Market conditions:
This week (4.9-4.15), the A-share real estate index (Shenwan real estate) increased by – 2.90% (1.64% last week), and the A-share market (wandequan a) increased by – 2.46% (1.74% last week); The H-share real estate index (kroney real estate leading index) rose – 1.81% (10.65% last week), and the H-share market (Hang Seng Index) rose – 1.62% (0.76% last week). This week, the performance of A-share and H-share real estate sectors were weaker than the market.
Industry fundamentals:
The epidemic continues to impact sales. From the data, the cumulative sales area of commercial housing in 45 cities (4.1 ~ 4.14) was – 53.8% year-on-year and – 41.7% year-on-year last month; The transaction area of second-hand houses in 16 cities (4.1 ~ 4.17) was – 34.9% year-on-year and – 30.3% year-on-year last month.
The decontamination cycle continues to rise. From the data, the cycle of commercial housing in 15 cities (as of April 16) was 769 days, compared with 618 days in the same period last month.
The land market continued to decline. According to the data, the cumulative land construction area of 100 large and medium-sized cities this year (as of April 17) was – 40.1% year-on-year and – 38.1% year-on-year last week; The premium rate of land transaction in 100 large and medium-sized cities (4.11 ~ 4.17) this week was 0.4% and 0.2% last week; The total land transaction price of 100 large and medium-sized cities this year (as of April 17) was – 56.8% year-on-year, and – 55.5% year-on-year last week.
Great financing pressure. From the data, the issuance scale of domestic real estate bonds (4.1 ~ 4.17) has accumulated – 50.6% year-on-year, and the scale of last month was – 41.4% year-on-year; The issuance scale of overseas real estate bonds (4.1 ~ 4.17) was – 57.2% year-on-year, and the scale of last month was 9.4% year-on-year; The scale of trust financing (4.1 ~ 4.17) accumulated – 75.0% year-on-year, and the scale of last month was – 84.7% year-on-year.
Investment strategy:
The support of monetary policy to the market is continuously strengthening. Zou LAN, director of the financial market department of the central bank, said on April 14 that the recent reduction in mortgage interest rates mainly occurred at the bank level. Since March, due to the weakening of market demand, banks in more than 100 cities across the country have independently lowered mortgage interest rates according to market changes and their own business conditions, with an average range of 20 to 60 basis points. On April 15, the central bank decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points and release long-term funds of about 530 billion yuan.
Due to the relaxation of the regulation policy of urban implementation, it has gradually moved from low-energy cities to high-energy cities. On April 11, Suzhou relaxed the restrictions on the purchase of new houses and the sale of second-hand houses. On April 12, the purchase restrictions were relaxed in two districts of Nanjing and Shanghai Lingang Holdings Co.Ltd(600848) district.
Under the repeated epidemic situation, the sales pressure is further highlighted. The relaxation of purchase, loan and sale restrictions in more cities and the further decline of mortgage interest rates have gradually become a realistic choice. Under the impact of shrinking demand and weakening expectations, both supply and demand are facing great impacts. The policy goal of “stabilizing land prices, house prices and expectations” will face great challenges. It is urgent to further strengthen market support. The healthy and stable development of the market is not only the need to prevent and resolve risks, but also the basis for the transformation of the industry to a new development model.
We believe that the central government’s attitude towards real estate regulation has changed significantly, and the policy tone has gradually shifted from correction at the end of last year to support. With the current clear policy tone and encouragement direction, financial support and local regulation are expected to continue. Although the high-frequency data shows that the current market sales are still continuing to decline, with the release of the policy, some cities have shown signs of recovery. Although the recent multi-point outbreak of the epidemic may affect the recovery of sales, the government’s determination to boost the market has been relatively clear. With the gradual appearance of the policy effects at both ends of supply and demand, the recovery of industrial sales has been gradually approaching.
In the short term, with the release of policies and the improvement of support expectations, the industry policy atmosphere is relatively friendly during this period, and there will be a big game in the market for the reduction of default risk of private enterprises. However, many low credit private enterprises with high risk still face great liquidity pressure, which may be difficult to support until the market warms up; Moreover, frequent negative news and almost lost land acquisition ability have also greatly damaged the market reputation and future development space of the enterprise. Therefore, we believe that in the long run, the real estate enterprises with high credit are the more stable strategy. Under the industry background of frequent thunderstorms in various enterprises, at the sales end, high credit real estate enterprises can win the trust of home buyers; On the supply side, high credit real estate enterprises continue to obtain financing support from financial institutions, and still have the ability to obtain land in the open market and acquire projects through mergers and acquisitions in the current market environment. Market reputation and business strength have laid the foundation for future development.
Looking back on history, in the early stage of policy loosening, with the release of policies and the improvement of support expectations, the policy game dominated and the sector tended to β Significant gains. With the gradual appearance of the effect of administrative policy and monetary policy, seize the opportunity of industry recovery, and the more top-notch real estate enterprises began to walk out of the market α profit. We believe that the advantages of financing will promote high credit real estate enterprises to gain advantages in the land and M & a market. The continuous land acquisition and promotion ability and high-quality credit endorsement are also expected to seize the opportunity when the demand recovers and further improve the market share. Recommended China Vanke Co.Ltd(000002) , Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) . The support from the financing side, after meeting the steady central enterprises and real estate enterprises in the head, will gradually overflow to the stable private enterprises, and the market will gradually restore confidence in the stable private enterprises. It is suggested to continue to track the leaders of the stable private real estate enterprises, such as Longhu group and country garden.
Risk tip: the risk that the implementation of industrial policies is less than expected, the risk that profitability continues to decline, and the risk that sales are less than expected.
