The trading volume of the third round of centralized land supply decreased compared with the previous two times. Under the urban investment trust, the flow auction rate of the third round of centralized land supply decreased, and the premium rate further decreased. Up to now, except Ningbo, 21 cities in the third batch of centralized land supply have completed land supply transfer activities. A total of 535 residential land transactions have been made in the third batch of centralized land supply, 117 less than the second batch (652) (including Ningbo) and 342 less than the first batch (877); The total turnover of the third batch of transfer fees was 569.22 billion yuan, a decrease of 11.6% compared with the second batch (6439.4) and a significant decrease of 46.7% compared with the first batch. A large number of state-owned enterprises and local urban investment companies took the land under the trust of the third batch of land supply transfer, especially the local platform companies. The proportion of land sold at the base decreased slowly, but the proportion of land sold at the base and 0 premium increased accordingly. The total auction rate of land sold in the third batch decreased to 18.47%, and the proportion of land sold at a premium decreased to 16.27%.
In December, the sales of the top 100 real estate enterprises continued to decline, with a year-on-year decline of more than 30% for four consecutive months. In December 2021, the top 100 real estate enterprises achieved a sales amount of 1100.7 billion yuan (- 36%) and a sales area of 71.31 million square meters (- 31%), both of which fell by more than 30% for four consecutive months. From January to December, the cumulative sales amount of the top 100 real estate enterprises was 12631.8 billion yuan, a year-on-year decrease of 3%, and the cumulative sales area was 846.11 million square meters, a year-on-year decrease of 9%. The market cooled significantly in the second half of the year. The monthly sales of the top 100 real estate enterprises increased negatively for six consecutive months since July, and the monthly sales area increased negatively for seven consecutive months since June.
Financing has increased month on month for two consecutive months. The peak maturity of USD 2022q1 bonds is superimposed on the cashing of project funds before the festival, and real estate enterprises have a large risk of debt default. In December 2021, the total financing of real estate enterprises was 96 billion yuan, a month on month increase of 35.6%. The financing scale of a single month increased month on month for two consecutive months. From January to December, the cumulative financing was 1765.2 billion yuan, a year-on-year decrease of 26%. Real estate enterprises in 2022q1 still have great financial pressure. First, they need to cash a large amount of project funds (trillion scale) before the Spring Festival. Second, the offshore US dollar bonds due in Q1 in 2022 are about US $16.05 billion, far higher than that in the fourth quarter of 2021. With sluggish sales and declining financing scale, real estate enterprises are still in multiple difficulties: 1) there is a large gap between financing amount and maturing debt; 2) The decline in sales and the supervision of pre-sale funds led to poor collection; 3) Credit differentiation leads to financing difficulties for private enterprises.
The scale of M & A in the real estate industry has decreased significantly, and the revenue of M & A in 2022 may improve under the promotion of the government. As of December 20, the amount of M & A in the industry was 76.9 billion yuan, a decrease of 77% over the whole year of 2020. In December, the central bank issued a notice to encourage high-quality enterprises to increase mergers and acquisitions of real estate projects in accordance with the principle of marketization. We believe that the current difficulties faced by M & A in the industry are: 1) the liquidity pressure of the industry has not been completely relieved; 2) the local auction market has higher cost performance. Recently, the Guangdong provincial government convened a number of real estate enterprises to “bridge the gap” for the acquisition of M & A projects. We believe that the government is willing to promote real estate acquisition and M & A from the perspective of resolving the industry and financial risks. With the promotion of the government, the acquisition and M & A may improve in 2022.
Investment suggestions: we believe that we should pay attention to five main investment lines at present: 1) development enterprises: Poly Developments And Holdings Group Co.Ltd(600048) , Seazen Holdings Co.Ltd(601155) , China Resources Land, Longhu group, China Vanke Co.Ltd(000002) , Xuhui holdings, China Construction Development International Holdings, etc; 2) Property management enterprises: Country Garden service, China Resources Vientiane life, Jinke service, Xuhui Yongsheng service, Baolong business, etc; 3) Liquor travel enterprises: Btg Hotels (Group) Co.Ltd(600258) , Fosun travel culture, Songcheng Performance Development Co.Ltd(300144) , Oct, etc; 4) Track transformation Enterprises: Tianjin Guangyu Development Co.Ltd(000537) , Lushang Health Industry Development Co.Ltd(600223) ; 5) Real estate brokerage Enterprises: shells, etc.
Risk tips: project delivery risk, project sales collection risk, industry policy regulation risk.
