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 comes at the time when the Bureau of statistics released the economic data of March, and the indicators of real estate sales, investment and financing, commencement and completion have 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.
