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华创证券:如何看2024年地产竣工?

Huachuang Securities: How do you view the completion of real estate in 2024?

Zhitong Finance ·  11/22/2023 14:54

Real estate completion in '24 may be under pressure

The Zhitong Finance app learned that Huacheng Securities published a research report saying that the completion of real estate in '24 may face pressure, focusing on urban village renovation and housing enterprises taking the lead in solving historical land storage problems. The demand side in September 2023 was due to the relaxation of urban policies, and the recovery in real estate sales was slightly lower than expected. Considering the decline in sales area in 2022, the area completed in 2024 is expected to fall 9% year on year. Total real estate data is under pressure, while urban village renovation responds to real demand, yet policy breakthroughs are needed; sectorial opportunities are less likely to occur in 2024, and the difficulty of policy games has also increased, focusing on relative certainty opportunities: 1) Urban village transformation; 2) Some housing enterprises are expected to take the lead in solving historical land storage issues, and the valuation center is expected to improve (focus on Yuexiu Real Estate) 00123), heaven and earth source (600665.SH), etc.

▍ The main views of Huacheng Securities are as follows:

There is a big gap between the completed area of commercial housing and the sales area of commercial housing, production of flat glass, completion of micro housing enterprises, and revenue performance.

1) The sales area of commercial housing increased steadily after 2015, while the completed area remained around 1 billion square meters. There was a “scissor gap” between sales and completion. By 2021, the sales area of commercial housing was about 1.8 billion square meters, and the completed area was 1 billion square meters in that year.

2) The lead in flat glass production to a certain extent reflects actual completion performance. The cumulative increase in flat glass production from 2015-2021 is about 38%, which is basically in line with the increase in sales area.

3) In 2012, the total sales and completion area of the six typical housing enterprises accounted for about 3% of the country's commercial housing sales and completed area, while the share of completion after 2015 was significantly ahead of sales. In 2020, the sales area of the six housing enterprises accounted for 9% of the country's commercial housing sales area, while the completed area accounted for 17% of the country; in addition, the main business revenue of real estate development enterprises announced by the Bureau of Statistics also increased steadily.

Judging from the difference between the growth rate of completed area, the growth rate of newly started area, and the growth rate of sales area, it may not be strict to judge that there is a completion backlog.

1) The market believes that the year-on-year growth rate of new construction has rebounded since 2018, but the completion growth rate has remained at the bottom. Thus, it is believed that housing enterprises have increased commencement and at the same time greatly lengthened the completion cycle. The explanation behind this is mainly that after the new asset management regulations, housing enterprises increased new construction, increased sales payback, slowed completion, reduced construction and security expenses, and increased cash flow.

2) However, from a microscopic perspective, the completion area of the 12 major housing enterprises increased by 34% in 2018, and no decline in completion was observed; in addition, the growth rate of flat glass production, the growth rate of the main business revenue of the entire industry, and the revenue growth rate of the A-share real estate sector were +10%, +18%, and +20%, respectively, and it is impossible to verify that the completion growth rate in 2018 was greatly affected by the lengthening construction cycle of housing enterprises.

The fitted data showed that the lengthening completion cycle did not have a significant impact on the completion volume of steady housing enterprises.

1) Select the sales and completion area of the three housing enterprises, Vanke, Poly, and Jindi, and Jindi, and establish a regression model using the T-phase completion area and the T-1 and T-2 sales areas. The data interpretation is strong. R Square is over 90%. This method fits the completed area well, and it is also verified that it is basically 1-2 years from sales to completion.

2) In this model, the fitting results before 2017 were slightly lower than the actual completed area of the housing enterprises, and the fitting results after 2017 were slightly higher than the actual completed area of the housing enterprises, reflecting a certain slowdown in completion after 2017, but did not reach the level of a large backlog.

3) Bringing the above completion model into the national sales area calculation theoretical completion value, it is more in line with the growth rate of flat glass production, which is one year behind, or may better reflect the actual completion trend.

The completed real estate area in 2024 may be under pressure. Under a neutral assumption, the completed area is -9.3% compared to the same period last year.

1) Judging from the sales fit completion model, the theoretical completion area may have declined 26% year on year due to a sharp decline in sales area in '22 and '23, or a sharp decline in completion reserves in '24.

2) The above model does not take into account the requirements of the Baojiao Building and the slowdown in the backlog of completion after 2017. It uses the 2011 theoretical completion area as the basis, uses the flat glass growth rate as the actual completion rate, measures the revised predicted completion value, and takes into account the gap between the predicted completion value after each year and the theoretical completion value. The backlog is expected to be completed in 2018 or reach 1 billion square meters until the end of 2023.

3) Three hypotheses are made for predicting completion in 2024: under pessimistic, neutral, and optimistic hypotheses, the backlog of completed areas will be released year by year by year. It is estimated that the completed area for 24 years will be -16.6%, -9.3%, and 0% compared to the same period last year.

Risk warning:

The regression model was obtained using samples of sales and completion data from three typical housing enterprises. Due to the small sample size, the measurement results may be biased and do not represent the entire industry; in '24, the progress of the bailout building fell short of expectations, and the backlog of completed area was not sufficiently released.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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