Matters:
The Bureau of statistics released real estate investment and sales data from January to March. Among them, the sales volume of commercial housing was 2965.5 billion yuan, a year-on-year decrease of 22.7%; The sales area of commercial housing was 310.46 million square meters, a year-on-year decrease of 13.8%; The investment in real estate development was 2776.5 billion yuan, a year-on-year increase of 0.7%; The new construction area of houses was 298.38 million square meters, a year-on-year decrease of 17.5%; The completed housing area was 169.29 million square meters, a year-on-year decrease of 11.5%.
Guoxin real estate’s view: 1) the sales data continues the downward trend, and the policy relaxation direction is clear, which has yet to take effect. 2) The performance of investment and funds in place deteriorated, mainly affected by the impact of the epidemic and the decline in sales. 3) The decline of commencement and completion continued to expand, and there is still great pressure to look forward to the second quarter. 4) Investment suggestion: this round of real estate downturn is different from the downward cycle in history, and is no longer the “rational disease” of policy tightening. The downward range of data, the degree of pessimism expected, and the difficulty of industries and enterprises are unprecedented. The reason is the excessive financialization brought about by the “fast turnover” model from 2016 to 2021. After the explosion of sales decline and pre-sale supervision since the second half of 2021, the model “collapsed”. Accordingly, there is no need to worry that policy stimulus will overcorrect. I believe that the “powerful medicine” is on the way. We firmly believe that the current is a good opportunity for the allocation of real estate stocks, and the excess return will continue to be deduced. From the perspective of game, the land is not hot and the market is not cold; From the perspective of value, the layout mode is improved, and the “rising tide and rising ship” brings the second round of rise. It is suggested to pay attention to Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , Longhu group, China Merchants Property Operation & Service Co.Ltd(001914) . 5) Risk warning: the policy is tightened more than expected; Factors such as the epidemic caused the industry fundamentals to decline more than expected; The credit risk event of real estate enterprises exceeded the expected impact.
Comments:
The sales data continued the downward trend, and the policy relaxation direction was clear, which has yet to take effect
Sales continued the downward trend. From January to March 2022, the sales volume of commercial housing totaled 2965.5 billion yuan, a year-on-year decrease of – 22.7%, down 3.4 percentage points from the previous value; The total sales area was 310.46 million square meters, a year-on-year decrease of – 13.8%, down 4.2 percentage points from the previous value. From the monthly value, the sales volume of commercial housing in March 2022 was 1419.6 billion yuan, a year-on-year decrease of – 26.2%, a decrease of 6.9 percentage points compared with the previous value; The sales area was 153.43 million square meters, a year-on-year decrease of – 17.7%, down 8.1 percentage points from the previous value. We believe that the epidemic that began to spread in March has impacted real estate sales. On the one hand, it has affected the opening of the sales field, and on the other hand, it has exacerbated the wait-and-see mood of property buyers.
The direction of policy relaxation is clear and has yet to take effect. The average sales price of real estate continued to decline. From January to March 2022, the average sales price of commercial housing was 9552 yuan / m2, a year-on-year increase of – 10.4%; In March 2022, the average selling price of commercial housing was 9252 yuan / m2, a year-on-year increase of – 10.3%. As the performance of the third and fourth tier sales market is not as good as that of the first and second tier, the decline in the average sales price is not caused by structural factors, but more reflects the price reduction sales behavior of real estate enterprises, and the market is still depressed. Although since March, many places have introduced measures such as relaxing purchase and loan restrictions and reducing mortgage interest rates to promote the demand for house purchase, the current policy strength and scope are still limited compared with 2014. I believe that the “powerful medicine” is on the way.
The performance of investment and funds in place deteriorated, mainly affected by the impact of the epidemic and the decline in sales
The margin of development investment decreased. From January to March 2022, the total investment in real estate development was 2776.5 billion yuan, a year-on-year increase of + 0.7%, 3.0 percentage points lower than the previous value. From the monthly value, the completed investment in real estate development in March 2022 was 1326.6 billion yuan, a year-on-year decrease of – 2.4%, a decrease of 6.1 percentage points compared with the previous value. When the land market has not yet warmed up, development investment mainly depends on construction and installation investment. We believe that the epidemic in March has had a certain impact on real estate construction.
The decline in funds in place expanded. From January to March 2022, the total amount of funds paid in by real estate enterprises was 3815.9 billion yuan, a year-on-year decrease of – 19.6%, a decrease of 1.9 percentage points compared with the previous value. From the single month value, the funds in place of real estate enterprises in March 2022 was 1301.6 billion yuan, a year-on-year decrease of – 23.0%, a decrease of 5.3 percentage points compared with the previous value. Dismantle the capital sources of real estate enterprises. From January to March 2022, the proportion of sales collection (deposit and advance collection + personal mortgage loan) in the capital sources was 48.8%, and the pull on the funds in place was reduced to – 14.7%; The proportion of Chinese loans in the source of funds was 14.5%, and the pull of funds in place decreased to – 3.6%. The recovery of loan financing is slow, and real estate enterprises are still highly dependent on sales collection, which is greatly hit by the downward trend of sales.
The decline of commencement and completion continued to expand, and there is still great pressure to look forward to the second quarter
In addition to the impact of the epidemic, construction continued to be weak due to insufficient land stock and sales have not been reversed. From January to March 2022, the newly started area totaled 298.38 million square meters, a year-on-year decrease of – 17.5%, a decrease of 5.3 percentage points compared with the previous value. From the monthly value, the newly started area in March 2022 was 1487.1 billion yuan, a year-on-year decrease of – 22.2%, a decrease of 10.1 percentage points compared with the previous value. At the end of completion, the marginal decline was obvious. From January to March 2022, the completed area totaled 169.29 million square meters, a year-on-year decrease of – 11.5%, down 1.7 percentage points from the previous value. From the monthly value, the completed area in March 2022 was 47.29 million square meters, a year-on-year decrease of – 15.5%, a decrease of 5.7 percentage points compared with the previous value.
Looking ahead to Q2, sales, commencement and funds in place are expected to remain low. If the epidemic situation eases and the construction can proceed normally, the investment may stabilize at a low level, and the completion growth rate is expected to be repaired at the bottom. However, in terms of the impact on the economy, finance and employment, the pressure on the real estate chain in the second quarter is still large.
Investment suggestions:
This round of real estate downturn is different from the downward cycle in history. It is no longer a “rational disease” of policy tightening. The downward range of data, the degree of pessimism expected, and the difficulty of industries and enterprises are unprecedented. The reason is the excessive financialization brought about by the “fast turnover” model from 2016 to 2021. After the explosion of sales decline and pre-sale supervision since the second half of 2021, the model “collapsed”. Accordingly, there is no need to worry that policy stimulus will overcorrect. I believe that the “powerful medicine” is on the way. We firmly believe that the current is a good opportunity for the allocation of real estate stocks, and the excess return will continue to be deduced. From the perspective of game, the land is not hot and the market is not cold; From the perspective of value, the layout mode is improved, and the “rising tide and rising ship” brings the second round of rise. It is suggested to pay attention to Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , Longhu group, China Merchants Property Operation & Service Co.Ltd(001914) .
Risk tips:
1. The policy was tightened more than expected; 2. Factors such as the epidemic caused the industry fundamentals to decline more than expected; 3. The credit risk event of real estate enterprises exceeded the expected impact.
