According to the news app, China Ping An Securities released a research report stating that as of the current point in time, the real estate sector has retreated to its lowest point in April, and sales in key cities have gradually improved recently. Coupled with the important meeting to be held in July, July may be a new round of competition window, and the sector's performance can be moderately optimistic. The stock suggestions include high-quality real estate companies such as China Overseas Development (00688), China Merchants Shekou Industrial Zone Holdings (001979.SZ), and Yuexiu Property (00123) that actively optimize land reserves, have basic support for their fundamentals, and still have room for valuation repair. It is also recommended to focus on subdivision leaders such as brokerage KE Holdings-W (02423), construction contractor Greentown Management Holdings (09979), and property management Poly PPT Ser (06049).

Ping An Securities' view is as follows:

Multiple factors have driven a significant increase, and a new round of competition window has arrived:

Since the end of May, the real estate sector has continued to adjust, and the market's concerns mainly include: 1) Doubts about future policy space after the announcement of the policy on May 17th; 2) Under the backdrop of declining income and house prices, the market lacks confidence in the fundamental recovery; 3) The market has concerns about the existence of funds for receiving and storing, and the speed at which they will be put into practice. But as we mentioned in our weekly report last week: 1) As of last Friday, the sector has retreated to its low point in April; 2) Over the past two weeks, the real estate market has continued to improve, with new home sales in 50 cities increasing by 67% compared to the previous week, and weekly sales hitting a new high for the year. There is a possibility that new home sales in key cities may turn positive in July due to a low base in July; 3) July is the window period for important meetings, and it is worth looking forward to new policies and the accelerated implementation of receiving and storing. Today, the real estate sector has risen sharply, and it is not ruled out that some speculative funds have entered the market in advance. Once again, we emphasize that July may be a new round of competition window for the sector, and the sector's performance can be moderately optimistic.

Pay attention to receiving and storing in the second half of the year, there may be unexpected possibilities for clearing out inventory:

The People’s Bank of China and the Ministry of Housing and Urban-Rural Development held meetings in June to accelerate receiving and storing. If the residents’ purchase of houses is lower than expected, government receiving and storing may be the only way to clear out inventory. The market is concerned about the insufficient amount of funds and the financial pressure on local governments. We believe that 1) The first- and second-tier cities are the main battlefield for receiving and storing. If only small-sized ready-to-occupy houses are considered, the 500 billion yuan may be relatively sufficient. If local governments have their own funds, the actual amount may exceed 500 billion yuan; 2) Considering that loans can be extended, if banks receive and store loans of 500 billion yuan at a 3% loan interest rate, the annual interest rate is estimated to be 15 billion yuan, and the short-term repayment pressure is relatively limited; 3) In the context of clearing out inventory and the sector's current undervaluation and low holdings, the capital markets may also perform well. At present, the market still has a large difference of opinion on the actual implementation effect of receiving and storing. We believe that there may be unexpected possibilities for clearing out inventory in first and second-tier cities.

Risk reminders: 1) Risks of policy support falling short of expectations; 2) Risks of the real estate market not recovering as expected; 3) Risks of individual real estate companies' liquidity problems fermenting and causing chain reactions that exceed expectations.