Core view
Under the current market environment, how will the trend of follow-up real estate policies evolve? We believe that from the perspective of the urgency of current policy adjustment, the capital pressure of real estate enterprises is alleviated
Demand side relaxation supply side adjustment. In 2008 and 2014, the main policies of real estate relaxation were from the demand side. From 21q4, it was mainly based on the concentrated outbreak of real estate enterprise debt risk or the hidden worry of economic growth. Therefore, in terms of policy, more consideration will be given to the adjustment from the perspective that the reasonable funds of real estate enterprises are met first, and then the demand side adjustment will be focused on, and the demand side adjustment will mainly be local fine-tuning. We believe that the real estate policy has stepped from relief to active promotion. At present, there are two policies that can be used in the policy Toolbox: the narrow policy is still dominated by the “five limits” policy, which mainly changes in urban energy levels and policy details. Firstly, the urban energy level will gradually expand from the third and fourth tier cities and the weak second tier cities to the strong second tier cities. We can focus on the policy follow-up of strong second tier cities such as Chengdu, Xiamen, Wuhan and Hangzhou. Secondly, there will be changes in policy details. For example, in terms of loan restrictions, the two sets with improved area sections may enjoy the down payment ratio of the first set, the withdrawal of provident fund to offset the down payment, etc. In terms of broad policies, 1) liberalize the purchase qualification of new citizens and expand demand. 2) Adjustment of pre-sale fund supervision. 3) In terms of loans to real estate enterprises, increase the loans of financial institutions to real estate, expand the scope of issuing bonds to real estate enterprises, and so on. 4) AMC enters the acquisition project. 5) Encourage local state-owned assets to participate in some real estate enterprises.
How effective is the demand side policy? We believe that from strong to weak, it can be summarized as: comprehensive relaxation of purchase restrictions → relaxation of loan restrictions (reduction of down payment ratio → reduction of mortgage interest rate) → partial relaxation of purchase restrictions → increase of price limit space → relaxation of sales restrictions → purchase incentive policies such as talents and population → reduction of transaction taxes and fees.
How will the real estate industry and competition pattern change in the future? The old model of achieving rapid growth through high leverage and high turnover has been unsustainable in the current market environment. Scale growth is not the main demand of real estate enterprises. It pays more attention to safety and stable operation, and the whole industry has also transformed into a healthy, stable and management driven operation. The competition pattern of the industry will be optimized, and the proportion of central state-owned enterprises and high credit private enterprises with smooth financing in the real estate industry will increase significantly in the future. In the past, both in terms of land acquisition scale and sales scale, the proportion of private enterprises was high; However, we expect that the market share will gradually decrease from 70% to 40% in the future. Since the second half of 2021, thunderstorms have occurred frequently in private real estate enterprises, and the proportion of sales and land acquisition will gradually decrease. With the end of this round of pain period, the market will speed up clearing. Central state-owned enterprises with low credit risk, smooth financing channels, high security and stable cash flow will benefit more from the deregulation of policies and the recovery of the real estate market, so as to maintain a good development momentum. As for private real estate enterprises, we believe that some private real estate enterprises will be cleared. Although some private real estate enterprises have successfully survived the crisis, their scale will shrink in the future due to credit damage, poor financing and possible asset sales and investment slowdown in the painful period. Overall, the sales proportion of central state-owned enterprises: private real estate enterprises will gradually change from 3:7 to about 6:4.
