Long lost leading market!
Under the influence of multiple factors of “no speculation in housing” and “three red lines”, the real estate stocks that used to be the “leading brother” experienced a difficult time in 2021. Many well-known real estate enterprises had problems such as debt default, and the share price of the sector led the decline in various industries.
However, after a year of downturn, the valuation advantages of real estate stocks have gradually become prominent. With the recent policy warm wind and the catalysis of good news, the sector has ushered in a strong rebound, and the share prices of many companies have risen by more than 10%, driving the theme funds to lead the income list. Industry insiders said that at present, the real estate sector has “upward valuation, sufficient repair space and defensive and offensive advantages.”
In addition, with the advent of the new affordable housing era, the air outlet of prefabricated buildings is gradually rising. Some institutions believe that with the improvement of building material standards, the pattern of green building and low-carbon construction industries such as waterproof and coating will quickly become head-on, and industries with stronger essential attributes such as kitchen electricity and bath electricity will usher in better investment opportunities under the requirements of full decoration and delivery of indemnificatory rental housing.
what are the opportunities for bottom reading in the real estate sector?
In the next few trading days, the market trend was not very optimistic. The Shanghai and Shenzhen index fell by 1.27 and 3.03% respectively, and the gem fell by more than 6%. The top declines were new energy and national defense military industry, both of which fell by more than 8%, and hot sectors such as electric power, chemical industry, automobile and alcohol index were also weak. However, the decline of the index is mainly caused by the decline of plates with higher weight. For individual stocks, the rise and fall ratio of Shanghai and Shenzhen is about 50-50, and the overall market is relatively stable. Because many of the falling sectors are the focus of the fund’s heavy positions, they are slightly lonely after the boundless scenery last year. Therefore, the investment experience of investors is better than that of fund investors recently.
The construction machinery, airport and real estate industries accounted for the top three after the year, with an increase rate of more than 5%. These themes were depressed and rebounded strongly after nearly a whole year. Between one change and another, the market after the year highlighted the characteristics of “common prosperity”.
Looking back on 2021, it can be described as an eventful time for the real estate industry. The top 100 real estate enterprises represented by Evergrande have successively defaulted on their debts, and even some companies are facing bankruptcy liquidation. Affected by multiple factors, the sales and sales area of the top 100 real estate enterprises in 2021 decreased by 3.2% and 9.0% respectively year-on-year. From the perspective of the annual sales completion rate of real estate enterprises that announced the annual sales target, the average in 2021 was 88%, which was also the lowest in recent five years. However, since the fourth quarter of last year, the supervision has continued to release the warmth of policies and provide necessary support from the residential mortgage end and the financing end of real estate enterprises. Recently, the central bank has also encouraged financial institutions to create a good financing environment for project mergers and acquisitions between real estate enterprises, aiming to resolve the liquidity crisis of real estate enterprises by market-oriented means.
After a number of “thick eyebrows and big eyes” real estate stocks fell by more than 30%, has the opportunity to copy the bottom come? From the perspective of valuation, the current P / E ratio of the real estate index is 12.08 times, which is about 40% of the historical quantile. South Fund said that it is currently in the process of bottoming out in policy and not yet bottoming out in fundamentals. With the continuous support of the policy, it will create a good external environment for the valuation and repair of real estate stocks. At present, the overall Pb of the real estate index is still only 1.03, in the historical P6 quantile, with sufficient space for upward valuation and repair. In the current volatile market, the real estate sector has a defensive and offensive advantage.
In the secondary market, eight real estate enterprises, including Shanghai Shimao Co.Ltd(600823) , Shenzhen Overseas Chinese Town Co.Ltd(000069) , and Vanke, have increased by more than 10% in recent trading days. The rise in share prices has directly driven the performance of theme funds. For example, Huabao CSI 800 real estate ETF, Nanfang CSI all refers to real estate ETF and Huatai Bairui new financial real estate have been at the forefront of the industry since the beginning of the year.
