麦格理-中国-房地产行业-中国房地产业：抓住转折点-2019.1.8-27页.pdf

Please refer to page 25 for important disclosures and analyst certification,or on our website January 2019 China EQUITIES Valuations yet to reflect relaxation Source:NBS,Bloomberg,Macquarie Research,January 2019 Market share of top 50 developers Source:CRIC,Macquarie Research,January 2019 Related publications China Property-Time to pick quality stocks(23 Jul 2018)Longfor Group Holdings-Steady knight with shining armour(25 Jul 2018)Longfor Group Holdings-Ready to win the battle(20 Aug 2018)Shimao Property-Entering second stage of recovery(18 Jul 2018)Shimao Property(813 HK)-Target to outperform(10 Dec 2018)China Jinmao(817 HK)-A winner in the storm(19 Nov 2018)China Jinmao(817 HK)-Differentiated model,differentiated value(26 Nov 2018)Analysts Macquarie Capital Limited Kelvin Tam,CFA +852 3922 1181 David Ng,CFA +852 3922 1291 Nicholas Ting +852 3922 1398 Sophie Wang +852 3922 3572 China property sector Catch the turning point Key points The tightest policy is behind us while relaxation is not yet in the price National sales seeing healthy moderation Top developers market share should grow,with decent sales growth Tightest policy behind us.We are positive on the China property sector in 2019.Policy risk is lower than last year,as the physical housing market is weakening,with sluggish sales growth and mild price correction.Indeed,we saw policy and mortgage stabilisation in October 2018 and anticipate a mild relaxation in 2019.We expect:(1)fine-tuning of measures related to price caps,resale restrictions and other distortive measures;(2)a low chance of nationwide loosening;and,(3)no more drastic tightening.The credit environment should also improve gradually after the first unconditional RRR cut since March 2016.We expect national sales volume growth to be negative(0-5%)for 2019 with weak YoY momentum in the first half and a pick-up in the second.The more accommodative policy should help shorten the time for recovery of buyers sentiment and sales momentum.Sales value growth should slow gradually from the high base in 2018;a sharp contraction is unlikely.We expect tier-2 cities and leading tier-3 cities to outperform in terms of sales value.Top developers gaining market share.Our consolidation theme and investment thesis“mid-sized developers catching up with giant”worked well in 2018 and should remain intact in 2019.Leading developers should continue to expand market share and achieve better-than-average sales growth in a slowing real estate market on the back of stronger access to credit.We expect 20-25%sales growth for top developers in 2019(vs 35%in FY18)and robust earnings growth for the next 1-2 years.Valuations yet to reflect relaxation.Chinas property sector is currently trading at an attractive 30%NAV discount(historical average 28%)and 5.1x forward P/E(6.5x),suggesting attractive risk/reward for a 12-month investment horizon.In October 2018,we saw the fourth bottom of the sector since 2007.However,valuations have not fully reflected relaxation,in our view.Some investors are concerned about macro headwinds,such as US trade disputes and economic slowdown.The logic of“bad is good”still applies to Chinas property sector:the weaker the economy,the more important real estate investment is to the country.2019 should be a year of differentiation in sales execution and funding capability.Top picks:Longfor,Shimao and Jinmao.Longfor is a leading developer with balanced and defensive growth and a strong investment property portfolio.It looks to build up its stable income,which not only aids in smoothing out volatilities in property sales but also helps to support interest repayments and dividend distributions in the long run.Shimao is leveraging its quality portfolio(70%exposure to tier-1/2 cities)and strong execution capability to maintain its sales leadership in FY19.The company also has solid financing capability.Jinmao is an SOE whose open-minded management is striving for growth while enjoying the defensiveness backed by its“state-owned”status.It is among the few SOEs implementing a project-level co-investment scheme,which can drive sales.(60%)(30%)-%30%60%-30%0%30%60%90%120%Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Sales in GFA monthly YoY(%)LHSNAV discount(%)RHS0%10%20%30%40%50%60%20112012201320142015201620172018#1-5#6-10#11-20#21-50Macquarie Research China property sector 8 January 2019 2 Where are we in the property cycle?Chinas property sales volume(GFA)recorded positive growth(YoY)for ten consecutive years since the housing reforms in 1998.Then,in January 2008,the countrys housing market experienced a downturn with monthly sales volume growth turning negative.However,sales momentum recovered rapidly with the help of the Rmb4tn stimulus package introduced by the Chinese government in November 2008.Sales growth turned positive in March 2009,ending the 14-month downturn.With abundant liquidity,asset price inflation emerged subsequently.In order to cool down the overheating property market,the Chinese government initiated a round of property tightening with the announcement of“National 11 Rules(国十一絛)”in January 2010 and“New National 10 Rules(新国十絛)”in April 2010.While the equity market moved six months ahead of the tightening announcement,sales momentum came down in May 2010,four months after the announcement.In January 2011,the Chinese government intensified the tightening with the announcement of“New National 8 Rules(新国八絛)”,and the stock market reacted five months before the official announcement.The physical market started to factor in the policy impact with sales trending down after nine months.This round of tightening,which started in 2010,ended with a relaxation cycle after the PBOC and CBRCs announcement of“Further Improving Housing Financial Services(关于进一步做好住房金融服务工作通知)”in September 2014.Stock valuations reacted two months before the relaxation.Sales volume picked up seven months after the positive signal was officially released.The recent tightening cycle started in September 2016 and it took about 24 months to see the negative