Since this year, the land market in core cities has been hot. The national land auction premium rate has remained above 10%. The amount of land acquired by the top 100 housing companies in January-April increased by 42% over the same period last year, and investment confidence has also improved.
The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that in 2024, real estate development companies were still at the bottom of their performance due to falling gross margins and increased depreciation, and there was no significant improvement in the first quarter of this year, yet development and property rental housing companies with core city layouts still achieved performance growth. Due to the contraction of business and the contraction in the scale of financing, housing enterprises continued the trend of reducing leverage in 2024, and the debt structure was optimized in the first quarter of this year, and the interest-bearing debt ratio declined. The ability of central enterprises to repay their debts is still relatively stable. Against the backdrop of declining financing costs, strong credit housing enterprises will still have a clear competitive advantage in the future. The sales concentration of the top 100 real estate companies continues to decline, and the market share of leading real estate companies (Top 10) is relatively stable. Since this year, the land market in core cities has been hot. The national land auction premium rate has remained above 10%. The amount of land acquired by the top 100 housing companies in January-April increased by 42% over the same period last year, and investment confidence has also improved.
CITIC Construction Investment's main views are as follows:
Housing companies' overall losses were mainly due to a decline in gross margin and an increase in accrued impairment. Central enterprises and real estate companies deeply involved in core cities performed steadily and remained profitable, and there was a positive increase in the performance of property leasing and management housing enterprises in high-energy cities
In 2024, the performance of development housing companies continued to bottom out, and revenue and profits declined at an accelerated pace. The sample housing enterprises achieved revenue of 4.03 trillion yuan in 2024, a year-on-year decrease of 19%; net profit to mother was a loss of 371.9 billion yuan, an increase of 281.1 billion yuan compared to 2023. The increase in losses was mainly affected by the decline in gross margin and the increase in accrued impairment. The gross margin of the sample housing enterprises in 2024 decreased by 2.2 percentage points compared to the previous year, the estimated deduction value of A-share housing enterprises calculated 63.5 billion yuan more than the previous year, the change in the fair value of properties invested by Hong Kong stock listed housing enterprises lost 33.4 billion yuan more than the previous year, and there was no improvement in housing companies' performance in the first quarter of this year.
The trend of reducing leverage continues, and the debt structure was optimized in the first quarter
Housing enterprises are still in the stage of reducing leverage in 2024. The overall balance ratio of the sample housing enterprises at the end of 2024 was 71.6%, down 0.3 percentage points from the previous year. Among them, the debt ratio of central enterprises dropped a lot, and the debt ratio of private enterprises increased due to high losses. Housing companies' leverage reduction is mainly due to a decline in contract debt and a contraction in the scale of financing, but the interest-bearing debt ratio will continue to rise in 2024. Meanwhile, in the first quarter of 2025, the interest-bearing debt ratio of A-share development housing enterprises fell 0.9 percentage points from the end of last year, and there was a marginal improvement in debt structure optimization. In terms of solvency, the ability of central enterprises to repay their debts is stable, the liquidity risk of private enterprises is increasing, and strong credit housing enterprises will still have a great competitive advantage in the future.
The sales concentration of the top 100 housing enterprises declined, and the investment confidence of housing enterprises improved marginally
The concentration of the real estate industry continued to decline in 2024. The full-caliber sales of the top 100 housing enterprises for the year were 3.08 trillion yuan, down 27.4% year on year; the market share ratio was 36.3%, down 4.9 percentage points from the previous year, but the market share of leading real estate companies (Top 10) was relatively stable. The amount of land acquired by the top 100 housing enterprises in 2024 decreased by 31% year on year, and the investment intensity of the top 10 housing enterprises decreased by 7.1 percentage points compared to 2023. However, since this year, housing enterprises have actively replenished their positions. In January-April, the amount of land acquired by the top 100 housing enterprises was 428.5 billion yuan, an increase of 42% over the previous year, and investment confidence has improved.
The steady trend of the property market and the division of cities and enterprises will continue. Focus on the layout of core cities and companies related to commercial ownership and operation
Developers, property management companies, and intermediaries who are optimistic about the layout of core cities, focus on A shares: Binjiang Group, C&D, Jindi Group, China Merchants Shekou, Investment Savings, I Love My Family, Hong Kong stocks: Shell, C&D International Holdings, Yuexiu Real Estate, and Greentown Services. Recommended high-quality commercial real estate companies: China Resources Vientiane Life, China Resources Land, Longhu Group, Xincheng Holdings, etc.
risk analysis
The risk of uncertainty in the international trade situation; sales fall short of expectations; carry-over falls short of expectations; credit repair of housing enterprises falls short of expectations.
