Core view: we believe that local state-owned enterprises and regional real estate enterprises, which have been continuously eroded by high turnover real estate enterprises in the past few years, with stronger land acquisition ability, will realize the reverse super from land acquisition to sales scale, and all kinds of enterprises in the industry will have an average return process. Real estate enterprises with low debt and slow turnover, relying on the improvement of credit status and low leverage level, continue to obtain the market share lost by the insured real estate enterprises in the land market and realize the double improvement of scale and quality.
The default of private enterprises accelerated, and the share of land acquisition sales continued to decline
Since the liquidity pressure appeared in the real estate industry in the second half of 2021, the overall default scale has continued to rise. Among them, the proportion of default scale of private real estate enterprises continued to increase, from 59% in 2020 to 89% in 2022. From financing to land acquisition, and then to the level of sales scale, the proportion of sales scale of private real estate enterprises continued to decline. Among the top 100 real estate enterprises, the proportion of sales scale of private enterprises decreased from 82% in 2018 to 79% in 2021.
Local state-owned enterprises took over and the construction intensity of land acquisition increased against the trend
Behind the decline in the market share of private enterprises is the rapid increase in the speed of land acquisition and project construction expenditure by local state-owned enterprises. We use the year-on-year growth rate of cash paid for purchasing goods and receiving labor services in the cash flow statement to measure the land acquisition and construction rhythm of enterprises. After the decline of land acquisition construction intensity in 20172020, local state-owned enterprises rebounded rapidly in 2021, which was significantly differentiated from other types of real estate enterprises.
Due to the relatively low leverage level of state-owned enterprises in the past few years, the level of potential leverage in the industry has remained relatively lower.
The margin of supply and demand has improved significantly, and the recovery of real estate sales is expected
In terms of new house supply, with the improvement of a new round of epidemic since March this year and the gradual reduction of sealing and control measures, the volume of sales in core cities continued to improve month on month, and the area of pre-sale certificates approved in March and April continued to grow month on month. In terms of market demand, under the loose policy environment, second-hand housing transactions in core cities improved month on month. After April, the year-on-year decline in the number of transactions continued to narrow.
Under the influence of the epidemic, the adverse effects on the normal transaction processes such as house viewing and sales in the sales office gradually subsided, the projects to be pushed accumulated in the early stage successively entered the market, and the continuous improvement of the supply side can be expected.
From high week to heavy resources, a big opportunity for small real estate enterprises is coming
Since 2018, under the high turnover mode of the real estate industry, large real estate enterprises have continued to sink the business model of low-energy cities by expanding the control radius, and the business model of sacrificing profit space for rapid scale growth is difficult to sustain.
In contrast, regional small and medium-sized real estate enterprises, relying on the improvement of credit status in the financing environment and the cost and efficiency advantages of small pipe control radius, continue to strengthen their relative competitive advantage in the changing market environment. Since the second half of 2021, the intensity of land acquisition has been continuously improved at the land acquisition end, and the bottom reversal of competitive position has been realized in the process of marginal improvement of market supply and demand.
Investment advice
We believe that there is no substantial improvement in the current total data, and the regulation policy is still based on a loose rhythm. At the same time, in the process of the gradual improvement of the epidemic situation and the gradual elimination of the adverse factors inhibiting the promotion of enterprises, with the continuous easing of policies and the joint improvement of both supply and demand, the real estate recovery will be gradually driven. Plate opportunities gradually transition from policy expectations to fundamental improvement. Leading and regional real estate enterprises with the ability to take land and push the sector will benefit from the improvement of competition pattern and land market to the greatest extent, and realize the double reversal of sales scale and operation quality. Continue to recommend three main lines: 1) local state-owned enterprises that benefit most from the improvement of competition pattern after the liquidation of private enterprises: Shanghai Jinqiao Export Processing Zone Development Co.Ltd(600639) ; 2) National leaders for continuous improvement of medium and long-term business quality: Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, green city China; 3) High rated steady operation private enterprises: Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , Xuhui holding group.
Risk warning event: the tightening of financing environment exceeds expectations; The epidemic continues to impact real estate sales; Changes in land market transfer rules; Changes in real estate sales policies; Changes in real estate regulation policies; Reference data lag or not
