Main points of investment
The prosperity and length of the second-hand housing market in core cities will exceed expectations, and second-hand housing in core cities will be the main body of credit creation in the future. 1, from a macro point of view, banks must add leverage to real estate, economic downside credit creation depends on real estate logic, and second-hand housing in core cities will be the main body of credit creation in the future. 2, from a micro point of view, the recent warming trend of second-hand housing transactions in core cities is obvious. The company's main layout city, Shenzhen, although the year-on-year data are general, but the upward trend of some leading indicators is obvious. Since the beginning of this year, the number of new passengers has increased by 45% compared with the same period last year, which has been up for four consecutive months. The transaction area of second-hand houses in Zhuhai increased by 8.4% from January to February compared with the same period last year. Indicators such as the proportion of price increases, new passenger volume and trading volume show that the fundamentals of core cities are trend recovery, not seasonal changes.
The good layout of the core cities of Q Housing Network will fully benefit from the general trend of second-hand housing in the core cities. The company mainly distributes 16 core cities and has more than 20,000 brokers. Especially in South China, the competitiveness is more obvious. Among them, Shenzhen ranked 1st with a share of 19%, Zhuhai ranked 1st with 20%, and Zhongshan, Guangzhou, Foshan, Dongguan and Shanghai also steadily improved their market share and ranking.
Q Fangwang second-hand housing business has three core advantages: 1, the key layout of cities to form strong regional barriers; 2, platform empowerment, the most benefit from the warming of the industry; and 3 leading O2O model, with strong joining genes. Q Housing Network ranks first in market share in Shenzhen and Zhuhai, forming a strong regional barrier. With the help of the advantages of platform system and model, the market share of small and medium-sized intermediaries will be eroded gradually. from the medium-and long-term development of the intermediary industry, the market share of leading intermediaries such as Q Housing will continue to increase.
Another important part of the company's new housing agency business will also benefit. The warming of the second-hand housing market will also drive the new housing market, and the new housing agent sales business will also benefit. The company's new housing business is also highly competitive in core cities. In 2016, the market share in Shenzhen, Zhuhai and Shanghai was 12.8%, 8.8% and 6.7% respectively, with a commission rate of more than 2%.
Investment suggestion: second-hand housing in core cities will be the main body of credit creation, and the prosperity and length of second-hand housing in core cities will exceed expectations. Q Housing Network layout of 16 core cities, is an important beneficiary target. And focus on the layout of cities to form strong regional barriers, with the help of core advantages, the medium-and long-term share will continue to increase. We estimate that the company's EPS in 2018 and 2019 will be 0.33 yuan and 0.47 yuan respectively, and the corresponding PE will be 25.1 times and 17.8 times respectively according to the closing price on March 22, 2019, giving it a "prudent overweight" rating.
Risk hints: substantial tightening of monetary policy, stringent regulation and control of core cities, below-expected performance risk, goodwill impairment risk, reduction risk