Core view
From the perspective of the down payment policy of real estate loans, 20% down payment is an obvious loose policy signal. In the past 15 years from 2006 to 21, the down payment ratio of housing loans has been reduced to 20% only twice: 1) in order to stabilize the economy and the real estate market in 2008, the central bank launched a new deal in October of that year: the minimum down payment ratio was adjusted to 20%; 2) On September 30, 2014, the minimum down payment of the first set of loans was 30%. On September 30, 2015, the minimum down payment ratio of the first set of loans in non restricted cities was no less than 25%, and the minimum down payment ratio of the first set of houses in non restricted cities was 20% in February 2016. After two “down payment reduction” and policy adjustment in other industries, the real estate market has witnessed obvious sales recovery, rising house prices, slowing down the upward speed of inventory or a decline in inventory. We believe that the reduction of the down payment ratio, especially in commercial loans, has been an important signal. The number of cities with the down payment ratio will continue to increase, but the follow-up of high-energy cities can play a clearer significance. From the comparison of real estate cycles in 2008 and 14, how will the trend of real estate policy evolve in the current market environment? We believe that the direction of the current policy adjustment is: from the urgency of the current policy, the release of capital pressure of real estate enterprises the relaxation of demand side the adjustment of supply side. In 2008 and 2014, the main policies of real estate relaxation were from the demand side. In 2008, the financial conditions and access threshold of residents’ house purchase were relaxed. In 2014, we focused on solving the core problem of high inventory at that time, and took measures such as loosening purchase restrictions, 70% discount on housing loans, reducing interest rates and down payment. 21q4 started mainly based on the concentrated outbreak of debt risk of real estate enterprises or the hidden worry of economic growth. Therefore, the central government will give more consideration to the adjustment from the perspective that the reasonable funds of real estate enterprises are met first, and then begin to pay attention to the adjustment of the demand side. Moreover, the adjustment of the demand side will mainly be local fine-tuning, and the probability of national demand side policy adjustment is relatively low. The specific measures for the release of capital pressure of real estate enterprises are as follows: 1) the gradient management of “three red lines”, which distinguishes between state-owned enterprises and private enterprises in index value and adjusting the length of transition period. 2) The policy side helps enterprises to bail out, allows the deferred payment of land transfer fees, reduces the proportion of land transfer fee margin, strengthens credit support such as M & A loans and development loans, allows the letter of guarantee to offset the pre-sale funds, and shortens the time limit of administrative approval. 3) Release positive signals and guide financial institutions to maintain a moderate growth in new loans. 4) Allow real estate enterprises to transform stock assets into affordable housing, so as to resolve the debt crisis of real estate enterprises to a certain extent. 5) Taking provinces and cities as the unit, the local government urban investment platform appropriately takes over some real estate enterprise projects to alleviate the capital pressure of local enterprises and reduce the wait-and-see mood on the demand side. The effectiveness of demand side policies on the market from strong to weak can be summarized as follows: comprehensive relaxation of purchase restrictions → relaxation of loan restrictions (reduction of down payment ratio → reduction of mortgage interest rate) → partial relaxation of purchase restrictions → increase of price limit space → relaxation of sales restrictions → purchase incentive policies such as talents and population → reduction of transaction taxes and fees.
From multiple dimensions, which places are facing the pressure of market rescue and what aspects can we start from? 1) At present, the pressure of destocking in weak second tier and third and fourth tier cities is large, and the policies at both ends of supply and demand may be mainly guided by destocking. For example, Taizhou, Harbin, Dalian, Yixing, Yiyang and Yantai. On the demand side, a) expand demand, relax purchase restrictions in some areas or groups, and support improvement demand; b) Appropriately encourage the monetized resettlement of shed reform, and transform resettlement houses through government repurchase; c) Strengthen credit support, relax loan restrictions on second homes, and guide the reduction of mortgage interest rates. On the supply side, reasonably control the supply scale of new houses, dynamically adjust the supply of homestead according to the decontamination cycle of the area, reduce the inventory risk of some areas, and effectively alleviate the capital pressure of real estate enterprises. 2) In cities with outstanding problems of suspension of work and delivery risk, we should pay attention to the solution of the liquidity problem of trapped real estate enterprises. Considering the scale of shutdown and the number of problem projects, we believe that the delivery risk is mainly focused on five cities: Changsha, Fuzhou, Yancheng, Guangzhou and Chongqing. In these cities, real estate enterprises may face more liquidity problems. Local governments should pay more attention to the resolution of liquidity risk of real estate enterprises and the related work of ensuring the reasonable funds of real estate enterprises. 3) Yunnan is a province with great pressure on economic growth and relying on real estate investment. It is expected to make policy adjustments for real estate investment; Combined with the growth target of fixed investment, Henan and Liaoning plan to take fixed investment as an important starting point to drive economic growth this year. 4) In areas where real estate enterprises are concentrated, such as Guangdong, the government is expected to further optimize and adjust in taking the lead in mergers and acquisitions between real estate enterprises, encouraging financial institutions to increase real estate loans steadily and orderly, and meeting the reasonable capital requirements of real estate enterprises. 5) At present, the new housing market is still dominated by rigid demand. There is considerable room for improvement demand release in the future. Policies can be released and adjusted according to the improvement demand. Replacement customers can enjoy the convenience of mortgage loans, online signing and filing. For example, Shenzhen, Dalian, Zhengzhou, Harbin, Langfang, Xianghe, Gu’an, etc.
