Matters:
The National Bureau of statistics released the national real estate development investment and sales data from January to March 2022, of which the investment was 2.8 trillion yuan, a year-on-year increase of 0.7%; New construction of 300 million square meters, a year-on-year decrease of 17.5%; Completed 170 million square meters, a year-on-year decrease of 11.5%; The land purchase area was 13.39 million square meters, a year-on-year decrease of 41.8%; The land transaction price was 67.2 billion yuan, a year-on-year decrease of 16.9%; The sales area of commercial housing was 310 million square meters, a year-on-year decrease of 13.8%; The sales volume was 3.0 trillion yuan, a year-on-year decrease of 22.7%; The funds of real estate enterprises reached 3.8 trillion yuan, a year-on-year decrease of 19.6%.
Ping An View:
The monthly investment growth rate turned negative, and the short-term downward pressure remained. Dragged down by factors such as the sluggish sales market, the pressure on real estate enterprises’ funds and the weakening impact of delayed payment of land funds, real estate investment decreased by 2.4% year-on-year in March, the growth rate decreased by 6.1pct month on month, and the cumulative investment increased by 0.7% year-on-year from January to March. In terms of subregions, the investment in Central China continued to perform well, with a year-on-year increase of 5.4% in March and negative growth in other regions. In the future, considering that the sales are still at the bottom stage, the capital pressure of real estate enterprises is still large and lack of confidence, and the short-term downward pressure on the investment side still exists. In the medium term, with the increase of policy efforts and the gradual control of the epidemic, the investment side is expected to gradually recover with the stabilization of sales, so as to maintain the performance of low investment before and high investment after the whole year.
The decline of new construction and completion expanded, and the construction end continued to be depressed. The epidemic situation was repeatedly superimposed and the market was under pressure. From January to March, the number of new construction projects nationwide decreased by 17.5% year-on-year, and 22.2% year-on-year in March. The decline was expanded by 10.1pct month on month. In the future, considering that the capital pressure of real estate enterprises is still on, the decline of land transactions since 2021h2 affects the volume of goods available for construction in the future, and the construction is likely to slow down under the background of giving priority to insurance delivery to some out of danger real estate enterprises, the situation of new construction is still not optimistic. Affected by the impact of the epidemic and the continued spread of credit risks, the pace of completion and delivery of real estate enterprises further slowed down. From January to March, the cumulative national completion decreased by 11.5% year-on-year and 15.5% year-on-year in a single month in March. The decline expanded by 5.7pct month on month. In March, the price of flat glass remained volatile and the inventory increased significantly, confirming that the completion demand of downstream real estate is still weak. In the future, the short-term completion may still be in the doldrums, but if the financial pressure of subsequent real estate enterprises is significantly relieved, and under the background of the peak delivery period, the completion and repair speed will be faster than the commencement. It is expected that the completion end is expected to be repaired gradually in the second half of the year.
The epidemic situation has repeatedly exacerbated the sales pressure, and the positive factors continue to accumulate. The decline in income expectations, the impact of the epidemic and delivery concerns continued to affect the confidence of buyers. In March, the sales area and sales volume of commercial houses in a single month decreased by 17.7% and 26.2% year-on-year, with the decline rate expanding by 8.1pct and 6.9pct month on month; From January to March, it decreased by 13.8% and 22.7% respectively year-on-year. In March, the sales area and amount of Kerui top 100 real estate enterprises decreased by 57% and 53% respectively year-on-year, reflecting the real de transformation pressure of the micro market or greater. Since “March 16”, many ministries and commissions have relaxed purchase and sales restrictions in many places, and extended from the third and fourth tier to high-level cities. With the continuous development of the policy side and the gradual control of the epidemic, the property market is expected to be gradually repaired, and the second quarter is an important observation window.
The capital side still did not improve, and the mortgage interest rate fell. From January to March, the funds in place of real estate enterprises decreased by 19.6% year-on-year, with a decrease of 1.9pct compared with that from January to February. Among them, Chinese loans, deposits, advance receipts and personal mortgage loans decreased by 23.5%, 31.0% and 18.8% year-on-year respectively, with a decrease of 2.4pct, 4.0pct and 1.9pct compared with that from January to February. The new medium and long-term loans for residents decreased by 910 billion yuan from January to March, and the capital side of real estate enterprises still did not improve. In March, the loan interest rate of the first and second houses in China was 5.28% and 5.57%, which has fallen to the level in March 2021. The relative benchmark is still at a historically high level. It is expected that the subsequent mortgage interest rate is expected to accelerate the decline.
Investment suggestion: in March, the growth rate of real estate investment continued to fall, the decline in sales, commencement, completion and funds in place expanded, and the micro sales data of the top 100 were significantly weaker than that of the whole country. It is difficult to be optimistic about short-term investment sales. In terms of investment suggestions, the current downward pressure on the industry and the capital side risk of real estate enterprises still exist. Under the background of virtuous circle and “three stabilities”, we believe that the unstable policies of the real estate market are not only persistent, but the valuation repair driven by the policy side is expected to continue. In the medium and long term, with the withdrawal or contraction of some real estate enterprises in the painful period of this round, the overall pattern of the industry is expected to be optimized, and the market share and profitability of brand real estate enterprises with financing and control advantages are expected to be improved. The development sector is mainly concerned about: one is the strong operating and high credit enterprises with relaxed short-term benefit policies and improved gross profit margin at the land acquisition end, which are expected to seize market share in the medium and long term, such as Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , etc; One is the subject of policy game elasticity with certain support for Fundamentals, such as Seazen Holdings Co.Ltd(601155) Jiangsu Zhongnan Construction Group Co.Ltd(000961) Jinke Property Group Co.Ltd(000656) . In terms of diversified business, the valuation of the property management sector has reached an all-time low, and the downward pressure of the guidance in the middle of the quarter of the annual report has been gradually released. With the continuous deregulation of policies and the improvement of the capital side of development enterprises, it is expected to bring about the continuous repair of the valuation of high-quality property enterprises. Attention is paid to such things as country garden service, poly property, China Merchants Property Operation & Service Co.Ltd(001914) , Jinke service, xinchengyue service, Xingsheng business, etc. In addition, it is suggested to pay attention to upstream and downstream industrial chain opportunities such as cement, waterproof and glass.
Risk tips: 1) reduce the risk of supply adequacy: if the local city continues to be cold and the new land storage scale of real estate enterprises is insufficient, it will have a negative impact on the subsequent supply of goods, and then affect the sales, commencement, investment and completion of the industry. 2) Pressure risk on the performance of real estate enterprises: if the de chemical pressure of the real estate market exceeds the expectation and the sales are greatly changed by price, it will bring the risk of impairment of some early high prices and pressure on settlement profits. 3) Risk that the policy care is not as good as expected: if the effectiveness of the policy is insufficient and the adjustment range and time of the real estate market exceed expectations, it will have a negative impact on the development of the industry.
