Talk every Monday: Comments on 2021 annual report and 2022 quarterly report: no pole will eventually come to Tailai
In 2021, the revenue growth of the real estate sector slowed down slightly. The revenue in 2021 increased by 9% year-on-year, 3 percentage points lower than that in 2020; The year-on-year growth rates of revenue in the fourth quarter of 2021 and the first quarter of 2022 were – 10% and – 13% respectively, which was the lowest year-on-year growth rate in recent quarters. Mainly affected by the shortage of funds of real estate enterprises, the completed scale of the industry decreased year-on-year, affecting the confirmation of project settlement, resulting in negative year-on-year growth of revenue in recent two quarters. With the increase of industry policy and financing support and the expectation of sales improvement, the capital environment of real estate enterprises will be improved, which will drive the recovery of completion settlement scale, and the bottom of industry revenue growth is supported.
The profit scale of the industry decreased significantly in 2021, with a year-on-year growth rate of – 85%, a decrease of 72 percentage points compared with 2020. The profit scale of the industry changed from negative to positive from the fourth quarter of 2021 to the first quarter of 2022, with a year-on-year growth rate of – 41% in the first quarter of 2022. The profit scale of the single quarter hit the bottom and rebounded.
The profitability of the industry continued to decline in 2021. The gross profit margin and net profit margin in 2021 were 20.8% and 2.5% respectively, a decrease of 6.2 and 6.8 percentage points compared with 2020. The industry as a whole recorded a single quarter loss in the fourth quarter of 2021, and rebounded in the first quarter of 2022. The gross profit margin and net profit margin were 20.3% and 2.3% respectively, a month on month decrease of 0.6 and an increase of 7.4 percentage points, realizing a positive quarter on quarter growth rate. At present, the profitability of the industry is at the bottom, the gross profit margin of settlement projects will gradually stabilize with the slowdown of the rise of land costs, and the fundamentals of the industry will continue to improve. In the future, the bottom rebound of the profitability of the industry will start.
The overall debt level of the industry has decreased. In 2021, the overall net debt ratio of the industry was 79.3%, the asset liability ratio excluding advance receipts was 72.4%, and the cash short debt ratio was 0.97, a decrease of 2.1 percentage points, flat and 0.13 respectively compared with the previous year. With the net repayment of the financing end of the industry in 2021, the overall asset liability level of the industry has decreased, in which the net liability ratio and the asset liability ratio excluding advance receipts have decreased, while the cash short-term debt ratio has decreased slightly due to the impact of debt repayment, and the pressure of short-term debt repayment has increased.
In the first half of 2022, we should pay attention to the short-term debt repayment pressure. From the fourth quarter of 2021 to the first quarter of 2022, the overall net debt ratio of the industry increased and the cash short debt ratio decreased. The first half of 2022 is still the peak period of debt repayment of real estate enterprises. From the perspective of debt risk, we still need to pay attention to the short-term debt repayment pressure.
In 2021, there was a significant net outflow of financing funds in the industry, resulting in negative cash flow in the industry. In 2021, the net cash flow of operation, financing and investment activities in the industry was 379.3 billion, – 221.3 billion and – 329.7 billion respectively. Affected by the tightening of financing environment, there was a net outflow of financing end in the industry, and the capital chain of real estate enterprises was under pressure.
The net outflow of cash flow at the financing and investment ends is improving, but the operating cash flow is under pressure. The biggest point of cash flow pressure in the industry occurred in the third quarter of 2021. With the recent improvement of financing environment, the net outflow of cash flow at the financing end has improved significantly; At present, the capital pressure of the industry is transferred from the financing end to the operation end. Affected by the weakness of the sales market, the operating cash flow showed an outflow of 97.5 billion in the first quarter of 2022.
The results of the 2021 annual report of the industry are not ideal, but the fundamentals will continue to improve in 2022. On the other hand, real estate enterprises have accrued impairment losses in the 2021 annual report. If the industry starts again in 2022, there will be a more satisfactory answer.
Data tracking (April 24-april 30):
New housing market: the transaction area of 30 cities is – 50pct and – 38pct in one week and cumulative year-on-year respectively, first tier cities – 53pct, – 36pct, second tier cities – 73pct, – 69pct, third tier cities + 2pct and + 9pct.
Second hand housing market: the transaction area of second-hand housing in 13 cities was – 30pct year-on-year in a single week and – 31pct year-on-year in total.
Land market: the cumulative construction area of land supply in 100 cities is + 13pct year-on-year, the cumulative construction area of transaction is – 11pct year-on-year, the cumulative transaction amount is – 56pct year-on-year, and the land transaction premium rate is 5.06%.
City market month on month: Beijing (- 35PCT), Shanghai (- 8pct), Guangzhou (+ 45pct), Shenzhen (- 8pct), Nanjing (- 4pct), Hangzhou (- 14pct), Wuhan (- 17pct)
Investment strategy: under the background of “steady growth”, there is a strong demand for improvement of industry fundamentals, and we continue to be optimistic about the future. Loose policies will guide the recovery of industry fundamentals; It is suggested to select the leading real estate enterprises Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Longhu group with stable operation and good credit background; High quality real estate enterprises Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , Greentown China, etc. under the product-oriented logic; Jianfa international and Yuexiu real estate, leaders of local state-owned and central enterprises with good credit background and development potential; Pay attention to the repair opportunities of high-quality private enterprises, such as Xuhui holding, Jinke Property Group Co.Ltd(000656) etc; Green City Management Holdings, the industry leader recommended in the field of agent construction.
Risk tip: the sales market is down, and some real estate enterprises have a storm of debt default.
