Core view
Business analysis: real estate enterprises generally slow down their expansion and pursue steady development. 1) Sales: the sales amount of the top 100 real estate enterprises showed negative growth (- 3.2%) for the first time in 21 years, which was lower than the growth rate of national commercial housing sales. The sales target completion rate of top 20 real estate enterprises in 21 years was only 87.5%, lower than that in 20 years (101.4%); The sales target completion rate from January to April of 22 years is only 17.2% (29.8% in the same period of 21 years). We believe that the overall sales expectation of real estate enterprises in 22 years will be more conservative, and real estate enterprises of a certain scale will face negative growth. In the past 21 years, the industry concentration declined. The equity based sales concentration of Cr5, CR10, Cr20, Cr50 and CR100 decreased by 2.5, 3.0, 3.3, 4.1 and 5.6pct to 11.6%, 18.4%, 26.8%, 40.6% and 48.8% respectively. We believe that the proportion of state-owned enterprises and private enterprises in the financing industry will be greatly improved in an orderly manner in the future. Central state-owned enterprises: the sales proportion of private real estate enterprises will gradually change from 3:7 to about 6:4. 2) Land acquisition: the scale of land acquisition has been reduced. In the 21st year, the land acquisition amount of the top 100 real estate enterprises was 2.54 trillion yuan, a year-on-year increase of – 21.5%; 22q1 was 362.7 billion yuan, a year-on-year increase of – 55.8%.
The concentration degree appears obvious differentiation, the concentration degree of tail real estate enterprises drops sharply, and the head real estate enterprises rise steadily. In the 21st year, the concentration of land acquisition amount of top 100 real estate enterprises was 52.2%, a significant decrease of 8.8pct year-on-year, and further decreased to 48.1% from January to April of the 22nd year; The concentration of Cr5 real estate enterprises increased slightly by 0.3pct to 12.4% year-on-year in 21 years, and further increased to 15.4% from January to April of 22 years. The financing and land resources are still inclined to the head real estate enterprises. From the perspective of land acquisition, the proportion of land acquisition by central state-owned enterprises and private enterprises has gradually changed from 3:7 in 20 years to the current 7:3 pattern; Local state-owned enterprises “support the bottom” and private enterprises “lie flat”. At present, the market is still dominated by local state-owned enterprises, accounting for more than 40%. The land acquisition intensity of mainstream real estate enterprises generally weakened. In 21 years, the land acquisition intensity of 26 mainstream real estate enterprises generally decreased, and the average value decreased from 36.0% in 20 years to 28.6% in 21 years; Central state-owned enterprises can still maintain the growth of land acquisition amount and intensity. 3) Commencement and completion: as the main regulatory object of the “three red lines”, the concentration of new construction has decreased significantly in 20 years, and the concentration of completion has increased significantly under the demand for large net assets.
Analysis of industry financial indicators: performance growth, profitability and cash flow are under pressure, and the solvency continues to improve. 1) The completion peak promoted the steady growth of the industry’s revenue scale in 21 years (3.04 trillion yuan, year-on-year + 8.3%), but subject to the decline of profit margin and the increase of cooperative projects, the performance continued the downward trend in the past 20 years (30.3 billion yuan, year-on-year – 84.5%), and most real estate enterprises increased their revenue without increasing profits. Reasons for the sharp decline in net profit attributable to parent company: profit margin is significantly under pressure; Real estate enterprise cooperation projects increased, and the proportion of minority shareholders’ profits and losses increased by 35.6pct to 59.9%. The scale of 22q1 revenue performance shrank, and the year-on-year growth rates of revenue and net profit attributable to the parent were – 12.9% and – 41.1% respectively. Due to the shortage of funds of real estate enterprises, the completion continued to shrink, and the settlement income showed a negative growth. The overall level of revenue guarantee remained stable at a high level, and the advance receipts / revenue of the previous year as of the end of 22q1 was 1.2x. 2) Profitability: the profit margin is