of the real estate sector are faintly visible from the bottom of the policy to the bottom of the market. Based on the profound industrial logic, the sustainability of the current round of real estate market will be better than in the past. Before the rapid recovery of sales and the rising pressure of house prices, the performance of real estate stocks is worth looking forward to.
favorable policies stimulate the rebound of the real estate sector
On March 25, the real estate development sector rose by 1.54% as a whole, of which 76 stocks rose, 8 stocks were flat and 26 stocks fell. Data show that as of March 25, the real estate development sector rose 8.15% in the past week and 9.65% in the past month. It is understood that the real estate sector has continued to recover recently, mainly due to the continuous warm wind of the recent housing loan market policy, which has released many positive signals.
In this regard, Li Fu, manager of ChuangJin Hexin financial real estate fund, further said, “the significant recovery of the real estate sector is mainly due to the gradual strengthening of the expectation of policy improvement after the negative year-on-year growth of sales for many months. With the continuous acceleration of the relaxation of real estate policies in Zhengzhou and other cities, the expectation of policy improvement is further enhanced.”
In Li Fu’s opinion, real estate has made a great contribution to GDP, has a strong pulling effect on relevant sectors, and plays a great role in economic stability. It is expected that the policy will remain relatively friendly in the future. The market of the real estate sector has a certain sustainability. From a longer cycle point of view, some real estate enterprises that have lost their financing ability in this round are less likely to re leverage in the future, face continuous contraction, and some real estate enterprises with good credit may surpass the growth of the industry.
Referring to the reasons for the good performance of the real estate sector since the fourth quarter of last year and recently, Wang Fang of the fund research department of SDIC UBS believes that there are two main points. First, the pendulum of China’s real estate policy cycle is swinging in the opposite direction from the “extreme tightening” in the past few years, from the central economic work conference at the end of last year to the recent meeting of the financial commission, from the relaxation of loan restrictions in some regions to the decline of mortgage interest rates in various regions, All release the expectation of relaxation of real estate policy.
“Second, it is more important than the first point,” Wang Fang stressed, that is, China’s real estate industry is experiencing the largest supply side optimization in history. Once radical private enterprises default or permanently withdraw from the real estate industry, while at the same time, high trust state-owned enterprises and central enterprises may obtain greater market share and enjoy a better competitive environment.
Yang Yaquan, a researcher of Nord fund, also believes that the recent continuous recovery of the real estate sector is mainly due to the continuous positive catalysis at the policy level. At the meeting of the Finance Committee of the State Council on March 16, it was proposed to “timely” study and put forward “effective” supporting measures to prevent and resolve the risks of real estate enterprises and transform to a new development model; The Ministry of Finance said that it did not have the conditions to expand the pilot cities of real estate tax reform this year; The national development and Reform Commission said it would expand the supply of affordable rental housing.
Yang Yaquan pointed out that this series of policies have greatly boosted the confidence of the current real estate industry. Although the industry is still in a state of contraction from the data of sales and investment, the portfolio policy of stable growth and risk prevention of the real estate industry is expected to form a greater supporting and stabilizing effect on the sales, investment and credit subjects of real estate enterprises in subsequent industries.
several fund managers arranged the real estate industry chain in advance
With the continuous rebound of real estate this week, most funds with heavy positions in real estate stocks have achieved considerable returns. Based on the optimistic view of the real estate industry chain, many fund managers have “ambushed” the layout in advance.
Specifically, as of March 25, the southern China Securities all refer to the real estate ETF, the Huaxia China Securities all refer to the real estate ETF, the southern real estate ETF connection a and the Huaxia real estate ETF connection a have achieved an income of more than 3% in the past four days. Huabao CSI 800 real estate ETF, China Merchants Hushen 300 real estate a, Penghua CSI 800 real estate, Yinhua CSI mainland real estate theme ETF, Guotai CSI real estate a and other funds with heavy positions in real estate stocks have achieved positive returns.
In terms of actively managed fund managers, Zhan Jia, director of the International Business Department of Everbright Prudential fund, increased positions in a number of home appliance stocks and Hong Kong property stocks in the fourth quarter of last year, among which poly property ranked as the largest heavy position stock of Everbright Prudential’s quality life; In addition, the fund also made heavy positions in Xincheng Yue service, country garden service, green city service, etc. Midea Group Co.Ltd(000333) , Haier Smart Home Co.Ltd(600690) and other home appliance stocks.
Based on the logic of steady growth, the products managed by Li Heng, manager of ChuangJin Hexin financial real estate fund, had a certain layout of real estate stocks and related industrial chains in the fourth quarter of last year and the beginning of this year, but were mainly equipped with high security real estate enterprise leaders. “It is mainly considered that the sales area of more than 1.7 billion square meters of commercial housing in the past few years may be difficult to reach again in the short term, and the risk exposure of real estate is still ongoing. Therefore, the risk of more stable real estate enterprises at this stage is less than that of the industrial chain and private enterprises with high debt risk.” He said.
Yang Yaquan, a researcher of Nord foundation, said frankly, “Since the fourth quarter of last year, we have put forward the view that the valuation of the real estate sector has entered the bottom, which is a good time to gradually increase the allocation of high-quality real estate enterprises”. Since October 2021, we have seen the gradual decline of local mortgage interest rates and the gradual shift of policies to care. We think it was a relatively large policy shift at that time. At the same time, high-quality leading real estate enterprises did not have credit risk, and sales and land acquisition are still growing, The land market has more and better investment opportunities due to the overall depression of the industry, which provides an excellent opportunity for high-quality real estate enterprises with high credit rating to improve their market share. “
“As we said at that time, even the valuation of high-quality real estate enterprises with high credit rating was at the bottom of history at that time. Many real estate enterprises fell below twice the price to book ratio, which provided a high odds for investment. In fact, the share prices of these real estate enterprises have been rising steadily since Q4 in 21 years.” Yang Yaquan explained.
