Matters:
On April 18, the people’s Bank of China and the State Administration of foreign exchange issued the notice on improving financial services for epidemic prevention and control and economic and social development (hereinafter referred to as “financial Article 23”), which put forward 23 policies and measures to strengthen financial services and support the real economy from three aspects: supporting the relief of troubled subjects, unblocking the national economic cycle and promoting the development of foreign trade and exports.
Guoxin real estate’s view: 1) timely introduction of policies to stabilize market sentiment is expected to ease the downward trend of real estate fundamentals. 2) The demand side easing policy is promoted from top to bottom, which is more helpful to boost residents’ confidence in house purchase. 3) The supply side will increase financing support to ensure the smooth development of real estate enterprises’ projects. 4) Investment suggestion: financial Article 23 was issued in a timely manner, with positive attitude and precise measures. 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 timely introduction of policies to stabilize market sentiment is expected to ease the downward trend of real estate fundamentals. The introduction of financial Article 23 coincided with the release of March economic data by the Bureau of statistics, and the indicators of real estate sales, investment and financing, commencement and completion further deteriorated.
From the single month value, the sales volume of commercial housing in March 2022 was – 26.2% year-on-year, down 6.9 percentage points from the previous value; The sales area was – 17.7% year-on-year, down 8.1 percentage points from the previous value; The completed investment in real estate development was – 2.4% year-on-year, down 6.1 percentage points from the previous value; The funds in place of real estate enterprises were – 23.0% year-on-year, down 5.3 percentage points from the previous value; The newly started area was – 22.2% year-on-year, down 10.1 percentage points from the previous value; The completed area was – 15.5% year-on-year, down 5.7 percentage points from the previous value. We believe that the epidemic that began to spread in March has also had an impact on the real estate industry. On the one hand, it has affected the promotion of construction progress and the opening of sales cases, on the other hand, it has exacerbated the wait-and-see mood of real estate enterprises and home buyers.
In this round of real estate downturn, the downward range of data, the degree of pessimism expected, and the difficulty of industries and enterprises are unprecedented. 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 economy, finance and employment, the pressure is still large. In this context, the timely introduction of policies to support the relief of distressed subjects and unblock the national economic cycle can stabilize market sentiment and is expected to ease the downward trend of real estate fundamentals.
The demand side easing policy is promoted from top to bottom, which is more helpful to boost residents’ confidence in house purchase. Although since March, Zhengzhou, Lanzhou and other cities have launched measures to relax purchase and loan restrictions and reduce mortgage interest rates to promote the satisfaction of reasonable housing demand, subject to local authorities, the strength and scope of influence of policies are still limited compared with 2014, so it is difficult to form a joint force to reverse the wait-and-see attitude of house buyers. The 23 financial articles issued by the central bank and the safe propose from top to bottom to improve financial services in the housing field, which can better boost the confidence of the demand side, including implementing differentiated housing credit policies according to urban policies, reasonably determining the minimum down payment ratio and minimum loan interest rate requirements of commercial individual housing loans within the jurisdiction, so as to better meet the reasonable housing needs of home buyers and promote the stable and healthy development of the local real estate market.
In addition, for the loan population affected by the epidemic, Article 23 of the finance department proposed support and guarantee measures for existing housing loans to effectively resolve the concerns of home buyers.
On the basis of distinguishing the repayment ability and willingness, the short-term repayment ability and medium and long-term repayment ability affected by the epidemic, we should flexibly take reasonable measures to postpone the repayment time, extend the loan term Adjust the repayment plan by delaying repayment of principal and other means to support it.
The supply side should increase financing support to ensure the smooth development of real estate enterprises’ projects. Sales collection is the main source of funds for real estate enterprises, but it is greatly impacted by the downward sales. From January to March 2022, the proportion of sales collection (deposit and advance payment + personal mortgage loan) in the capital sources of real estate enterprises was 48.8%, and the pull on the funds in place of real estate enterprises decreased to – 14.7%; The proportion of Chinese loans in the capital sources of real estate enterprises was 14.5%, and the pull of funds in place decreased to – 3.6%.
Under the background of low possibility of reversing the sales trend in the short term, Article 23 of Finance strongly supports real estate enterprise loans and bond financing. The policy proposes that financial institutions should distinguish between project risks and enterprise group risks, increase support for high-quality projects, do not blindly withdraw loans, cut off loans and suppress loans, do not engage in “one size fits all”, and maintain the stable and orderly release of real estate development loans. At the same time, commercial banks and financial asset management companies are required to do a good job in M & a financial services for risk disposal projects of key real estate enterprises, steadily and orderly carry out M & a loan business, increase M & a bond financing support, actively provide M & a financial advisory services, resolve project risks and avoid adverse effects.
In addition, in view of the financing difficulties of private enterprises, Article 23 of finance also proposes to actively support the healthy development of private enterprises. The policy emphasizes the equal treatment of state-owned economy and private economy in financial policies such as loan and bond financing policies, fully meet the reasonable financial needs of private economy, and further improve the proportion of private enterprise loans in newly issued enterprise loans. Considering that the proportion of private enterprises in the real estate industry, especially among the top 100 real estate enterprises, is still high, the industry will benefit marginally.
Investment suggestions:
Financial Article 23 was issued in a timely manner, with positive attitude and precise measures. 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.
