Ping An View:
Due to the superposition of three factors, there is a large potential space for M & A: since 2021h2, credit events have broken out in many real estate enterprises, most of which are short-term liquidity crises caused by the sudden decline in financing and sales, but the value of high-quality assets held by them has not shrunk significantly, such as residential projects in first and second tier cities, commercial assets in core areas, property management companies, etc., which can alleviate liquidity pressure through asset sales; Although the policy environment has warmed up, it is difficult for the distressed real estate enterprises to improve in the short term due to concerns about the unfinished business and the risk appetite of financial institutions; Under the high liquidity pressure, the real estate enterprises in distress and high-pressure real estate enterprises have a strong willingness to transfer assets for self rescue. The amount and quantity of M & A in 2021q4 real estate industry increased by 120% and 9% respectively compared with 2021q3.
In December 2021, we jointly issued the notice on doing a good job in M & a financial services for risk disposal projects of key real estate enterprises, focusing on supporting high-quality real estate enterprises to merge and acquire high-quality projects of large real estate enterprises in danger and difficulties. Meanwhile, relevant M & A loans are no longer included in the “three red lines”. In January, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) completed the registration of the first 3 billion yuan of M & A bills in the real estate industry, Shanghai Pudong Development Bank Co.Ltd(600000) planned to issue the first 5 billion yuan of M & a theme bonds of real estate projects. From high-quality real estate enterprises to financial institutions, the M & A of real estate projects has been steadily promoted. Inter Project M & A of real estate enterprises can not only revitalize the assets of real estate enterprises in danger and alleviate their short-term liquidity pressure, but also introduce better qualified partners for the project, help boost the confidence of financial institutions and home buyers in the project, facilitate the follow-up financing and sales at the project level, and provide an important means for market-oriented risk resolution.
There is still resistance to large-scale collection and M & A, mainly in the short term or in the form of dots: we believe that multiple factors lead to the lack of large-scale collection and M & A of large-scale development projects: 1) the capital pressure of real estate enterprises is tightening, the willingness to invest is not strong, and debt bearing collection and M & A is not included in the “three red lines”, but it will still increase the debt of the acquirer; 2) The local auction market has cooled down, and the attraction of land acquisition in the open market has increased; 3) It is difficult to reach an agreement on the transaction consideration due to the acquisition of M & A projects or potential risks; 4) The market trend is still uncertain, and it is better to wait and see with money; 5) Compared with development, real estate enterprises tend to light asset property. On the whole, real estate enterprises still have many concerns about M & A. It is expected that the M & A of short-term development projects will still be in point form. In addition to the continuous implementation of relevant support policies, local governments still need to actively guide and match up in the follow-up.
The distribution of land storage of the real estate enterprises in danger is relatively balanced, and the price game may be the key to the transaction: among the top 100 real estate enterprises, the sales share of 9 real estate enterprises in danger accounts for about 8-9% of the country, of which 7 real estate enterprises in danger account for about 10.4% of the top 50 real estate enterprises in land storage at the end of 2021h1. Among the real estate enterprises that have been out of danger, Evergrande has the most abundant land reserves, and jiazhaoye has the most abundant urban renewal project reserves. From the perspective of regional distribution, the regional distribution of soil storage of the out of danger real estate enterprises is relatively balanced, and the urban renewal projects of jiazhaoye group, China Olympic Park and huaxiangnian are relatively dominated by Dawan district. We believe that the subsequent M & A is more at the project level. Projects with better regional location may be easier to attract M & A parties, but better location also means higher consideration. The game negotiation of consideration between the two sides of subsequent M & A may be the key to the transaction.
Investment suggestion: Recently, the policies encouraging high-quality real estate enterprises to acquire and purchase have appeared frequently, and the first acquisition bill has been registered. We believe that acquisition and purchase can help the real estate enterprises in danger to realize asset realization and alleviate the short-term liquidity pressure. However, considering that the current trend of the real estate market is still uncertain, real estate enterprises still have many concerns about acquisition and purchase, and it is expected that the acquisition and purchase of short-term development projects will still be difficult to increase significantly, In addition to the continuous implementation of relevant support policies, local governments still need to actively guide and match in the follow-up. In terms of investment suggestions, the short-term industry fundamentals are still under pressure, and there is still room for policy game, which is expected to drive the continuous repair of sector valuation; In the medium and long term, as the painful period of the industry continues, some real estate enterprises withdraw and merge and integrate within real estate enterprises, the industry pattern is expected to be reshaped, and real estate enterprises with financing, control and product advantages are expected to stand out. In terms of development, pay attention to the leading real estate enterprises Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) with strong short-term pressure resistance and prominent medium and long-term competitive advantages, and moderately pay attention to the second-line elastic targets Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Longguang group, etc. benefiting from the improvement of policies. In terms of diversified business, the current valuation of the property management sector has reached a historical position, and the cost performance continues to highlight. It is optimistic about the property management leaders with outstanding comprehensive strength, such as country garden service, poly property, xinchengyue service, Jinke service, and commercial operators with strong asset light output strength, such as Xingsheng commerce.
Risk tips: 1) reduce the risk of supply adequacy: if the local city continues to be cold and the new land storage scale of real estate enterprises is insufficient, it will have a negative impact on the subsequent supply of goods, and then affect the sales, commencement, investment and completion of the industry. 2) Large scale impairment risk of real estate enterprises: if the de industrialization pressure of the real estate market exceeds expectations and the sales are greatly changed from price to quantity, it will bring some impairment risk of high price in the early stage. 3) Risk that the policy care is not as good as expected: if the effectiveness of the policy is insufficient and the adjustment range and time of the real estate market exceed expectations, it will have a negative impact on the development of the industry.