What ways can real estate enterprises take the initiative to resolve the current dilemma? We believe that at present, the capital chain of real estate enterprises is still in the situation of “internal and external difficulties”. The cash recovery before the industry recovers is less than the debt maturity speed in the first half of 2022, which is the biggest dilemma faced by real estate enterprises. We believe that to solve the current dilemma, on the one hand, we should rely on policies to bail out real estate enterprises; On the other hand, real estate enterprises need to actively carry out self rescue. The specific measures are as follows: 1) shareholder blood transfusion (R & F, contemporary, Xuhui); 2) Selling projects (Shimao, Aoyuan, rongchuang); 3) Corporate repurchase of bonds & senior executives purchase bonds (Zhongliang, Rongxin, Longguang, etc.; country garden, Xuhui, Xincheng, Jindi); 4) Exchange offer for extension (Rongsheng, Yuzhou, Dafa); 5) Hire Financial Consultants (Contemporary real estate, Zhengrong); 6) Introduce war investment (Wanda business management); 7) Creditors actively communicate and debt restructuring ( China Fortune Land Development Co.Ltd(600340) ); 8) Sale of property companies (Yuzhou, Fuli, Zhongliang); 9) Frugality (Vanke); 10) Stock increase (country garden, R & F, Shimao, etc.); 11) Introduce state-owned assets (South China City, Evergrande). The above self rescue measures are short-term and timely measures, which are more short-term operations to release signals and strengthen confidence; From a medium and long-term perspective, real estate enterprises can also explore the organizational structure, income M & A and new development models: 1) real estate enterprises are accelerating the adjustment of organizational structure, with simplification of management levels, regional merger and sinking of managers as the main direction. 2) The benefits of M & A financing continue to be released. We believe that the project collection and M & A led by the government, the financing is relatively smooth and the central state-owned enterprises will take the lead. 3) “Agent construction + TOD + urban renewal” has become one of the new models of industry development.
Investment advice
On March 16, the meeting of the Finance Committee proposed that “relevant departments should actively introduce policies beneficial to the market and carefully introduce contractionary policies”, which may mean that all localities will more actively introduce loose policies beneficial to the real estate market, and the real estate policy may be substantially improved. Since then, the central bank, the CBRC, the safe, the Ministry of Finance and the CSRC have also made intensive statements on the real estate industry, releasing a strong signal of maintaining stability. Although the investment and sales data from January to February exceeded market expectations, the actual market sales were still sluggish, and the boosting effect of local policies on the market was relatively limited in the near future. At the same time, real estate enterprises are still facing great financial pressure, the early credit support is not in place, and the debt repayment peak will also be ushered in from March to April. Therefore, the exceeding expectation on the surface of short-term data may not continue. We believe that there is still room for continuous further adjustment on the supply and demand side and the capital side of real estate enterprises at the local level. From the perspective of sector investment, we believe that the alternation of the first and second quarters is still a good allocation window period, and the expectation of policy improvement is still strengthened. It is suggested to continue to pay attention to the opportunities of the real estate sector. We suggest paying attention to four main lines: 1) leading real estate enterprises with low credit risk, smooth financing channels and high security: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) , Longhu group and China Resources Land. 2) Regional central state-owned enterprises or regional leading private enterprises with high financial report security and stable cash flow: China Construction Development International, Yuexiu real estate, Midea real estate, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) . 3) Under the influence of macro and industrial policies such as interest rate reduction, elastic real estate enterprises with large marginal income: Xuhui holding group, Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) . 4) At present, the real estate post cycle property sector with strong income determination and accelerated concentration, as well as the recent credit risk mitigation of related real estate enterprises and elastic reversal: Country Garden service, Xuhui Yongsheng life, poly property, Zhonghai property and xinchengyue service.
Risk tips:
The policy effect is less than expected; Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
