This month’s view: the central government has intensively voiced “stabilizing real estate” and the deregulation of policies has spread to high-energy cities; In March, the real estate market transaction and the financing of real estate enterprises improved month on month, but the market confidence has not been fundamentally repaired. The land acquisition and domestic bond issuing real estate enterprises are still concentrated in the central state-owned enterprises or high-quality private enterprises with good credit qualification. The subsequent market repair depends on the effective control of the epidemic and the force of policy. At present, the downward pressure on the industry and the capital side risk of real estate enterprises still exist. Under the background of virtuous circle and “three stabilities”, we believe that the unstable policy of the real estate market continues, and the valuation repair driven by the policy side is expected to continue. In the medium and long term, with the withdrawal or contraction of some real estate enterprises in the pain period of this round, the overall pattern of the industry is expected to be optimized, and the market share and profitability of brand real estate enterprises with financing and control advantages are expected to be improved. The development sector is mainly concerned about: 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 of policy game elasticity with certain support for Fundamentals, such as Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Jinke Property Group Co.Ltd(000656) , etc. The valuation of the property management sector has reached an all-time low, and the downward pressure of the guidance in the middle of the quarter of the annual report has been gradually released. With the continuous deregulation of policies and the improvement of the capital side of development enterprises, it is expected to bring the continuous repair of the valuation of high-quality property enterprises. Attention is paid to such services as country garden service, poly property, China Merchants Property Operation & Service Co.Ltd(001914) , Jinke service, xinchengyue service, Xingsheng business, etc.
Policy: the deregulation of the policy spread to high-energy cities, and the real estate market stepped into substantial improvement. In March, there were 32 housing related policies, including 26 partial loose policies. The frequency of housing related partial loose policies in a single month hit a new high in nearly a year. Many central departments have intensively voiced “stabilizing real estate”, making it clear that they do not have the conditions to expand the pilot cities of real estate tax reform this year, support the reasonable financing needs of real estate enterprises, and strengthen the confidence to resolve industrial risks; The capital cities of coastal provinces and core metropolitan cities have successively joined the ranks of deregulation of the property market, and some of them have more directly relaxed the purchase and sale restrictions. The regulation of the property market has entered a substantive relaxation stage, and more subsequent policy adjustments are worth looking forward to.
Capital: “comprehensive RRR reduction + targeted RRR reduction”, and the financing of real estate enterprises recovered month on month. In March, the growth rate of M2 increased by 0.5 percentage points month on month; The growth rate of social finance stock increased by 0.4 percentage points month on month. On April 15, the central bank announced that from April 25, “comprehensive RRR reduction + targeted RRR reduction” will be 0.25 percentage points respectively. Although the mortgage interest rate in key cities continued to decline and the overall financing scale of real estate enterprises rebounded month on month in March, the investment of individual house purchase loans is still not optimistic. Domestic bond issuance is concentrated in high-quality real estate enterprises, and the follow-up monetary policy is expected to strengthen the support for key areas of real estate.
Property market: the pace of supply has accelerated and the turnover has improved month on month. In March, the average approved listing area of commercial houses in 35 cities increased by 174.8% month on month, and the pace of selling was accelerated. The average monthly daily turnover of new houses in 50 key cities increased by 26.2% month on month, and the average monthly daily turnover of second-hand houses in 20 key cities increased by 60.1% month on month. Affected by the credit environment and the optimization of regulatory policies in key cities, the transaction scale of some cities gradually bottomed out, and the average price of houses in 100 cities rose for two consecutive months, but the confidence of home buyers has not been fundamentally repaired, The follow-up market still depends on the effective control of the epidemic situation and the force of policy.
Prefecture and city: the trading volume and price rise together, and the first round of local auction rules make profits. In March, the first batch of land auction was completed and the second batch of land supply plan was listed. The land trading volume and price rose together, and the land supply rules were “full of sincerity”; The local auction heat is differentiated. The bidding real estate enterprises only show high enthusiasm for high-quality plots in high-quality areas. The land acquisition participants are central state-owned enterprises or high-quality private enterprises with stable finance and good credit qualification.
Real estate enterprises: the sales of the top 100 real estate enterprises decreased by more than 40% year-on-year, and high-quality real estate enterprises are the main force to obtain land. The sales of the top 100 real estate enterprises in March halved year-on-year, with a cumulative decline of more than 40% in the first quarter. Subject to repeated epidemic prevention and control, the real estate market in many places was in a state of “semi suspension” in March. However, recently, the “four limits” regulation in some cities has loosened, and the market has stabilized. It is expected that the market of each city may intensify differentiation, and the second quarter is an important observation window period. The land acquisition efforts of the top 50 real estate enterprises continued to be low. In March, only 11 real estate enterprises such as Jianfa and Grandjoy Holdings Group Co.Ltd(000031) gained, all of which are central state-owned enterprises or high-quality private enterprises with stable finance and good credit qualification.
Sector performance: Shenwan real estate sector rose 9.52% in March, significantly outperforming Shanghai and Shenzhen 300 (- 7.84%); As of April 22, 2022, the current PE (TTM) of real estate sector is 10.28 times, lower than 11.85 times of CSI 300, and the valuation is in the 65.5% quantile in recent five years.
Risk tips: 1) if the subsequent supply of goods is impacted due to insufficient new soil storage, it will have a negative impact on the sales, commencement and investment of the industry; 2) If the pressure of property market deregulation exceeds expectations and sales continue to exchange price for volume, it will bring some early high price impairment risk; 3) The policy care is limited, and the adjustment range and time of the industry exceed expectations, which will have a negative impact on the development of the industry
