The Bureau of Statistics announced the operation of the real estate market in March 2022. The sales area, sales amount, investment amount and newly started area of real estate were 153.43 million square meters / 141.96 billion yuan / 132.66 billion yuan / 148.71 million square meters respectively, with a year-on-year growth rate of - 17.7% / - 26.2% / - 2.4% / - 22.2% and a previous value of - 9.6% / - 19.3% / 3.7% / - 12.2%.
In March, the sales area of commercial housing in China fell by 17.7% year-on-year, and the volume and price continued to fall. The average sales price in March was 9252 yuan / m2, down 10.3% year-on-year and 6.0% month on month. As we pointed out in our previous report, the month on month recovery of the average sales price from January to February is related to the tightening of sales discounts by real estate enterprises after the beginning of the year, and the area for sale of commercial houses has increased significantly, indicating that the inventory has a rising trend. We believe that the current demand side data may still reflect the more severe situation than the actual demand side. Judging from the overall decline in sales prices in March, it proves that the real estate fundamentals are still bottoming out, and the substantive recovery on the demand side still needs further policy stimulus.
The decline in new construction has expanded, and investment has entered a negative growth range. In March, the ratio of new construction area / sales area was 0.97, compared with the previous value of 0.95, and the new construction area is still lower than the sales area. New construction continued to decline. We believe that the main reasons are as follows: first, weak sales and insufficient motivation for enterprises to replenish inventory; Secondly, affected by the centralized land supply and the epidemic, the cumulative land transfer area decreased by 41.8% from January to March 2022, and the insufficient land storage of enterprises had a negative impact on the subsequent new construction; Under the pressure of guaranteed delivery, completion also has a certain crowding out effect on new construction. We expect that the weakening trend of new construction in the first half of the year will not change. In March, real estate investment fell by 2.4% year-on-year. We previously pointed out that the high growth rate of investment from January to February is related to the low base and the construction and installation investment brought by cross year construction, which is not sustainable. We believe that the support of real estate investment is still weakening, and the follow-up may face further downward pressure.
The capital of real estate enterprises continues to tighten, and there is great pressure on loan financing and sales collection. From the perspective of capital, in March, the capital in place of real estate enterprises was 1301.6 billion, with a year-on-year growth rate of - 23.0%, and the previous value was - 17.7%. The overall capital was further tightened. By item, China's loan financing was 142 billion, with a year-on-year growth rate of - 29.7% and the previous value of - 21.1%. The decline continued to expand, and the wide credit was not fulfilled. On the demand side, deposits and advance receipts were 422.5 billion yuan, with a year-on-year growth rate of - 37.5%, the former value of - 27.0%, and personal mortgage loans were 224.5 billion yuan, with a year-on-year growth rate of - 22.5%, the former value of - 28.5%. At present, the bank credit environment has indeed been relaxed, or some cities are concerned about reducing the down payment ratio, but consumer confidence is still insufficient and the sales momentum is still declining.
The industry concentration is still declining, and the sales of the top 100 real estate enterprises are weaker than the industry average. From January to March 2022, the year-on-year growth rates of the sales amount of top 10, top 10-20, top 20-50 and top 50-100 real estate enterprises were - 41.5%, - 51.1%, - 53.6% and - 44.0% respectively. From January to March, the sales concentration of TOP10 decreased to 22.3%.
Investment proposal and investment object
The sharp decline in various statistical indicators of the real estate industry this month also proves that the current industry fundamentals are still in the process of bottoming. Although the industrial policy has been relaxed since November last year, the marginal improvement of the actual fundamentals of the industry is very limited. From the perspective of capital, the financing environment of enterprises is still tightening, and more importantly, the prepayment and mortgage of the residential sector continue to decline, which shows that the current confidence on the demand side is still weak. Previously, the policy showed a balanced force at both ends of supply and demand, but from the results, it is not enough to reverse consumer confidence and restore the credit level of private real estate enterprises. Therefore, the weakening pressure on both sides of supply and demand still exists, and the expectation of policy correction still exists. In the context of weak supply and demand, low rated real estate enterprises are still in a state of continuous blood loss. We believe that it is still not a good strategy to find marginal real estate enterprises at this stage, and continue to recommend the combination of state-owned enterprises and high credit private enterprises. We are optimistic about the first-line leaders with stable performance, and recommend Poly Real Estate ( Poly Developments And Holdings Group Co.Ltd(600048) , buy), China Vanke Co.Ltd(000002) ( China Vanke Co.Ltd(000002) , buy); Second tier leaders with flexible performance are recommended Gemdale Corporation(600383) ( Gemdale Corporation(600383) , buy), Longhu group (00960, buy), Xuhui holding group (00884, buy). At the same time, we are optimistic about the property management and business management industry that is growing rapidly and benefiting from the recovery of real estate. We recommend Country Garden Service (06098, buy), poly property (06049, buy), China Merchants Property Operation & Service Co.Ltd(001914) ( China Merchants Property Operation & Service Co.Ltd(001914) , overweight), New Dazheng Property Group Co.Ltd(002968) ( New Dazheng Property Group Co.Ltd(002968) , buy), rongchuang service (01516, buy) and Xingsheng Commerce (06668, buy).
Risk tips
Sales were significantly lower than expected. The intensity of policy regulation exceeded expectations. There is uncertainty in the financing environment.
