The Zhitong Finance App learned that Guotai Junan released a research report saying that the Bureau of Statistics released industry data for the first 2 months. Among them, the sales amount/area performance that was more concerned about was better than the performance of leading real estate companies. The real estate industry showed obvious resilience, and long-term risks were manageable. Combining existing guaranteed housing, it is expected that in the future, off-term housing, existing housing, second-hand housing, and guaranteed housing will form a sales-oriented supply side. Continue to pay attention to the restructuring progress and small-cap value of the industry. Xuhui Holding Group (00884) and Sunac China (01918), etc. benefiting from the restructuring category, also suggest exploring small-cap value opportunities, and continue to recommend park companies, including China News Group (601512.SH), China Merchants Shekou (001979.SZ), and leading housing enterprises recommend Poly Development (600048.SH).

The sales data, which the market paid more attention to, was clearly better than expected. The year-on-year growth rate of sales amount/area in the first 2 months was -29.3%/-20.5%, which is significantly better than the housing enterprise data monitored by Kerry, indicating that the industry is still resilient. According to Kerry's monitoring data, in the first 2 months, the sales amount of leading housing enterprises mostly fell by around 40%, while the industry declined by 29.3%, which is significantly better than that of leading housing enterprises. It is implied that the bottom housing enterprises performed better. Considering that the housing enterprises at the end are all local enterprises, it also shows that previously the risks in the industry were mainly concentrated on rapidly expanding national housing enterprises. With the release of risks, the current industry is more reflected in resilience.

There have been significant improvements in data adjustments. It is expected that there will be fewer checkouts and non-saleable mortgaged homes, and data disturbances will continue to decrease. Consistent with the full year of 2023, there is still some degree of data revision. For example, if the 2023 sales area is adjusted retroactively according to the year-on-year growth rate of sales area, the same period in 2023 will decrease by about 8.32 million square meters, but compared to the current area of 113.69 million square meters, the adjustment is not significant, and less than the adjustment of 2023 to 2022. As a result, the industry is gradually improving due to phenomena such as check-out and non-sale mortgaged housing.

Investment and development were the highlights, and the year-on-year decline began to narrow. Cathay Pacific Home Safety believes that it is the reduction in land drag and the rapid end of the downturn period, but it is necessary to consider the impact of the reduction in future construction area brought about by the continued decline in sales. In real estate investment, the main share of physical investment is high, but due to large marginal changes in land transactions in the past two years, the share of land transactions has been low and large changes. As the share of land transactions falls further, the marginal impact becomes smaller. Relatively resilient physical investment can support the gradual narrowing of the decline in real estate investment in 2024. Also, considering the increase in guaranteed housing, real estate investment is expected to perform well among the main indicators.

The area to be sold is growing rapidly. It is expected that subsequent housing will have four major categories on the supply side, including off-plan housing, existing housing, second-hand housing, and guaranteed housing. It is expected that existing housing will reach a certain scale in 2025. The current area for sale is 760 million square meters, of which 410 million square meters are residential, up 15.9% and 23.8%, respectively. If the current growth trend continues, the possible decline in combined sales corresponds to the reduction cycle. Existing houses represented by the area to be sold will form one of the main parts of the housing supply.

Risk warning: Market demand is declining at an accelerated pace.