The Zhitong Finance App learned that Fangzheng Securities released a research report saying that the beginning of 2024 has not yet reached its full strength, demonstrating the firm and unwavering confidence in the policy to stabilize real estate. Among them: demand side, Haikou and Shanghai ease purchase restrictions, financing side, support for the introduction of multiple innovative policies, supply side, continuous implementation of the three major projects, etc., and the other side, downgrade+ Pudong reform pilot promotion. Multi-end policies continue to catalyze in the short term, and comprehensive joint efforts form strong support. The bank believes that the current valuation of the industry is in a historically low range, and the ratio of low allocations to positions has been further expanded, but the industry has stabilized and has a policy environment, and the sector has sufficient rebound and flexibility.

Fangzheng Securities's views are as follows:

Although fundamentals are being adjusted, structural opportunities still exist, and second-hand housing transactions in core cities remain active.

The cumulative sales area/sales amount of commercial housing for the full year of 2023 was -8.5%/-6.5% year-on-year. Currently, sales in the industry are still under pressure due to slowing urbanization and a decrease in the number of newborns. However, according to the bank's high-frequency real estate data tracking, second-hand housing sales in 14 cities, including major core cities such as Beijing, Shenzhen, and Hangzhou, will continue to be high for three years in 2023. Focusing on recent data, the active popularity of second-hand housing transactions in core cities continues. As of January 23, 2024, the seven-day moving average of second-hand housing transaction area in Shenzhen was +123%, Nanjing +181%, Qingdao +116%, Suzhou +151%, and Xiamen +109% (historical data has been revised based on the 2024 Spring Festival to avoid the year-on-year impact of the Spring Festival effect). These data show that the current structural opportunities in the real estate industry deserve attention, and demand for property purchases in some core cities is still strong.

The multi-pronged policy continues to be catalyzed in the short term, and all-round joint efforts form strong support.

The beginning of 2024 is not yet full moon, and favorable policies related to real estate are in full force, demonstrating the firm and unwavering confidence in the policy to stabilize real estate, including:

On the demand side, Haikou and Shanghai relaxed purchase restrictions: ① On January 9, the Haikou Housing and Construction Bureau relaxed the property market control policy, and the “province with the strictest property market control” loosened purchase restrictions; ② On January 13, Qingpu District and Fengxian District of Shanghai relaxed their purchase restriction policies.

On the financing side, a number of innovative policies were introduced to support: ① On January 5, finance increased financial support for housing leasing; ② On January 13, the establishment of a real estate financing coordination mechanism was accelerated; ③ On January 24, operational property loans were improved and broken through in terms of quota and use.

On the supply side, three major projects continued to be implemented: ① On January 4, Shenzhen issued rules for urban village renovation, and the viable model for urban reform gradually became clear; ② At the beginning of January, the first batch of rental housing loan support programs in Qingdao piloted 1.85 billion yuan loans to support the acquisition of the first batch of 7 existing housing projects, involving a total of 2,319 housing units.

On the other side, downgrading+promotion of the Pudong reform pilot: ① On January 24, the central bank announced that it will lower the deposit reserve ratio by 0.5 percentage points on February 5 to provide the market with 1 trillion yuan of long-term liquidity; ② The Pudong Comprehensive Reform Pilot Program will lead the country to build a new economic system with a higher level of openness. The positive impact on the real estate industry is worth paying attention to, benefiting local state-owned developers.

Real estate risks are generally manageable, financing is smooth for central enterprises, and there is room for high-quality private enterprises to maneuver.

Although the industry's adventures are not over yet, I am concerned that: ① On the part of central enterprises, financing channels such as credit, bonds, and equity are open, and financing costs are low, and liquidity pressure is low; ② On the private enterprise side, the policy emphasizes “equal treatment” many times, and the establishment of a financing coordination mechanism may be an effective starting point to further strengthen mutual trust between banks and private enterprises. Recent breakthroughs in the use and amount of operating property loans are also beneficial to high-quality private enterprises with many operating properties, such as Longhu Group and Xincheng. The bank believes that controlling industry risk is a core prerequisite for restoring demand-side home buying confidence and enhancing the willingness of housing enterprises to invest and start construction. In a policy environment with a relatively open financing window, real estate risk may be manageable as a whole.

Valuation is in a historically low range, the ratio of low allocations to positions has further expanded, and the sector's rebound and elasticity is sufficient.

In terms of valuation: Stock prices in the real estate sector are constantly being adjusted. Currently, sector valuations are still in a historically low range, and there is plenty of room for valuation repair. Looking at the overall PE in the real estate sector, the latest PE of Shenwan Real Estate is about 11.9 times, which is still in the historical low range. Judging from the PE sector, the PE of Shenwan Real Estate is about 1.1 times that of the Shanghai and Shenzhen 300, which is also in the historically low range. In terms of fund holdings: In 2023Q4, public funds in the real estate sector held 36 billion yuan, down 26.08% from the previous month, and their holdings were 0.57 percentage points lower than the standard industry allocation ratio, and the low allocation margin increased. The bank believes that the current valuation of the industry is in a historically low range, and the ratio of low allocations to positions has been further expanded, but the industry has stabilized and has a policy environment, and the sector has sufficient rebound and flexibility.

Investment advice: The overall real estate risk is manageable, and the fundamentals are structurally supported. Under policy catalysis, we are optimistic that the real estate sector will continue to rebound.

In terms of targets, the core focus is: Pudong Jinqiao (600639.SH), Tiandi Source (600665.SH), I Love My Family (000560.SZ), and Poly Development (600048.SH).

In addition, it is recommended to focus on the following main lines: 1) Pudong reform-themed Chinese enterprises (600675.SH), Waigaoqiao (600648.SH), Shanghai Lingang (600848.SH), and Lujiazui (); 2) second-hand housing circuit shell-W (02423); 3) high-dividend C&D Co., Ltd. (USD), Nanjing Hi-Tech (Chengdu), and China International Trade (Singapore). 600663.SH 600153.SH 600064.SH 600007.SH

Risk warning: Policy implementation falls short of expectations; the stock market may be at risk of adjustment; the recovery of the property market falls short of expectations.