Comments on the data of the Bureau of statistics from January to March: the growth rate of investment turned negative in March, and the decline of sales expanded to 26%

Investment: in March, the development investment turned from positive to negative to - 2.4% year-on-year. From January to March, the national investment in real estate development was 2776.5 billion yuan, an increase of 0.7% at the same time, 3 PCT lower than the previous value; The investment in March was 132656 billion yuan, a decrease of 8.5% and 2.4% respectively. In March, various localities successively issued relaxation policies, which had a certain boosting effect on market investment confidence, but the repeated epidemic again dragged down the recovery of investment. Superimposed on the high base in the first half of last year, the investment side was relatively depressed. We expect that in the context of steady growth, the policy will further promote the recovery of the industry and economic growth.

Land acquisition: the decline in land purchase stabilized in March, and the decline in transaction price narrowed significantly. From January to March, the cumulative land purchase area was 13.39 million m3, a decrease of 41.8%, an increase of 0.5pct over the previous value; The value in March was 5.01 million m3, with a ring decrease of 40.2% and a same decrease of 41.0%. From January to March, the land transaction price was 67.2 billion yuan, a decrease of 16.9%, an increase of 9.7 PCT over the previous value; The value in March was 30.29 billion yuan, down 17.9% and 0.9% respectively. According to the China Index, from January to March, the transfer fee of residential land in the sample 300 cities was 309.9 billion yuan, down 61.9% from the same period, an increase of 6.8 PCT over the previous value; In March, it was 138.4 billion yuan, down 48% at the same time. In March, some two centralized cities began the first round of centralized land auction this year, and the recovery of land supply led to the recovery of transaction margin. Considering that some core cities also started the first round of centralized land auction in April, it is expected that the land market will continue to recover.

New construction: the cumulative and monthly decline of new construction expanded. From January to March, the accumulated new construction area of real estate enterprises was 298.38 million m3, a year-on-year decrease of 17.5% and a decrease of 5.3 PCT compared with the previous value; In March, 148713000m3 of new construction was started in a single month, with a month on month decrease of 0.6%, a year-on-year decrease of 22.2%, and a decrease of 10.1pct compared with the previous value Affected by the decline of land trading volume, the shortage of funds of some real estate enterprises and the continuous decline of sales, the new construction capacity and willingness of real estate enterprises are still weak. It is expected that the new construction of real estate enterprises in the short term will continue to decline.

Completion: the decline in single month and cumulative completion has expanded to double digits. From January to March, the completed area of real estate enterprises was 169.29 million m3, a decrease of 11.5% and 1.7 PCT lower than the previous value; It was 47.295 million m3 in a single month, with a ring decrease of 61.2% and a same decrease of 15.5%. As the overall capital pressure of real estate enterprises is still large and the construction progress is relatively slow, even if the capital chain is improved, it will be given priority to daily expenses and debt repayment, so that the completion cycle is prolonged. Superimposed on the small peak of completion in the first half of last year, it is expected that the completion in the first half of this year will continue to be under pressure.

Sales: sales decreased by 26.2% in March, and the decline was further widened. From January to March, the cumulative sales volume of commercial housing was 2965.5 billion yuan, down 22.7% at the same time, 3.4pct lower than the previous value; In March, it was 1419.6 billion yuan, a decrease of 8.2% and 26.2% respectively. According to the data of China Index, the sales volume of commercial housing from January to march was 1782.6 billion yuan, down 38% at the same time, 5.3pct lower than the previous value; In March, the sales volume was 623.8 billion yuan, down 45.9% at the same time.

In March, many ministries and commissions issued a voice emphasizing the resolution of real estate risks. The Ministry of finance made it clear that this year did not have the conditions to expand the pilot cities of real estate tax reform, and all localities relaxed the "city based policies" from the housing demand side. However, the current market is still depressed, mainly because: 1. The current policies are mainly concentrated in the third and fourth tier cities and a small number of second tier cities, and the degree of stimulation is insufficient; 2. The epidemic has plunged Shanghai, Shenzhen and surrounding markets with potential demand into freezing point; 3. Under the influence of the epidemic and the international situation, buyers' expectations of future income decline and lack of confidence in house purchase. It is expected that more second and third tier cities will follow up the policy in the future. Due to the urban implementation of the policy, the "four restrictions" space of purchase restriction, loan restriction, sales restriction and price restriction will be gradually opened, and the sales recovery can be expected.

Funds: the funds in place of real estate enterprises accelerated to fall with the sales collection, and the growth rate hit a new low for many years. From January to March, the funds in place of real estate enterprises totaled 3815.9 billion yuan, down 19.6% from the same period, 1.9 PCT lower than the previous value; It was 1301.6 billion yuan in March, down 48.2% and 23% respectively. Among them, China's loans / utilization of foreign capital / self raised funds / deposit and advance collection / personal mortgage loans were - 23.5% / - 11.6% / - 4.8% / - 31% / - 18.8% year-on-year respectively. The industry is still in a relatively difficult time. The rising power of loans in China is insufficient. Due to the decline of sales, the decline of deposits, advance receipts and personal mortgage loans expanded year-on-year, dragging down the overall funds in place.

Investment suggestions: local policies continue to relax, and more cities are expected to follow up in the future to maintain the "overweight" rating of the real estate development sector. We believe that this year is a large-scale policy easing cycle, which is a beta market. Real estate enterprises with good credit qualification, sufficient liquidity, sufficient soil reserves and high quality are the main choice. It is suggested to pay attention to: A shares Poly Developments And Holdings Group Co.Ltd(600048) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , China Vanke Co.Ltd(000002) , Huafa Industrial Co.Ltd.Zhuhai(600325) , Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) ; H-share China overseas development, green city China, China Resources Land, Longhu group, China Jinmao, Xuhui holding group, China Overseas Hongyang. Property management: Country Garden service, China Resources Vientiane, green city service, poly property, Yongsheng life service, Jinke service, China Merchants Property Operation & Service Co.Ltd(001914) .

Risk tip: the speed of policy introduction and implementation are lower than expected, and the fundamentals continue to decline, causing a chain reaction. The repeated impact of the epidemic exceeded expectations.

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