The investment department of China Southern Fund Index believes that the sharp rise of the real estate sector in recent days is catalyzed by a news from a media that the relevant M & A loans will no longer be included in the relevant indicators of the “three red lines” for the debt bearing acquisition of projects of enterprises in danger. This is the first time that it is clear that M & A loans are not included in the three red lines. In the early stage, credit risk events of real estate enterprises occur frequently. The introduction of M & a policy is conducive to resolving stock risks and optimizing the competition pattern of the industry. For real estate enterprises, in addition to valuation repair, NAV itself can also realize table expansion.
The most concerned part of the real estate industry is undoubtedly the liquidity of real estate enterprises. In this regard Huatai Securities Co.Ltd(601688) believes that high-quality real estate enterprises are expected to break the financing dome. “We believe that this wave of defaults of private real estate enterprises will promote the real estate financing policy to shift from comprehensive restrictions to structural incentives. The new channels represented by M & A financing may break the financing dome that has lasted for nearly five years. We may see the breakthrough of M & A financing in the \’three red lines\’ and the breakthrough of high-quality real estate enterprises in\’ borrowing new for old \’.”
industrial chain investment opportunities under “bonus” of affordable housing
In addition to real estate enterprises, how many investment opportunities can be tapped in the real estate industry chain?
Recently, the warm wind of affordable housing policy has been blowing frequently. In December 2021, the central economic work conference said that “we should adhere to the simultaneous development of rental and purchase, accelerate the development of long-term rental housing market, promote the construction of affordable housing, and promote the virtuous circle and healthy development of the real estate industry due to urban policies”. Chen Jining, mayor of Beijing, said in his government work report on January 6 that he insisted on “housing without speculation”. We will maintain the continuity and stability of real estate regulation and control policies, ensure land supply for housing, raise 150000 sets of affordable rental housing for construction, and complete 80000 sets of various affordable housing.
with the advent of the new affordable housing era, Huatai Securities Co.Ltd(601688) believes that policy is the biggest driving force for the promotion of prefabricated buildings, and prefabricated buildings need to consider five aspects: relevance, price, construction difficulty, durability and green environmental protection. It is recommended to pay attention to:
1. Win win varieties: Cement / steel / thermal insulation material / waterproof material / gypsum board / emulsion paint, etc;
2. Different varieties: plastic steel / rock wool / solid wood composite board / man-made board, etc;
3. New varieties: light steel keel / autoclaved light concrete / steel support foundation components / gypsum hollow strip, etc.
Also holding similar views are Gu Qibin, Tianhong high-quality growth enterprise and fund manager of Tianhong cycle strategy. Gu Qibin said that in 2022, the real estate chain is facing downward pressure and the industry state of parallel quality and standard improvement. For subdivided industries, the promotion of market share of leading companies and the use of new building materials are the focus.
First of all, the standards required for the use of building materials have been rapidly improved. Materials with low industry standards and quality pain points in the past are facing the acceleration of the industry pattern. For example, in waterproof, coating and other industries, the leading companies in these industries are expected to accelerate the increase of market share. Second, in terms of new materials, green buildings and low-carbon construction are rapidly promoted and applied. Among them, insulation, maintenance system, assembly, vibration reduction and isolation are facing the rapid release of emerging needs. For example, the legislative documents on vibration reduction and isolation have been issued, and the assembly industry continues to maintain rapid growth. The leading companies of new building materials are expected to continue to realize the company’s competitiveness in the industry.
In addition, under the full decoration delivery requirements of indemnificatory rental housing: large kitchen electricity (mainly refers to large kitchen electricity such as integrated stove and range hood) and bath electricity are decoration needs, and their necessary attributes are stronger; Most white electricity (except air conditioning) and black electricity belong to the purchase demand, and the optional attribute is stronger. Therefore Huatai Securities Co.Ltd(601688) it is considered that the order of household appliances benefiting from the construction of new affordable housing is: kitchen electricity / bath electricity / air conditioning > small kitchen appliances > other white appliances > black appliances.
(source: China Securities Company)
