Ping An View:
Logical evolution of cycle comparison: the policy is gradually dominated by the market in the period of shock. After the “831” deadline in 2004, the land price and house price rose sharply, and the value revaluation resource real estate enterprises once led the rise. With the cyclical tightening of the policy, the policy is gradually dominated by the sector Market in the shock period, while in the stable period of the policy and industry, the sector investment logically returns to the fundamentals. Three rounds of industry easing cycles and policy valuation are the leading factors of the market.
Valuation of cycle comparison: the rise of the sector and the valuation of leading companies are much lower than those in previous cycles. Although the excess return of the real estate industry relative to the CSI 300 has been obvious since the meeting of the Financial Committee on March 16, the cumulative increase is only 11%, and the maximum increase in the range is only 37.3%, which is far less than that in the past cycles (20082009: 224.6%, 20112012: 41.3%, 20142015: 239.6%). The PE ratio between the sector and CSI 300 is 0.86, which is far lower than the three cycle highs of 20082009 (2.37), 20112012 (1.54) and 20142016 (2.04). As of April 21, 2022, the Pb levels of Vanke, China Merchants and poly were 0.95, 1.44 and 1.19 times respectively, all lower than the highs of the first three rounds of easing cycles.
Plate performance of cycle comparison: syllogism is still in the first stage. In the real estate easing cycle, the trend of real estate stocks is syllogized: 1) in the first stage, the sales volume recovered, the decline of house prices narrowed, the policy and credit environment continued to be loose, the excess return of real estate was obvious, and continued to outperform the market. 2) In the second stage, the fundamentals recovered, the volume and price stabilized, and the excess return on real estate narrowed. 3) In the third stage, house prices rose too fast, the expectation of policy regulation was enhanced, the real estate yield fell, and the market ended. In 2022q1, the downward pressure on the real estate market is still great. In March, the policy was relaxed and the urban energy level was further upgraded. We believe that the current time point is still the “honeymoon” of real estate stock investment.
Investment suggestion: affected by the rapid rise of real estate stocks in the early stage, the overall correction of the market, the strength of policy deregulation and the worrying effect of fundamental recovery, the performance of the real estate sector has been repeated recently. We believe that there is still great pressure on the volume and price adjustment of the real estate market, the deregulation of policies has gradually spread to high-energy cities, the valuation repair of the sector will continue, and we continue to be optimistic about the follow-up performance of the sector. Two types of investment opportunities are mainly grasped in the development. One is the strong operating and high credit enterprises with relaxed short-term benefit policies and improved gross profit margin at the land acquisition end, which are expected to seize market share in the medium and long term, such as Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , etc; One is the subject matter with large adjustment in the early stage, certain support in fundamentals and greater flexibility in policy game, such as Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Jinke Property Group Co.Ltd(000656) , etc. At the same time, the current mainstream material enterprises only have 20 times PE in 2022, and still set a growth target of 25-50% in the next few years. It is suggested to pay attention to country garden services, poly property, China Merchants Property Operation & Service Co.Ltd(001914) , Jinke services, xinchengyue services, Xingsheng commerce, etc.
Risk tips: 1) reduce the risk of supply adequacy: if the local city continues to be cold and the new land storage scale of real estate enterprises is insufficient, it will have a negative impact on the subsequent supply of goods, and then affect the sales, commencement, investment and completion of the industry. 2) Large scale impairment risk of real estate enterprises: if the decontamination pressure of the real estate market exceeds the expectation and the sales are greatly changed from price to quantity, it will bring significant impairment risk of some high prices in the early stage. 3) Policy care is less than expected risk.