significantly under pressure, and there is still room for recovery in the future. The gross profit margin, net profit margin and parent net profit margin of the real estate sector in 21 years were 20.8%, 2.5% and 1.0% respectively, with a year-on-year decrease of 6.1, 6.8 and 6.1pct respectively; 22q1 was 20.4%, 4.1% and 2.8% respectively, with a year-on-year decrease of 2.6, 1.5 and 1.4pct respectively. Previously, in the hottest period of the property market, real estate enterprises’ land acquisition projects at high prices entered the settlement period, and the profit space was squeezed. Under the pressure of declining profit margin, the industry’s roe fell 8.8pct to 1.7% year-on-year in 21 years. 3) Solvency: interest bearing liabilities showed negative growth for the first time, and real estate enterprises actively reduced their financial and operating leverage. By the end of the 21st century, the interest bearing liabilities of the sector had reached 3.45 trillion yuan, a year-on-year increase of – 4.7%, showing negative growth for the first time in five years; By the end of 22q1, the total was 3.48 trillion yuan, a year-on-year increase of – 4.6%. At the end of the year, the asset liability ratio, net liability ratio and cash short debt ratio excluding advances received were 72.5%, 74.3% and 1.1x respectively, of which the net liability ratio decreased by 1.9pct year-on-year. However, in 22q1, affected by factors such as sales collection, monetary funds decreased significantly, the index deteriorated, the net debt ratio increased to 80.8%, and the cash short debt ratio decreased to 1.0x. In terms of operating leverage, with the continuous credit risk events of real estate enterprises in the past 21 years, the issuance and use of commercial tickets have all decreased. In 21 years, the notes payable of the sector was 98.9 billion yuan, a year-on-year increase of – 13.9%, and the total amount of 22q1 was 84.3 billion yuan, a year-on-year increase of – 42.4%, and the operating leverage ratio decreased to 40.7%. At the end of the year, the implied comprehensive leverage level of the real estate sector was 121.5%, and 22q1 decreased to 120.7%. 4) Operating capacity: operating and financing cash flows are generally under pressure, and the funds of real estate enterprises need to be improved urgently. By the end of the year, the monetary capital of the industry had reached 1.3 trillion yuan, with a year-on-year increase of – 11.8%. For the first time in five years, there was a negative growth, which was mainly due to the sluggish collection at the sales end and inadequate financing of real estate enterprises due to the downward sales in the second half of the year and the tightening of credit in the early stage (the net financing cash flow was – 329.7 billion yuan, which was negative for the first time). The net operating cash flow in 21 years was 379.3 billion yuan, a year-on-year increase of + 17.7%, a decrease of 12.4pct compared with 20 years. By the end of 22q1, the monetary capital of the sector was 1.15 trillion yuan, with a year-on-year decrease of – 15.3%; The operating and financing cash flows are negative, which are – 97.5 billion yuan and – 14 billion yuan respectively; Among them, affected by the continuous downturn in sales, the cash obtained from selling goods and providing labor services decreased significantly by 32.5% year-on-year.
Financial index analysis of top30 real estate enterprises: central state-owned enterprises and large real estate enterprises have great advantages in growth, profitability, cost control, financial health and cash management. They have stronger risk resistance in the downward period of the industry, as well as more abundant capital and financing advantages. 1) Growth: in the past 21 years, the top 30 real estate enterprises had a revenue of 5.04 trillion yuan, a year-on-year increase of + 14.5%, and the growth rate increased by 1.2pct; The net profit attributable to the parent company was 276 billion yuan, a year-on-year increase of – 23.4%. The top real estate enterprises with a sales scale of more than 500 billion pay more attention to the quality of development. In the past two years, the scale growth has been appropriately slowed down. The year-on-year growth rate of revenue in 21 years is only 12.1%, and the net profit attributable to the parent company is – 27.3% year-on-year; The real estate enterprises with a sales scale of 250 ~ 500 billion yuan pay attention to scale growth, and the year-on-year growth rate of revenue is as high as 23.1%; The decline in net profit attributable to the parent company was also the lowest (- 6.2%).
