The Zhitong Finance App learned that Ping An Securities released a research report saying that real estate sales and construction commencement continued to be weak year on year in September, but there was a month-on-month improvement. However, there are still twists and turns in the subsequent recovery. According to Kerri's research, 22 key cities traded 1.37 million square meters during the Mid-Autumn Festival and National Day holidays, down 31% from the previous month and 23% from the previous year. On the 17th of October, the average daily sales area of new homes in 50 mainstream cities fell 32% year-on-year. The decline was close to September, and subsequent policy support is expected to continue to increase. The short-term proposal focuses on policy game opportunities, and continues to be optimistic about high-credit housing enterprises that actively acquire land to improve asset quality, financing, and sales advantage.
Incidents:The National Bureau of Statistics released national real estate development investment and sales data from January to September 2023. Of this, the investment amount was 8.7 trillion yuan, down 9.1% year on year; housing construction was 8.2 billion square meters, down 7.1% year on year; 720 million square meters of new construction started, down 23.4% year on year; 490 million square meters were completed, up 19.8% year on year; commercial housing sales area was 850 million square meters, down 7.5% year on year; sales volume of 89 trillion yuan, down 4.6% year on year; real estate enterprise capital was 9.8 trillion yuan, down 13.5% year on year.
The main views of Ping An Securities are as follows:
Investment continues to be under pressure, and short-term pressure remains.
In September, real estate investment in a single month was 1.0 trillion yuan, down 11% year on year, and fell by more than 10% for 5 consecutive months; by region, investment in the East, Central, West, and Northeast regions fell 9.4%, 8.4%, 17.1%, and 30.5% year on year, respectively. Considering that the total transaction price of residential land in Baicheng fell by 29% in the first 9 months, there is still downward pressure on subsequent land purchase costs; at the same time, tight capital for housing enterprises limited construction and security performance. In January-September, construction area fell 7% year on year, and retail sales of construction and decoration materials for enterprises above the limit increased to 7.9% year on year. Against the backdrop of sales pressure and tight capital, short-term investment pressure is expected to remain.
New construction has improved month-on-month, and completed construction has continued to improve.
In September, 80 million square meters of new construction began in a single month, up 19% from the previous month, down 14.6% from the previous year, and the decline narrowed by 9 pct from month to month; the construction area at the end of September fell 7.1% year on year, the same as at the end of August. Under intensive policy improvements combined with expectations of a recovery in sales, the willingness of housing enterprises to start construction and push for trading has picked up somewhat. Looking back, although new construction is still under pressure year on year, the absolute value of new construction starts may be close to the bottom range in the medium to long term, so it is not appropriate to be overly pessimistic. In September, 49.79 million square meters were completed in a single month, an increase of 25.3% over the previous year, and a cumulative year-on-year increase of 19.8% over the previous nine months. Since the second half of 2021, the central government has introduced 350 billion yuan of Bajiao Real Estate special loans and set up a 200 billion yuan Bajiao Real Estate loan support plan to guide commercial banks to actively provide supporting financing. Considering that there are still twists and turns in the current recovery of the property market, and at the same time, the remaining insurance delivery projects are facing problems such as low saleable value and uneven quality. Subsequent insurance delivery still depends on the policy to continue to advance.
The decline in sales continues to narrow, and the policy is expected to continue to improve.
In September, the sales area and sales volume of commercial housing in a single month increased by 47% and 42%, respectively, from the previous year, and decreased by 10.1% and 13.6% respectively. The monthly decline in sales area narrowed for 3 consecutive months. Looking at the subregion, sales area growth rates in the eastern, central, western, and northeastern regions in September were -12.6%, -10.3%, -6.4%, and -6.4%, respectively. Since September, Guangzhou and many other Tier 1 and 2 policies have successively loosened purchase restrictions, compounded by the traditional peak marketing season, driving a recovery in property market transactions in September. However, there are still twists and turns in the subsequent recovery. According to Kerri's research, 22 key cities traded 1.37 million square meters during the Mid-Autumn Festival and National Day holidays, down 31% from the previous month and 23% from the previous year. On the 17th of October, the average daily sales area of new homes in 50 mainstream cities fell 32% year-on-year. The decline was close to September, and subsequent policy support is expected to continue to increase.
In terms of individual stock investment,The short-term proposal focuses on policy game opportunities. In the medium to long term, we continue to be optimistic about high-credit housing enterprises such as Poly Development (600048.SH), China Merchants Shekou (001979.SZ), Yuexiu Real Estate (00123), Huafa Co., Ltd. (600325.SH), etc.; at the same time, it is also recommended to focus on property management enterprises and industry chain opportunities, such as Poly Property (06049), investment savings (001914.SZ), and Dongfang Yuhong (002271.SZ).
Risk warning:1) Property market recovery is less sustainable than expected risk: Recent property market recovery is fatigued. Current consumer expectations for the economy and revenue are weak, or sales fall short of expectations; 2) Liquidity problems of individual housing enterprises ferment and chain reactions exceed expectations: if policies are strong and property market restoration falls short of expectations, enterprises with high financial pressure may still experience debt default/rollover situations; 3) Short-term fluctuations in the real estate industry sales risk: If the market continues to diverge, most housing enterprises add insufficient land storage scale, which will have a negative impact on the supply volume of the subsequent industry., investment, commencement of construction, completion etc.