Investment summary:
Talk every Monday: taking history as a mirror, where is the market of the real estate sector?
The real estate sector remained strong this week. Since the bottom on March 16, the Shenwan real estate index has increased by 31%. Looking back on history, we find that the beginning of the market often changes with the policy, the market continues to need the support of fundamentals, and the good realization often occurs in the late recovery of industry fundamentals and the early middle stage of prosperity; Under the background of steady growth, the fundamentals have improved and the certainty is strong, but it still needs to be fermented. It is optimistic that the market of the real estate sector will continue.
Market review:
According to historical data, the rising trend of the industry will continue: this round of industry range growth is the highest since 2020 and the seventh highest since 2008. In terms of the rising speed, the annualized income of the current range is up to 6.9 times, far exceeding the average level of other high rising markets in history. At present, the industry market is still in the stage of rapid rise, and the rising momentum of the sector will gradually slow down in the future, but the short-term market will continue.
The fundamentals are still weak, and the continuous deregulation of the marginal policy is still the main reason for the rise of the market. From the dimensions of national commercial housing sales and land market from January to February released by the Bureau of statistics, the fundamentals are still at the bottom. The policy has accelerated to warm up, and the fundamentals are waiting for a response. Previously, it was the expectation of continued policy easing that promoted the rise of the sector.
Historical replay:
Similar to the current ones are November 2008 July 2009, January 2012 February 2013 and February 2014 December 2015. Comparing several rounds of market price, fundamentals and policy changes, we find that:
At the initial stage of market strength, the rhythm often follows the policy. No matter the history of the first, second and third rounds, the continuous rise and change of stock price is within 2 months from the time of policy change;
The continuous rise is supported by fundamentals, and the peak time point of the market strengthening period is in the middle and front of the boom period.
The sensitivity of the market to the policy is increasing, which squeezes the space for the realization of the fundamentals. The space for the market to trade in advance of the policy expectation is increasing, resulting in an increase in the advance range of the good realization of the fundamentals. In the first and second rounds, the share price of the sector rose to keep up with the pace of the policy, and in the third round, the market changed before the policy change. The first round of market strength opened the leading industry recovery period for 2 months, the second round was 6 months ahead, and the third round was 13 months ahead. The high level of the stock price also appeared in the early stage of the improvement of fundamentals. The most obvious is that the third round of single month year-on-year growth rate was only 15%, which reached the peak of the stock price, while the industry still reached a new high after 2016.
There is a leading fundamental cashing in the stock price, but there is still a significant improvement in the fundamentals after the stock price peaked. From the rising form of the index, the strength of the industry will continue. Although the increase of the market’s expected trading volume for the policy will reduce the space for the fundamentals to realize the increase to a certain extent, the fundamentals of the current industry have not improved significantly, and the expected transactions for the reversal of fundamentals will continue. As for the fundamentals, under the general direction of “stable growth”, the recovery is inevitable, the rising direction of the sector will continue, and the real estate sector will continue to be optimistic about its strength.
Data tracking (March 28 – April 3):
New housing market: the transaction area of 30 cities is – 38 PCT and – 34 PCT in one week and cumulative year-on-year respectively, first tier cities – 48 PCT and – 31 PCT, second tier cities – 72 PCT and – 68 PCT, third tier cities + 23 PCT and + 15 PCT.
Second hand housing market: the transaction area of second-hand housing in 13 cities was – 14 PCT year-on-year in a single week and – 29 PCT year-on-year in total.
Land market: the cumulative construction area of land supply in 100 cities is + 19 PCT year-on-year, the cumulative construction area of transaction is – 15 PCT year-on-year, the cumulative transaction amount is – 55 PCT year-on-year, and the land transaction premium rate is 1%.
City market month on month: Beijing (- 9 PCT), Shanghai (- 19 PCT), Shenzhen (+ 12 PCT), Nanjing (+ 20 PCT), Hangzhou (- 1 PCT), Wuhan (+ 42 PCT)
Investment strategy: it is suggested to pay attention to the leading real estate enterprises Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A and Longhu group with stable operation and good credit background. Focus on high-quality real estate enterprises Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , Greentown China, etc. under the product-oriented logic. With the further confirmation at the bottom of the policy, attention can be paid to the repair opportunities of high-quality private enterprises, such as Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , etc.
Risk tip: the sales market is down, and some real estate enterprises have a storm of debt default.
