Bank of China International stated in the report that according to data from Keiju, major developers showed weak contract sales performance in September. On a month-on-month basis, overall contract sales remained stable or grew by an average of 3%. Considering the seasonal peak of September and October, this growth rate is lower than expected. However, political efforts to stabilize the real estate market have boosted mainland real estate valuations and may continue for a longer period.

The bank pointed out that high-quality state-owned enterprises such as Poly Property Group (00119.HK), China Overseas Land & Investment (00688.HK), Agile Group (01109.HK), Greentown China (03900.HK), Country Garden International (01908.HK), and Yuexiu Property (00123.HK) experienced a year-on-year decline of 33% in September, further expanding from 19% in August. All monitored property companies saw a year-on-year decline in monthly sales, with only Shimao (00813.HK) achieving growth due to a low base. Greentown's 5% decrease in unit sales performed better than its peers. The bank believes that the policies implemented in the 924 document to reduce existing home loan interest rates and second-home down payment ratios will help boost sales performance in October, especially in first-tier cities.

The bank mentioned that following the policies in the 924 document, the Political Bureau held a meeting on September 26, clearly stating the intention to stabilize and revitalize the real estate market. Proposed measures include adjusting housing purchase restrictions, lowering existing home loan rates, improving land, financial, and tax policies, and promoting the establishment of a new model for real estate development. The bank believes that this policy demonstrates a commitment to stabilizing the real estate market and anticipates more supportive policies to be introduced soon. While past policy response times have been 3 to 8 months, the bank expects that this time the market may need a longer period, such as 6 to 12 months, to reverse the market's inherent expectations and revitalize the real estate and land markets.

The bank noted that the policies outlined in the 924 document led to a rebound in AH stocks and signals from the Political Bureau stimulated the performance of the real estate and other industries. The developer stocks covered by the bank have already risen by 34% to 72%, reflecting improved market sentiment and potential fundamental improvements. Although fundamental factors will need time to observe in the future, the bank believes that revaluation will occur first and will continue for a longer period. They remain bullish on China Overseas Land & Investment (excellent sales performance and land acquisition policy), Greentown China (faster profit growth), and Longfor (00960.HK) (new business model). However, they caution investors to be vigilant about recent profit-taking and risks associated with equity financing activities.