According to Wang Fang of the fund research department of UBS of SDIC, “the sales scale of the real estate industry is close to 20 trillion, and there are many industrial chain companies. We have been closely tracking this industry. Since the fourth quarter of last year, we proposed to raise the investment rating of the real estate industry.”
Wang Fang said that since the fourth quarter of last year, he has been optimistic about the real estate industry for several reasons: the data of the real estate industry began to decline rapidly in the second half of last year, the growth rate of real estate investment turned negative, and the double-digit decline of real estate sales; The operation of real estate enterprises mainly depends on credit, and the operation differentiation of enterprises at all credit levels is becoming larger and larger. Some enterprises’ sales decline by more than 90%, and some enterprises can achieve positive sales growth; The profit margin of high-frequency land acquisition by some enterprises is improving, and the real estate policy in some cities is gradually relaxed; In the past few years, “track investment” has prevailed, and seemingly unpromising real estate stocks are trading at extremely low and abnormal valuations.
On the whole, Wang Fang summarized the investment logic of the real estate industry at this stage as “demand improvement, supply clearing and pattern optimization”. We believe that the logic of improving the competition pattern of the real estate industry can finally be put on the statements of relevant companies.
high credit leading real estate enterprises have good configuration value
Looking forward to the future, with the development of the demand side and the downward adjustment of the margin, many public funders are generally optimistic and believe that the worst time of the whole real estate has passed.
Li predicted that the real estate market may continue to fluctuate. “It is mainly affected by the expectation of house prices. Of course, it is also related to the epidemic. At present, sales are still in the process of decline. In the process of sales decline, the warm wind of policy will continue. According to the performance of real estate stocks in the policy cycle in the past few rounds, the performance of real estate stocks is worth looking forward to before sales pick up rapidly and house prices show upward pressure.”
For the reasons for the poor performance of relevant industrial chains, Li Fu believes that there may be impairment risk in the short term. “We can see this from the fourth quarter report of some companies last year. As more real estate enterprises’ debts are extended, the estimated impairment risk continues. In the medium and long term, the sales of commercial houses of more than 1.7 billion square meters or a sales volume that is difficult to return in the short term are different from the previous rounds of regulation cycles. Therefore, the demand peaking must be considered in the industrial chain, and the company’s ability to continuously improve the market share must be higher than the total demand This is a test for many companies. ” He stressed.
Looking back, Wang Fang is also more optimistic. He believes that the sustainability of this round of real estate industry market will be better than in the past, because there is a profound industrial logic behind this round of market.
“When it comes to the promising sub asset categories, we tend to be optimistic about the leading high credit companies with better growth prospects and more adaptive business models. Most of them are located in the metropolitan area with increasing population, have higher business efficiency or more unique land acquisition model, and the corresponding roe is also in the forefront of the industry.” He said.
Wang Fang also stressed that compared with the real estate industry, his view on the real estate industry chain is relatively cautious, mainly because the business environment faced by the real estate industry chain company in the future is very different from that in the past. After the “high turnover and high leverage” model of real estate companies is unsustainable, it will have a very far-reaching impact on the competitive elements of industrial chain companies. In the future, the profit margin of industrial chain companies may be compressed, and the past high growth model may also be challenged.
Yang Yaquan also believes that high-quality real estate enterprises with high credit still have good configuration value. At the same time, the property companies of high credit rating real estate enterprises have good long-term growth. With the gradual recovery of the industry, the suppression of valuation has gradually eased. For the property companies under private real estate enterprises that have fallen a lot during the period, the probability of default of some parent companies under the current policy is decreasing. These companies can still continue to operate. At the same time, they have high odds in the stock market and can also be configured to a certain extent.
For the downstream of real estate, Yang Yaquan said that the opportunities for continuous growth in the total amount are not particularly determined, but more from the investment opportunities brought by the stabilization of the total amount and the increase of the company’s market share in the industry. Due to the special dispersion in the early stage of the building materials industry, the leading market share is low, and the direct channels of the categories converge. The leading companies are still in the stage of rapidly increasing their share and expanding their categories. Therefore, there are still many investment opportunities. In addition, the cost of raw materials also has a certain impact on the profits of building materials enterprises. If bulk commodities fall, the profits of enterprises are expected to continue to improve.
With regard to the allocation of financial real estate portfolio, Li Fu said that he would still grasp the main line of steady growth. The real estate sector and some undervalued banking sectors are the focus of current allocation. The valuation of wealth management related stocks that fell more in the early stage has a certain attraction and is also an optional allocation direction.
Yang Yaquan believes that the mortgage interest rate reached 13 BPs in a single month in March, and the second-hand interest rate decreased by 15 bps. Since October, the cumulative decline in the first half of the year has reached 40 BPs, and some regions have also reduced the previous down payment ratio. Therefore, in the follow-up, it may be seen that the second-hand houses in the core first and second tier cities are the first to stabilize, or even rise slightly. After the credit risk concerns of real estate enterprises are gradually reduced, the sales of new houses are expected to stabilize gradually. With the recovery of the land market, the supply of high-quality real estate is expected to keep up, so as to enter a stable and virtuous cycle of investment and sales.
