Events
The CSRC, SASAC and all China Federation of industry and Commerce issued the notice on further supporting the healthy development of listed companies (hereinafter referred to as the "notice").
Key investment points
Fundamental repair is slow, and resolving risks is still the focus
The notice mentioned that the listed real estate enterprises should "strengthen their own risk management" and "strictly prevent and properly resolve all kinds of risks". Q1 was repeatedly affected by the epidemic, the repair of the demand side of the industry was less than expected, and the sales of the top 100 did not improve significantly. The repair of trading volume requires efforts from both the supply and demand sides. The enterprise risk has not been resolved, and the supply is difficult to increase. This notice once again mentions risk resolution. In combination with the recent model of China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) + Great Wall AMC + jiazhaoye, we believe that more support measures for the rescue of real estate enterprises will be introduced in Q2.
Give equal treatment to all kinds of market entities and increase the support of private enterprises
The notice mentioned that "all kinds of market subjects should be treated equally" and "private enterprises should be supported in listing and financing, M & A and reorganization according to law, and the bond financing support mechanism for private enterprises should be improved". We believe that it is applicable to real estate enterprises. In this round of policy regulation, it is the result rather than the original intention that "the country advances and the people retreat", which is caused by the excessive leverage of some private enterprises. The optimization of industry structure is not to eliminate private enterprises. High quality private enterprises that reduce leverage in advance can still maintain smooth financing and low financing costs in the downward process of this cycle. For high-quality private enterprises, we believe that Q2 policy will give corresponding support in financing, M & A and reorganization.
Support the transformation of real estate enterprises to a new development model
Previously, both the government work report of the two sessions and the Jin Wen meeting proposed to "explore a new development model of real estate". How to understand the new development model of real estate enterprises, we believe that we should first clarify two important directions for the long-term development of the industry:
1) the policy guides the long-term realization of multi-level supply structure and the pattern of "housing" and "simultaneous development of rent and purchase";
2) urban renewal is a new growth point in the mature real estate market. In November 2021, the Ministry of housing and urban rural development announced the list of 21 pilot cities for two-year urban renewal. Urban renewal is a must for subsequent real estate enterprises. We believe that the new development model of real estate enterprises includes three types: participation in urban renewal and comprehensive development, development and operation of affordable rental housing and asset light development. In the process of supporting the transformation of listed real estate enterprises to the new development model, the support of industry equity, debt financing, collection and M & a industry integration will follow up.
Investment advice
1) high quality leader: it has strong comprehensive strength to realize the target of M & A integration, and the callback is the opportunity to increase positions: Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) ; China overseas development, China Resources Land and Longhu group;
2) dark horse contrarian growth targets: Huafa Industrial Co.Ltd.Zhuhai(600325) , Beijing Capital Development Co.Ltd(600376) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; Greentown China, Yuexiu real estate, China Construction Development International, China Jinmao;
3) dilemma reversal of high-quality private enterprises: Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , Xuhui holding group.
Risk tip: the policy force at both ends of supply and demand is weak, and the repair of the real estate market is weaker than expected.
