Since the State Financial Commission set the tone for real estate regulation and control at a major meeting on March 16, various localities have also introduced policies related to the property market, and the policy of the property market has become loose. Under this influence, the A-share real estate sector has also begun to continue to strengthen.
According to statistics, the real estate sector closed out 11 yang lines in 13 trading days, and the cumulative increase of the plate in just half a month reached a staggering 33%. In terms of individual stocks, from Songdu shares to Tianbao Infrastructure, from Sunshine City to CCCC Real Estate, bull stocks emerge in an endless stream.
But the policy is picking up, how is the real estate industry performing? Can it match the performance of the stock market? Is the future development of the industry still worth promising? Let's take a look at the questions.
In the first quarter of 2022, the sales list of housing enterprises was released
Recently, with the official conclusion of the first quarter, the sales of housing enterprises in the first quarter of 2022 have also surfaced, and the sales list of housing enterprises has finally been released.
The top 10 in the sales list are: Country Garden, Vanke Real Estate, Poly Development, Sunac China, China Overseas Real Estate, China Merchants Shekou, China Resources Land, Gemdale Group, Greentown China and Longhu Group.
In March 2022, the downward pressure on China's real estate industry continued, and the year-on-year decline in corporate sales further expanded compared with January and February. TOP100 housing enterprises only achieved sales of 511.54 billion yuan in a single month, an increase of 27.4% month-on-month, an increase significantly lower than the same period in previous years; a year-on-year decrease of 52.7%, an increase of 5.5 percentage points from the decline in February; and a decrease of 2.6% compared with the scale of performance in January.
In terms of cumulative performance, the overall performance scale of the top 100 housing enterprises in January-March decreased by 47% year-on-year, which was also lower than the same period in 2020, and the first quarter started dismal.
Specifically, in the first quarter, more than 80% of the top 100 housing enterprises had a year-on-year decrease in cumulative performance, of which nearly 40% of the enterprises fell by more than 50%.
In terms of profitability, affected by the new crown epidemic, the continuous real estate regulation and control policies, and the high costs of various types, the average net profit margin and the average return on net assets of the top 100 enterprises decreased by 2.2 and 1.8 percentage points respectively compared with the previous year, and the profitability continued to decline.
In terms of liabilities, the "three red lines" put forward the top 100 enterprises to actively respond, through early repayment of debts, adjustment of debt structure and other ways to reduce the scale of debt, the average value has been basically compliant. The average asset-liability ratio and net debt ratio of the top 100 enterprises excluding accounts received in advance were 69.5% and 77.1%, respectively, down 0.6 and 3.6 percentage points from the previous year, respectively; the cash short-term debt ratio was 1.6, up 0.1 from the previous year, and the overall stability was good.
Overall, although the current policy has a trend of easing and improving, the overall supply and demand and transactions in the market in the short term have not yet shown obvious signs of warming.
There are two main reasons for the performance of the real estate sector in the stock market: first, the policy recovery, which makes the real estate sector return to the investor's vision, and the funds have flowed in sharply; second, the dilemma after the big fall has reversed. From the historical experience, real estate stocks are not absolutely related to corporate fundamentals, on the contrary, the market will always make choices in advance, and the previous sharp decline and the recent relaxation of policies have given investors the opportunity to "rush away" in advance.
Therefore, although from the data level, the performance of housing enterprises is not good, the expectation of the future recovery of the industry has been deeply rooted in the hearts of the people. Of course, for investors, the risks behind the "rush" behavior cannot be ignored.
The current overall situation of the real estate market
After looking at the performance of housing enterprises, let's take a look at the overall situation of the industry.
The data shows that in March 2022, the overall real estate market was still sluggish, and the transaction area of commercial housing in 30 key monitored cities increased by 48% month-on-month and the year-on-year decline expanded to 47%.
