Zhongtong Finance learned that Minsheng Securities released a research report stating that the overall real estate industry fundamentals are at the bottom this year. Most corporate sales did not experience high growth at the entity level, and performance provisioning may continue. Combined with continued policy stimulation and continuous market bottoming, it is expected that the sector will have sustained investment value in the second half of 2024. The industry maintains a 'recommended' rating and recommends continuing to focus on opportunities related to real estate development and property sectors. As for targets, it is recommended to pay attention to the following: 1) Sufficiently provisioned targets, such as China Merchants Shekou Industrial Zone Holdings (001979.SZ), which had a relatively large amount of provisioning in the early stages; 2) City investment enterprises that benefit from relaxations in first-tier city policies and direct bullish trends, such as Beijing Urban Construction Investment & Development (600266.SH), and so on.

The main points of the Minsheng Securities report are as follows:

Policy level: Loosening shows the determination to control the market.

From January to April 2024, a series of accommodative policies were introduced at the central and local levels, including operating property loans and restrictions on land transfers, which are favorable to developers; demand-side relaxation policies such as reduced down payments and opening up limits on home purchases were also implemented.

The '517' policy covers destocking of the supply side and lowering thresholds and costs on the demand side. Central accommodative policies have once again increased and guided the development of 'renewal for old' and 'abolition of purchase limits' policies at the local level. Compared with the relaxation of previous cycles, this round of relaxation is more significant and the intent to control the market is stronger.

Market level: Policy superposition, low base effect, and a smaller year-on-year decline in new home sales in the second half of the year; policy supports stable prices and volume in the second-hand market.

New homes: June is the mid-year sprint point for real estate companies, and marketing efforts may increase. Coupled with policy relaxation, it is expected that the total transaction volume in June will be stable with an increase. The absolute amount is expected to hit a new high this year.

Second-hand homes: Benefiting from accommodative demand-side policies at the central and local levels, the iceberg index has improved somewhat, and the average listing price in first-tier cities has slightly increased. With the reinforcement of the 'renewal for old' policy, second-hand house prices are expected to stabilize.

Real estate enterprises: Shrinking land acquisitions and lowering expenses, sales rebounding and increasing revenues, and performance may rebound after provisioning.

Real estate developers urgently need to improve land acquisition willingness: From January to May 2024, the total investment amount of the top 100 real estate developers' land acquisitions has decreased both sequentially and year on year, there have been frequent occurrences of new faces in the top 30, and leading developers have strictly controlled their pace of land acquisitions.

Sales fluctuations have rebounded since February 2024: The total sales amount of the top 20 real estate developers has increased sequentially, and the market is gradually warming up.

Risk warning:

Risk of tightening regulatory policies, risk of changes in pre-sale models, risk of significant price declines, risk of rising land prices, risk of tightening overseas financing, and further risk of market downturn.