The performance scale of state-owned enterprises can still be basically the same as that in 2020. 2) Profitability: the gross profit margin and parent net profit margin of the top 30 real estate enterprises in 21 years were 18.9% and 4.9% respectively, with a year-on-year decrease of 4.6 and 4.3pct respectively. The profit margin of real estate enterprises with a sales scale of more than 500 billion yuan and 250 ~ 500 billion yuan is significantly higher than that of others, with a gross profit margin of 22.1% and 21.8% respectively, and a net profit margin attributable to the parent company of 6.6% and 9.2% respectively; The gross profit margin and net profit margin of state-owned enterprises are 2.5 and 4.8pct higher than those of private enterprises respectively. 3) Expense control ability: it is a consensus to improve the cost control ability and internal operation efficiency. The three rates of head real estate enterprises have improved. The three rates of real estate enterprises with a scale of more than 500 billion yuan are only 5.8%, a year-on-year decrease of 0.2pct; The third rate of state-owned enterprises remained at a low level of 5.3%, significantly lower than that of private enterprises (8.0%). 4) Solvency: by the end of the 21st century, the scale of interest bearing liabilities of top 30 real estate enterprises was 3.64 trillion yuan, a year-on-year increase of + 1.6%; After excluding advances received, the asset liability ratio, net liability ratio and cash short debt ratio were 70.9%, 66.4% and 1.67x respectively. State owned enterprises and leading real estate enterprises have benefited more from the relaxation of financing, the interest bearing liabilities are growing, and the leverage level remains low; Small and medium-sized real estate enterprises and private enterprises continue to explode, pay more attention to reducing leverage, and have negative growth in interest bearing liabilities. The average financing cost of top 30 real estate enterprises in 21 years was 5.47%, a year-on-year decrease of 0.28pct. The financing cost of real estate enterprises with a scale of more than 500 billion yuan and 250 ~ 500 billion yuan is relatively low, only 4.59% and 4.39%; The financing cost of state-owned enterprises (4.26%) is significantly lower than that of private enterprises (5.91%). 5) Cash management capacity: at the end of the year, the monetary capital of the top 30 real estate enterprises was 1.66 trillion yuan, a year-on-year increase of – 10.6%. The cash of real estate enterprises with a scale of 250500 billion yuan still maintained positive growth (+ 7.2%), and the decline of monetary funds of state-owned enterprises (- 1.9%) was significantly lower than that of private enterprises (- 16.3%).
Investment advice
Affected by the continuous downturn in the prosperity of the real estate market and the shortage of funds of real estate enterprises, the pace of sales and investment of real estate enterprises has slowed down significantly since the second half of 2021. It is expected that the whole year will still focus on steady operation. Judging from the financial performance of real estate enterprises in 2021 and the first quarter of 2022, profitability and cash flow are generally under pressure. However, we believe that with the government’s profit transfer and the subsequent improvement of the profit space of centralized land supply, the sales profit margin of the industry is expected to improve compared with last year; At the same time, with the intensive introduction of supply and demand side and capital side policies, the shortage of funds inside and outside real estate enterprises is also expected to be gradually alleviated. We suggest paying attention to four main lines: 1) the leading real estate enterprises of central state-owned enterprises with nationwide layout have been boosted by valuation in the last stage, but will still enjoy the rising space brought by the beta Market: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Longhu group and China Resources Land; 2) Regional leading central state-owned enterprises and high-quality private enterprises, but the quality of cash flow and financial report is good: China Construction Development International, Yuexiu real estate, Midea real estate, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; 3) After the policy becomes clearer, we can focus on the subject of elastic reversal: Xuhui holding group, Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , country garden; 4) At present, the real estate post cycle property sector with strong income determination and accelerated concentration, as well as the recent credit risk mitigation of related real estate enterprises and elastic reversal: Country Garden service, Xuhui Yongsheng service, poly property, Zhonghai property and xinchengyue service.
Risk warning: real estate enterprise operation and credit risk; The fundamentals of the real estate industry went down more than expected; The effect of real estate regulation policy is less than expected.
