Source: Ding Zuyu comments on the property market

Property stocks are showing their fragile side.

As of July 31, 46 of the 59 listed property management companies had fallen from the beginning of the month, the biggest drop of 68%, according to Corey management data.

Since the beginning of the year, the share prices of 59 listed property companies have fallen by 51, while only 3 have risen slightly.

Affected by the decline of the real estate industry, the upward momentum of property stocks has been suppressed again.

1

Property stocks fell across the board.

The listing of property management enterprises is "ebbing".

According to the monitoring of Kerry property Management, as of July 31, 2022, the total number of listed companies in the property management industry has reached 59, 4 enterprises have been successfully listed this year, and another 8 watch delivery companies are queuing up.

Property stocks generally fell in July.

From the chart below, it can be seen that the core index and the stock price of property enterprises have fallen day by day since the beginning of the month, with a slight correction around July 22, but by July 27, the share price of property enterprises has plummeted again. Overall, non-Hong Kong stock exchange companies fell 12%, Hong Kong stock exchange companies fell 23.1%, and the Hang Seng property Services and Management Index fell 30.1%, both larger than the Hang Seng Index (- 7.8%) and Shanghai and Shenzhen 300 (- 7.0%).

Focusing on 59 listed property companies, share prices fell by an average of 17.4% in July.

Among them, the share prices of 46 companies fell by nearly 80%, while the share prices of only 7 companies rose. The biggest drop was Ligao healthy living, with a drop of 68.0%. In addition, Fangyuan Life Services and Country Garden Services Holdings's share price also fell by more than 50%.

The situation is even less optimistic than at the beginning of 2022. Of the 59 property enterprises, 51 fell, and 17 fell by more than 50%.

Zhengrong service fell the worst, falling 86.8% from the beginning of the year to July 31. Compared with its peak share price, Zhengrong service share price has fallen 90.58%.

The second half of 2020 can be said to be a highlight moment for property management enterprises, when the share prices of most property enterprises reached their peak. In 2021, due to the shock of the main business of real estate, property stocks fell back quickly. As of July 31, 2022, share prices fell below 70% from their highs everywhere.

We compared the latest share prices of 29 listed property companies with those of their peak, and it is expected that the share prices of 29 listed property companies have fallen by an average of 61% from their peak.

There are six property companies whose share prices have fallen by more than 80% since their peak, namely, time neighborhood, Zhengrong Service, Kaisa Beautiful, Baolong Business, Color Life, and Luo Star Group. Among them, time neighborhood shares fell the most from their peak, down 90.71%, even if they were down 78.6% from their first day of trading.

2

The total market capitalization of 59 property enterprises has dropped by 30% compared with the beginning of the year.

Corresponding to the property stock price, the valuations of 59 listed property companies have fallen again.

As of July 31, the total market capitalization of 59 listed property enterprises was 342.03 billion yuan, down 22.8% from the end of last month. The average price-to-earnings ratio PE (TTM) and price-to-earnings ratio PE (LYR) were 11.4x and 11.6x respectively, both lower than those at the end of last month (13.9x and 14.1 times).

At the beginning of 2022, Country Garden Services Holdings's total market capitalization reached 128.5 billion yuan, and he was the only property enterprise whose market capitalization exceeded 100 billion yuan at that time. Subsequently, Country Garden Services Holdings's share price fell, and its market capitalization fell all the way to 100.7 billion yuan in early July. On July 19th, China Resources Mixc Lifestyle Services surpassed Country Garden Services Holdings in market capitalization for the first time. As of July 31, Country Garden Holdings's market capitalization was only 50.59 billion yuan higher than at the beginning of the month. The market capitalization dropped to the third place among the 59 property companies since the beginning of the month.

Compared with the beginning of the year, the total market value of 59 listed property enterprises fell by 32%, and the market value of 47 listed property enterprises fell by 32% compared with the beginning of the year. The market capitalization of Zhengrong Service dropped the most, reaching 86.2%. There are only eight property companies whose market capitalization has risen since the beginning of the year, and the market capitalization of Yuexiu service has increased by 15.5% since the beginning of the year.

Compared with the changes in market capitalization on the first day of listing, the market capitalization of 44 property enterprises fell compared with the first day of listing, with the largest drop of 89.4%, which was followed by Zhenxing Group with a decline of 86.3%.

It is worth noting that as of July 31, there are still 15 property enterprises whose market capitalization is higher than the first day of listing. Among them, China Shipping property rose the most, with the market capitalization up 710% from the first day of listing. The market capitalization of Greentown Service, Xuhui Yongsheng Service and Binjiang Service also increased by more than 200%.

Throughout the performance of the capital market of 59 listed property enterprises, many property stocks are obviously shocked by the real estate owners, which is also the fragile side of the property management industry in the capital market performance, especially when the real estate parent company encounters a liquidity crisis. property stocks have been comprehensively suppressed, leading the industry in decline, while the property management companies with strong real estate parent companies have led the way in the overall capital market performance.

On the whole, the property management industry is still dependent on the main real estate industry, and the stability pattern of the industry still needs to be further strengthened.

The capital market has cooled sharply since the second half of last year, and most property stocks are nearly halved from their peaks. in addition to repairing excessive valuations, downward pressure transmission in the real estate industry has also become an important reason.

The real estate industry is experiencing a difficult downward cycle, the uncertainty caused by the lack of market confidence has been extended to the property management industry, the overall capital market performance is not satisfactory, stock prices, valuation all the way down, as the property management industry "down the altar", in the future, while the industry continues to "squeeze the bubble", it also needs to stabilize the foundation.