Judging from the market performance in recent years, the valuation center of high-quality real estate stocks is basically in the range of 7-10 times PE, while the current PE valuation is basically near the lower limit.
Zhitong Financial APP learned that founder Securities released a research report saying that the real estate beta market level has declined and selected Alpha targets in the context of the new era. In recent years, the Beta market level of the real estate sector has gradually declined, and the driving force of the market comes more from policy expectations than from fundamental factors. Judging from the market performance in recent years, the valuation center of high-quality real estate stocks is basically in the range of 7-10 times PE, while the current PE valuation is basically near the lower limit. The bank is optimistic about the beta market under the gradual development of the policy, and recommends paying attention to the targets with long-term alpha: I love 000560.SZ, 600665.SH, 000090.SZ and 001979.SZ.
The main points of founder Securities are as follows:
Property market fluctuation adjustment:At the beginning of the year, the property market gradually weakened after the spring, and began to repair weakly in the third quarter. 1) New home sales showed an N-shaped trend this year, ushering in a small spring in the first quarter, gradually weakening in the second quarter, weakening in the third quarter, and second-hand housing transactions were high in recent years. 2) House prices weakened again after rising in the first quarter. In September, the month-on-month declines of new and second-hand housing prices widened to 0.3% and 0.5%, respectively. 3) Housing enterprises fixed production by sales, and real estate investment continued to decline. In September, the total investment completed was-9.1% compared with the same period last year, and the cumulative construction area was-7.1%. 4) the land market was in the doldrums, and real estate enterprises focused on the core cities.
The differentiation between real estate enterprises has intensified:Head housing enterprises are more flexible when the property market picks up, and the sales and land acquisition performance of central state-owned enterprises are better than those of private enterprises. The property market rebounded in the first quarter, and the gap between the monthly sales of TOP10 housing enterprises and TOP51-100real estate enterprises widened to + 49.9pct in February 2023; the difference between central state-owned enterprises and private enterprises widened to + 122.9pct in February 2023; in terms of land acquisition, the overall intensity of land acquisition by real estate enterprises declined, and central state-owned enterprises still played the main role.
The policy will be carried out gradually:Starting from the second half of the year, the policy is intensive and there is still room for the future, and the transformation of villages in the city is expected to stabilise the property market. Since the second half of 2023, the multi-level real estate policy has been fully implemented. Looking to the future, the policy still has room for development, mainly as follows: 1) in first-tier cities, except for the non-core areas of Guangzhou and Jinshan District of Shanghai, purchase restrictions have not been relaxed in other areas of first-tier cities; 2) there is still much room for downpayment ratio and mortgage interest rates in first-tier cities; and 3) there is still room for relaxation in some core second-tier cities.
Medium and long-term prospects:Real estate sales have been fully adjusted for two years, with support from the demand center of 10-1.2 billion square meters per year. The property market has been adjusted for two consecutive years in 2022 and 2023, and the sales area of commercial housing has dropped significantly or has been close to the level of potential reasonable demand. Real estate sales area in the improvement and renewal of demand support, the future demand center is expected to maintain 10-1.2 billion yuan per year. The real estate industry will make a smooth transition to a new development model that takes into account efficiency, fairness, stability and quality.
Outlook for 2024:Under the neutral forecast, the sales area of commercial housing in 2024 is + 2.9% compared with the same period last year, and the development investment is + 3.4% compared with the same period last year. The real estate policy is gradually coming into force, and now it is getting closer to 2014, and the bank believes that 2024 may be the year of real estate stabilization. The bank estimates the area of commercial housing sales in 2024 under optimistic, neutral and pessimistic forecasts of + 5.2%, + 2.9% and-3.5% respectively compared with the same period last year. In addition, by forecasting the newly started area, land purchase fee, construction intensity, completed area and other indicators, the amount of development investment in 2024 is + 6.5%, + 3.4% and-0.1% respectively compared with the same period last year under optimistic, neutral and pessimistic forecasts.
Risk Tips:The policy fell short of expectations; the real estate credit risk spread; the property market rebounded less than expected.