I. recent situation of the industry

This week, the Hang Seng property construction index closed down 0.84%, slightly outperforming the Hang Seng Index (- 1.22%), and the industry's relative income was 0.38%. However, according to the cumulative income so far from the beginning of the year, the Hang Seng property construction industry has substantially outperformed the Hang Seng Index, with an excess return of about 7.06%.

Judging from the 35 stocks in the weighting index such as Fortune Real Estate (see schedule 1 for details), the top three stocks up this week are Poly Properties (+ 8.91%), Country Garden Services Holdings (+ 6.19%) and China Shipping Properties (+ 4.93%). The top three decliners were China National Building Material (- 8.01%), KE Holdings Inc. (- 7.68%) and China Evergrande Group (- 4.22%).

According to the sub-plate analysis, the property management segment in the real estate industry performed well this week, while the overall performance of the development and building materials plate was poor.

Important developments in the industry:

• E-House Enterprise Holdings announced the acquisition of an 85% stake in Tmall's good house.On the evening of April 28th, E-House Enterprise Holdings Limited (02048.HK) announced that it had completed the acquisition of the remaining 85 per cent of Tmall's shares, equivalent to HK $1.86 billion, by issuing 248 million new shares to BABA at HK $7.50 per share. At the same time, Zhou Xin and BABA, chairman of the board of directors of E-House China, increased their holdings in E-House shares, and Yunfeng Fund bought shares in E-House. After the completion of the transaction, Zhou Xin holds a 22.84 per cent stake in E-House, maintaining its position as the largest shareholder; BABA holds 22.57 per cent, making it the second-largest shareholder; and Yunfeng Fund holds 2.86 per cent.

• Vanke management shareholding platform to increase Vanke shares.On April 29th, Vanke An announced that Shenzhen Deyuzhong Industrial Co., Ltd. (hereinafter referred to as "Deyuzhong") bought 804800 A shares of Vanke, accounting for 0.01% of Vanke's issued shares. as a result, the total number of voting shares owned by Xin Pai obligor and its actors reached 581 million, accounting for 5% of the company's issued shares, jumping over the listing line for the first time. Yingan Company is the third party that Vanke's partners collectively entrust to manage the economic profit bonus collective account. De Yuzhong, Yingan Partnership and Yingjiazhong Partnership are its concerted actors. In short, it was Vanke insiders who increased their stake in Vanke.

• Guangzhou centralized land supply for the first time.On April 26th and 27th, Guangzhou held the first centralized sale of land under "double centralization". This time, a total of 48 residential sites were sold, including 6 failed auctions and 42 transactions, with a total transaction value of 90.602 billion yuan. The first batch of land supply in Guangzhou is relatively high, accounting for 62.1% of the annual land supply plan and 62.6% of the three batches of land supply plan.

In view of the fact that there are many important events this week, we will focus on reading: 1. Yiju acquired the remaining 85% stake in Tmall good House; and 2. Vanke management shareholding platform to increase Vanke A shares.

II. Views of the week

• With regard to the acquisition of 85% equity in Tmall's good house this time, we believe that, on the one hand, this has established the leading position of E-House in the strategic cooperation with BABA on real estate transactions.It will help to reduce the previous cooperative internal friction between BABA and E-residence, and give full play to the core advantages of both sides, that is, E-House can give full play to its ability to promote real estate transactions, while BABA, by assisting E-residence, give full play to its strong technical strength and digital operation capabilities to greatly enhance the digital and online level of its existing business. After "professional matters are left to professionals", we believe that this will effectively enhance the competitiveness of E-House, thus gaining a larger market share in the increasingly competitive real estate brokerage industry.

• On the other hand, after the completion of this acquisition, BABA will directly hold 22.57% of the shares of E-House Enterprise Holdings, making it the second largest shareholder, and if you add the Yunfeng Fund, which also belongs to the Ali system, the total shareholding proportion of the Ali system will reach 25.43%. It even exceeds the 22.84% of Zhou Xin, the major shareholder of E-house.This shows that BABA is firmly optimistic about the follow-up development of E-House and the future prospects of the real estate brokerage industry.. We will continue to track the performance of the two sides after deepening strategic cooperation.

• For Vanke management shareholding platform to increase Vanke's stake to 5% of the listing line.We believe that the management not only expresses confidence in the future development of Vanke, but also clearly sends out a signal that Vanke's intrinsic value is undervalued.Investors need to re-examine the investment value of Vanke.

III. Investment suggestions

In view of the increasingly fierce competition in the real estate brokerage industry, the specific manifestations are as follows: Internet giants cross-border entry, property management companies accelerate the development of real estate brokerage business, head real estate enterprises build new housing marketing and second-hand housing trading platform, online real estate marketing platform also expand real estate trading business, traditional real estate brokerage giants are also accelerating "horse race enclosure" and so on, so the follow-up competition pattern of the industry is not very clear, but it can be determined. The market share of traditional real estate planning agents has been eroded, so we suggest that investors avoid this and consider paying attention to the final winner after the competition pattern of the industry is clear.

IV. Risk hints

The penetration rate of real estate brokerage business is lower than expected.

V. Appendix

Table 1: 35 constituent stocks of Fu Tu Real Estate Equal weight Index

Table 2: performance and valuation of each segment leader of Dazhou plate this week