Comment report on the press conference of financial statistics of the people’s Bank of China in the real estate industry: the press conference of the central bank sends an important signal to reproduce the excess return of real estate under wide credit

Events

On January 18, 2022, the people’s Bank of China held a press conference on financial statistics in 2021. Key investment points

The money supply and the scale of social finance matched the nominal GDP, and the comprehensive cost decreased steadily

According to the data released by the Bureau of statistics on the 17th, the growth rate at both ends of real estate supply and demand continued the downward trend, of which the single month data of real estate development investment in December showed double-digit negative growth month on month (the first single month negative growth month on month since 2000). In this context, the “credit easing” policy continued to be promoted: at the press conference of the central bank on the 18th, Liu Guoqiang, vice president of the central bank, said that “maintain the stable growth of the total amount of money and credit”, “comprehensively use a variety of monetary policy tools”, “maintain the growth rate of money supply and social financing scale, and basically match the economic growth” “Keep the comprehensive financing cost of enterprises stable and down”. Combined with the fact that most of the GDP targets of the two sessions of local governments are higher than the compound growth rate of 19-21 years and the proportion of real estate in GDP, we believe that before the data at both ends of the industry supply and demand improve significantly, the wide credit will continue to promote and the financing cost of enterprises will further decline.

Advance to promote stability: sufficient, accurate and ahead

The central bank press conference proposed that policies should promote stability with progress, and the specific force should be “sufficient”, “accurate” and “ahead”. In terms of risk resolution in the real estate industry, the meeting pointed out that: 1) “maintain the stable and orderly release of real estate credit to meet the reasonable financing needs of the real estate market”; 2) Support risk resolution and industry clearing in a market-oriented manner through M & a financial services. We believe that the improvement of credit at both ends of supply and demand in the real estate industry is still advancing, and the intensity and pace are gradually increasing and accelerating. The sales, land purchase and financing of the industry are expected to accelerate the return to normal, and the bottom of the industry fundamentals is gradually built.

The short-term real estate financial policy is continuous, consistent and stable, and long-term exploration of new models will promote a virtuous circle of the real estate industry

The central bank meeting pointed out that it is necessary to “maintain the continuity, consistency and stability of real estate financial policies, and steadily implement the prudent management system of real estate finance”. We believe that the short-term real estate funds will continue to relax until the industry gradually resolves risks, and the policy will have a strong concentration. It is inevitable to build a long-term model after the industry is in danger, and the long-term competitive potential of comprehensive real estate enterprises is self-evident.

Investment suggestion: optimistic

We believe that the industry has benefited from the continuous improvement of capital, the beta market will continue, the strength and determination to broaden credit have been clear at this meeting, and the industry valuation has been repaired and upgraded step by step. It is recommended to pay attention to:

1) subject matter after valuation and repair rotation: A shares – Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) ; H shares – Xuhui holdings and Baolong real estate, undervalued value + confidence repair = elasticity.

2) in addition, the valuation repair of comprehensive high credit real estate enterprises continues: A-share – Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, Gemdale Corporation(600383) ; H shares – China overseas development, China Resources Land and Longhu group.

Risk tip: the demand for repair is less than expected, and the decontamination and payment collection of real estate enterprises are weak.

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