How much room does the follow-up real estate sector have to rise? We believe that it is still a good configuration window period, and there will be frequent rising opportunities in the second quarter. When the strong second tier cities began to adjust their policies, we think it can be regarded as the end of this round of adjustment. From the past few rounds of cycles, after the policy was implemented, the stock price was basically fulfilled. We believe that the probability of policy adjustment appears from late April to may, and the probability of sales bottom appears in June. From the perspective of rising space, high credit real estate enterprises with solid fundamentals and smooth financing have more room to rise. Specifically: the first level is the national layout of central state-owned enterprises and leading real estate enterprises. In the previous stage, the share price performance of central state-owned enterprises was relatively dominant. The core logic was that the central state-owned enterprises had significant advantages in financing, capital, land, sales and other resources under the endorsement of central state-owned enterprises. We believe that the early logic of such real estate enterprises is still smooth. On the one hand, they benefit from greater policy repair, on the other hand, they have higher certainty of future sales and performance, and the risk of stock price fluctuation caused by short-term policy game is smaller. After policy adjustment β The market will still rise to a certain extent and still have investment value. The second level is the regional leader of central state-owned enterprises and high-quality private enterprises. The cash flow status and financial reporting status are good, and the rising space may be greater than that of the first level. With the rising valuation of some central state-owned enterprises, the share price performance of some undervalued local state-owned enterprises and high credit local private enterprises has also been prominent since the end of 21 years. On the whole, although the policy side has been loosened at this stage, due to the relative lack of policy strength and the continuous accidents of real estate enterprises, the market has not eliminated the concerns about the accidents of most real estate enterprises. The central state-owned enterprises and high credit private enterprises with better sales and financing have a large space from the perspective of pursuing profits from the capital side. The third level is to focus on the subject of elastic reversal after the policy is clearer. Companies at this level are expected to have more obvious benefits when the policy is implemented. Insurance and high-pressure real estate enterprises have a large decline in the early stage, or have released most of the credit side risks. With the increase of policy side efforts, the risk return ratio of some enterprises will gradually increase, or will show greater flexibility. However, due to the uncertainty of the degree and time of policy force, the investment time point can wait until May is close to the end of the policy.
Investment advice
At present, the main logic is still based on poor fundamentals and relaxed game policies. Since March, the sudden attack of the epidemic has increased, which has seriously affected the transaction of new houses everywhere. There is great pressure on the annual growth target, and the introduction of policies is imminent. Since April, we can clearly see that the real estate policy has gradually entered the stage of promoting demand improvement from relief, and the cities with the policy have gradually expanded from third and fourth tier cities to weak second tier provincial capitals, and the adjustment efforts have been increasing, from the relaxation of credit, house purchase subsidies, provident fund loan preferences to the relaxation of the “five limits”. However, on the whole, from the perspective of the depth of policy adjustment, the frequent “rescue” of low-energy cities has a limited role in boosting the market; High energy and slightly insufficient follow-up. In addition to the sluggish market prosperity, real estate enterprises are still facing great financial pressure, and the early credit support is not in place. The first half of 2022 ushers in the peak of overseas debt repayment, and the pressure will focus on April, June and July. In the next few months, some companies with great financial pressure may still have credit risk events. With the further increase of downward pressure on the property market in some cities, the credit risk of some real estate enterprises erupted again. Therefore, we believe that there is still room for further deepening adjustment at the local level. We think we can focus on whether the market downturn reflected in the data released by the Bureau of statistics on April 18 is in line with expectations. We are optimistic that the scope and strength of the follow-up real estate policies will continue to be strengthened. It is suggested to focus on the policy follow-up of strong second tier cities such as Chengdu, Xiamen, Wuhan and Hangzhou. From the perspective of the whole year, considering that the current sales are still at the bottom stage, the financial pressure of real estate enterprises is still large and lack of confidence, it is expected that the stabilization of the investment side will lag behind the sales side. In an optimistic situation, even if the sales end gradually stabilized at the end of the second quarter (probably in June), driving the improvement of the capital end of real estate enterprises, the repair of investment end such as land acquisition and construction will be delayed to the second half of the year. Under the background of “steady growth” and “risk prevention”, it is expected that the improvement of policy side is expected to be implemented throughout the year, and it should be sooner rather than later.
From the perspective of sector investment, it is still a good configuration window period. We think we can pay attention to the target companies at three levels: the first level is the leading real estate enterprise of the central state-owned enterprise with national layout, which has been boosted by the valuation in the last stage, but will still enjoy the rising space brought by the beta market. It is suggested to pay attention to Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Longhu group and China Resources Land; The second level is the regional leader of central state-owned enterprises and high-quality private enterprises. Compared with the first level, the attention is lower, but the cash flow and financial reporting quality are better. It is suggested to pay attention to China Construction Development International, Yuexiu real estate, Midea real estate, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; The third level is to focus on the subject of elastic reversal after the policy is clearer. It is suggested to focus on Xuhui holding group, Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , country garden.
Risk tips:
The policy effect is less than expected; Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