The first-tier city market fell silent, with transactions increasing by 7% month-on-month and extending to 49% year-on-year. Transactions in various cities continued to run at a low level, with a year-on-year decline of around 50%. Subject to the repeated epidemic prevention and control, the real estate markets in Shanghai and Shenzhen are in a "semi-suspended" state, and the year-on-year decline in transactions has expanded significantly. Transactions in Beijing and Guangzhou also fell short of expectations, with weak market performance in early and mid-March, with the average dematerialization rate of newly opened projects as low as 30%.
However, it is worth noting that with the relaxation of resident mortgage loans, most banks have lowered mortgage interest rates and shortened the lending cycle, and the Beijing and Guangzhou markets have begun to warm up in the second half of the year, but the overall market heat is far from the same period last year.
The markets in 26 second- and third-tier cities showed weakness, with transactions increasing by 56% month-on-month and extending to 46% year-on-year declines. Limited by the high base of the same period last year, the superimposed domestic epidemic rebounded, more than 60% of the second- and third-tier cities were cut year-on-year, and Changchun, Changzhou and other countries fell by more than 70% year-on-year.
Some urban markets with better epidemic control have stabilized, such as the year-on-year decline in Haikou transactions narrowed to 3%. Another example is the transaction volume in Xi'an, an increase of 32% year-on-year, the average dematerialization rate of newly opened projects reached 50%, and hot plates such as high-tech and port areas sometimes have projects "daylight".
In addition, the pressure city does have a warming up in the market after the rescue policy is implemented, but the duration is relatively short, and the side reflects that the transformation of the city's strength and weakness depends largely on the market supply and demand. Typically, such as Zhengzhou, the transaction volume in the first half of the month rebounded significantly, but because the property market supply far exceeded demand, the transaction in the second half of the month fell again, and the average dematerialization rate of newly opened projects was as low as 20%.
Overall, the overall situation of the real estate industry is still not very optimistic, and the performance differentiation between first-tier cities and second- and third-tier cities is also relatively large. In the case of the continuous impact of the epidemic and the low consumer sentiment, the recovery of the property market may still take a lot of time.
Brokerage: High-quality housing enterprises are expected to usher in a double rise in quantity and quality
Looking back at the stock market, after the Financial Commission set the tone on March 16, many places introduced economic stability maintenance measures. The stock market has risen in response, but after the recent sustained rally, is there still a performance opportunity in the real estate sector?
First of all, it is certain that although the real estate sector has been internally differentiated after the short-term sharp rise, the market is indeed difficult to say end. In the short term, before the land market fully recovers, the pace of policy relaxation may not stop, and there are still performance opportunities in the real estate sector under the emotional stimulation. However, in the medium and long term, with the withdrawal of the fast turnover model from the historical stage, the era of rapid development of the industry has ended, and the leading housing enterprises with stable operation and outstanding comprehensive strength in the future are expected to benefit.
Many brokers have relatively optimistic expectations for the trend of the real estate sector.
Shenyin Wanguo Securities mentioned that real estate is still a pillar industry of the mainland's national economy, and the industry itself and the industrial chain contribute nearly 30% to GDP. In view of the recent frequent government voices to emphasize the stabilization of the economy, stable growth, prevention and control of financial risks, and the stability of the economy is in urgent need of stable real estate, it is expected that the policy repair at both ends of the supply and demand of the real estate industry is expected to accelerate, and will promote the optimization of the industry pattern, the concentration will be further improved, and high-quality housing enterprises are expected to usher in a double rise in quantity and quality.
Ping An Securities pointed out that in the medium and long term, with the withdrawal or contraction of some housing enterprises in the middle of this round of pain, the overall pattern of the industry is expected to be optimized, and the market share and profitability of brand housing enterprises with financing and control advantages are expected to be improved. The development sector pays attention to high-credit leading housing enterprises with strong short-term pressure resistance and outstanding medium- and long-term competitive advantages, and moderately pays attention to flexible second-line targets.