Negative profit growth for the first time since 2011
In 2021, the revenue of 103 mainstream listed real estate enterprises in a + H shares increased by 12.5% year-on-year, down 1.2 percentage points from 2020; Net profit attributable to parent decreased by 49.2% year-on-year, 44.3 percentage points lower than that in 2020. In the 21st year, the settlement scale of the industry increased steadily, but the profit margin of the industry tended to decline, the market prosperity was under pressure, resulting in inventory impairment, superimposed the credit impact of private real estate enterprises, the suspension of some projects affected the carry forward rhythm, the net profit of the industry returned to the parent decreased year-on-year for the first time since 2011, and the profit concentration reached a new high since 2011.
The overall gross profit margin of real estate enterprises in 2021 was 20.9%, down 5.6 percentage points from 2020; The net interest rate was 6.2%, down 5.7 percentage points from 2020; The weighted roe was 7.0%, down 7.8 percentage points from 2020. The gross profit margin of the industry has continued to decline since reaching the phased top in 2018, and the downward range has expanded without difference in 2021, reflecting the narrowing of the overall profit space of the industry. The profit side of large real estate enterprises and state-owned enterprises has strong toughness, and the gross profit margin, net profit margin and roe remain absolutely ahead. The gross profit margin in 21 years is 2.0 and 4.0 percentage points higher than that of the industry as a whole. With good management and control efficiency and turnover advantages, the net profit margin and roe are slowly down.
The overall sales were stable and the performance reserve decreased
In 2021, the cash received by 69 A-share real estate enterprises from selling goods and providing labor services increased by 6.3% year-on-year, 0.1 percentage point lower than that in 2020. The industry’s credit risk exposure, the slowdown in the rise of house prices and the pilot of real estate tax have significantly damaged the confidence of the sales market, and the growth rate of sales collection has recorded the lowest since 2015. Small and medium-sized real estate enterprises accelerated the pace of payment collection under the pressure of large liquidity and debt, and the growth rate remained stable.
In 2021, the total advance receipts and contract liabilities of overall real estate enterprises increased by 8.8% year-on-year, with a growth rate of 2.8 percentage points lower than that in 2020. The growth rate of sales slowed down and the settlement increased steadily. The growth rate of advance receipts in the industry continued to decline, and the coverage rate of revenue in that year was still at a high level of 116.5%. In the future, the short-term listed real estate enterprises will still have relatively abundant settleable resources, and the performance growth may mainly depend on the trend of profit margin.
Land acquisition contracted and operating cash flow improved significantly
In terms of net cash flow from operating activities, the total net cash flow from operating activities of listed real estate enterprises continued to increase in 21 years. Large and medium-sized real estate enterprises realized net cash flow inflow from operating activities for three consecutive years, and the net cash flow of small and medium-sized real estate enterprises increased significantly in 21 years. In the environment of slow growth of the industry and passive tightening of financing, the continuous improvement of net cash flow from operating activities of real estate enterprises stems from: on the one hand, the refinancing ability is damaged and the dependence of the capital chain on sales collection is greatly increased; On the other hand, the growth rate of cash paid for purchasing goods and receiving labor services slowed down, reflecting that the downward sales expectation led to the contraction of the initiative of real estate enterprises in land investment and the gradual slowdown of industry expansion.
In 2021, the overall inventory of real estate enterprises accounted for 50.9% of total assets, down 0.7 percentage points from 2020. The slowdown in expansion combined with marketing upgrading has steadily improved the inventory level of listed real estate enterprises. Over the past 16 years, the inventory proportion of large and medium-sized real estate enterprises has shown an upward trend, and resources are more concentrated in leading enterprises. In 19 years, the inventory proportion of private enterprises began to fall after reaching the peak, while the inventory proportion of state-owned enterprises rose simultaneously. We believe that with the support of capital and financing cost advantages, the proportion of state-owned enterprise industry inventory in 22 years may continue to increase.
The financing gap has widened and the industry is struggling to shrink
In 2021, the year-on-year growth rate of interest bearing liabilities of overall real estate enterprises was – 1.8%, down 9.9 percentage points from 2020. In 2021, the medium and long-term interest bearing liabilities of the overall real estate enterprises accounted for 68.9% of all interest bearing liabilities, down 0.7 percentage points from 2020. In 2021, the total interest bearing liabilities of listed real estate enterprises increased negatively year-on-year for the first time since 2011, basically announcing the end of the rapid expansion mode of high turnover and high leverage in the industry. The downward sales superimposed credit contraction, the financing gap of the industry continued to expand, and deleveraging gradually entered the deep-water area. We expect that the industry leverage adjustment and capacity clearing will continue to deepen in 22 years, while the overall liquidity recovery will need to wait for the recovery of market sales and drive the improvement of risk appetite at the financing end.
In terms of the three red lines, in 2021, the asset liability ratio of overall real estate enterprises deducting advance receipts was 71.5%, 1.1 percentage points lower than that in 2020; The net debt ratio was 71.0%, 1.3 percentage points lower than that in 2020; The cash short debt ratio was 1.20, 0.18 times lower than that in 2020. In 21 years, the overall three red line indicators of real estate enterprises continued to be optimized, and many real estate enterprises rose to the green level. Affected by the sales and financing side, the three red line indicators of state-owned enterprises and private enterprises, head and middle and rear real estate enterprises are significantly differentiated, and the debt repayment indicators of some small and medium-sized real estate enterprises and private enterprises have improved.
Strategy: grasp the alpha of structural easing and M & A
In the 21 years, the industry has experienced a dark moment, the fundamentals and credit have bottomed out, and a number of profit indicators of listed real estate enterprises have reached a new low since 2011. Large real estate enterprises and state-owned enterprises still show strong resilience. We believe that the repair of Pb valuation of large real estate enterprises to about 1.0x is a more reasonable platform range. There is still room for upward breakthrough in the future, whether from the perspective of dynamic policy expectation improvement and roe capacity improvement, or the high sensitivity of static fundamentals to Pb. The future industry beta depends on the adjustment of industry structure, the pace of capacity clearing and the strength of policy support; Alpha focuses on the repair of the balance sheet and profit margin of key real estate enterprises by M & A, the accuracy of countercyclical plus leverage, and the long-term excavation of the value of housing scenarios. Continuous recommendation: 1) high quality large: Gemdale Corporation(600383) , Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, Longhu group, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ; 2) High quality growth: Seazen Holdings Co.Ltd(601155) , Xuhui holding group; 3) Quality property management: Country Garden service, China Merchants Property Operation & Service Co.Ltd(001914) , poly property, Xuhui Yongsheng service. It is suggested to pay attention to: Beijing Capital Development Co.Ltd(600376) , Huafa Industrial Co.Ltd.Zhuhai(600325) , Financial Street Holdings Co.Ltd(000402) , Yuexiu real estate, China Construction Development International and other local state-owned enterprises.
Risk warning: the credit risk of the industry is spreading, and the decline of industry sales is higher than expected, because the city’s implementation of policies is lower than expected
