Sales: under the impact of the epidemic, the decline in commercial housing sales continued to expand. In April, the sales area of commercial housing was – 20.9% year-on-year, and the former value was – 13.8%; The year-on-year sales volume was – 29.5%, and the previous value was – 22.7%; The average sales price was -12.45% year-on-year, and the previous value was -10.28%. We believe that the superposition of several major factors has led to the rapid decline of demand: 1) the impact of the epidemic has affected the development of sales and the release of demand. 2) The frequent credit crisis of real estate enterprises shakes the confidence of buyers in the timely completion and delivery of future houses, and then affects the sales; 3) The psychology of “buying up but not buying down” leads to the further aggravation of wait-and-see mood; 4) Under the background of economic recession, the weakening of income expectation has restrained some house purchase demand. 5) The expectation of the pilot real estate tax has also restrained the residents’ willingness to buy a house to a certain extent.
Development Investment: the decline in investment expanded, and the commencement fell sharply. In April, the newly started area was – 44.19% year-on-year, and the previous value was – 22.25%; The completed area was – 14.19% year-on-year, and the former value was – 15.5%; The development investment was -10.07% year-on-year, and the former value was -2.39%. We believe that the continuous fermentation epidemic in April greatly inhibited the resumption of construction and investment. The difficulties at the sales end have further impacted the liquidity of real estate enterprises and greatly affected their investment ability and willingness. With sluggish sales and weaker expectations, the land market is experiencing a sharp decline. The continuous sharp decline in land transactions is bound to bring great pressure to the construction and investment data in the future.
Funds in place: funds are becoming more and more tense, and the decline of sales has further exacerbated the tension of funds in the industry. The funds in place in April were – 35.54% year-on-year, and the previous value was – 23.01%. The pressure brought by the decline in sales still makes it difficult to improve the capital of the industry. The decline in deposits, advance receipts and personal mortgage loans both expanded, indicating that the current pressure on sales collection continues to expand. We believe that with the continuous development of policies at both ends of supply and demand in the near future, and the gradual shift of credit support from central enterprises and state-owned enterprises to high-quality private enterprises, the capital situation of subsequent industries is expected to bottom up.
Policy tracking: the stability maintenance policy continues to upgrade, and the financing support moves towards private enterprises. On May 15, the central bank and the China Banking and Insurance Regulatory Commission jointly issued a notice setting the mortgage interest rate of the first house as 20bp lower than LPR, which is equivalent to a minimum of 4.4%. On May 16, country garden, Longhu and Midea real estate were selected as model real estate enterprises by regulators. They will issue bonds and use protection tools within the week. We believe that the policy space is still large, and there is a certain operational space in terms of mortgage interest rate, down payment ratio, purchase qualification, relaxation of sales restrictions, transaction costs of second-hand houses, etc.
Investment suggestions:
We suggest that we gradually focus on the sector under the policy game β Income will be transferred to high-quality real estate enterprises benefiting from industry clearance and sales recovery α Income, while holding real estate enterprises with high-quality central enterprises and state-owned enterprises, actively layout high-quality private enterprises with stable operation. We believe that the advantages of financing will promote high credit real estate enterprises to gain advantages in the land and M & a market. The continuous land acquisition and promotion ability and high-quality credit endorsement are also expected to seize the opportunity when the demand recovers and further improve the market share. Recommended China Vanke Co.Ltd(000002) , Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) . After meeting the needs of real estate enterprises with the background of central enterprises and state-owned enterprises, the support from the financing side will gradually overflow to private enterprises with stable operation. The market will gradually restore confidence in private enterprises with stable operation. It is suggested to continue to track the leaders of private real estate enterprises with stable operation, such as Longhu group and country garden.
Risk tip: the risk that the implementation of industrial policies is less than expected, the risk that profitability continues to decline, and the risk that sales are less than expected.