YoY monthly sales growth(for three consecutive months).The last two years of tightening have highlighted three things:the tough stance of the leaders,the resilience of property prices and home buyers supporting it,and localised tightening and relaxation based on the conditions of individual cities or even districts within big cities.Control is tighter nowadays but measures seem more customized and adjusted more dynamically than in the past.Against the backdrop of market cooling down,we saw policy and mortgage stabilisation in October 2018 and expect mild relaxation in 2019,which is reflected in valuations yet,in our view.While sales growth has just started showing weakness,we expect valuations to bottom when the loosening policy comes through.Fig 1 Major policy cycles:we expect mild relaxation in 2019 Source:NBS,Bloomberg,Macquarie Research,January 2019 National 11 RulesFurther Improving Housing Financial ServicesHPR in various cities following BeijingPolicy stablisation(60%)(30%)-%30%60%-30%0%30%60%90%120%Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Sales in GFA monthly YoY(%)LHSNAV discount(%)RHSRelaxationTighteningVal:2M beforeSales:7M afterVal:15M beforeSales:24M afterTighteningVal:6M beforeSales:4M afterMacquarie Research China property sector 8 January 2019 3 Fig 2 Sales growth vs valuation Source:NBS,Bloomberg,Macquarie Research,January 2019 Fig 3 Sales volume vs housing price growth Source:NBS,Macquarie Research,January 2019 (80%)(40%)-%40%80%120%-50%0%50%100%150%200%Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Sales in value monthly YoY(%)LHSSales in GFA monthly YoY(%)LHSNAV discount(%)RHS(10%)(5%)-%5%10%15%-30%0%30%60%90%120%Jan-09Jan-10Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Sales in GFA monthly YoY(%)LHSPrice change index YoY(%)RHSMacquarie Research China property sector 8 January 2019 4 Tightest policy behind us We started to see policy stabilisation in October 2018 after the tightening measures started taking effect.The recent cycle of property tightening,which is the most severe in history,in our view,started in Sep-16.President Xi Jinping advocated that“housing is for living,not for speculation”and the government aimed at curbing property prices.In addition to traditional measures home purchase restrictions and mortgage restrictions,price restrictions and re-sale restrictions are in place in many cities.Among them,price caps,together with stringent presales permit approvals,were one of the most disruptive measures on developers project launch and sales.On 22 October 2018,Guangzhou removed double contract and eased price restrictions in three outskirt districts,namely Zengcheng,Nansha and Huadu.The attempt to lift distortive measures in a tier-1 city like Guangzhou and the muted response from the central government indicate that the policy direction has changed.China Politburos quarterly meeting was held in late October with no mention of the real estate market or of further deleveraging,confirming the turning point of the policy direction.We also saw different degrees of easing in price restriction in other cities.On 18 December,Heze,a tier-4 city in Shandong,removed home resales restrictions where home buyers were not allowed to resell within two years(for locals)and three years(for non-locals).While this is not exactly the same as removing new home purchase restrictions(HPR),we believe the trend is definitely towards relaxation.Some cities have introduced various incentives to attract talent,which may offset the impact from HPR.Those incentives include eligibility for home purchase(same as locals),subsidies for home purchase or for rentals.Hengyang,a tier-4 city in Hunan Province,called off the suspension of price restrictions on 27 December 2018,just one day after announcing that it would lift price caps from 1 January 2019 in view of normalisation of the housing market and stabilisation of housing prices in the city.Such abrupt changes in housing policy are not uncommon.On the one hand,local governments are keen on property loosening so as to ensure healthy economy and land sales revenue;on the other hand,the Central government aims at maintaining stable housing prices and delivering a clear message that housing is for living,not for speculation.We expect local governments will continue to propose various fine-tuning measures,such as price caps and resale restrictions,to test the Central governments threshold of tolerance for policy-easing.And the overall direction should be relaxation.However,drastic loosening or even nationwide relaxation is unlikely,as this may trigger tightening by the Central government.For 2019,we expect(1)more fine-tuning of measures related to price caps,resale restrictions and other distortive measures,(2)low chance for nationwide loosening and(3)no more drastic tightening.Tightening measures should remain more stringent in tier-1/2 cities,compared with low tier cities.Macquarie Research China property sector 8 January 2019 5 Fig 4 Relaxation since September 2018 Source:Government websites,CREIS,Macquarie research,January 2019 Sep-18Oct-18Nov-18Dec-18Jan-19RelaxationTier-1 cities17th Guangzhou 19th Guangzhou8th Shenzhen19th GuangzhouThe social security proof requirement Local authority lifted price cap and Land cost of housing for talent can be Properties for commercial use for talent was shorten to 6 months prohibited double contract in as low as 30%of market land pricetransactioned before Mar 30th,2017 from 12 monthsZengcheng,Nansha,huaducan be sold to individuals,rather than restricted to legal entities.21th Guangzhou(Rumor)The price cap of certain projects might be lifted based on market priceof surrounding districts.16th GuangzhouBeijingShenzhen(Rumor)Housing allowances for talents The mortgage rate of first purchase is The mortgage rate of first purchase is meeting specific standards are lowered to 10%-15%premium lowered to 10%premium over base RMB1mm at maximum level.over base rate(from 20%)rate(from 15%)26th BeijingPrevious price cap of RMB80k/sqm has been lifted by a few high-end luxury houses at ASP of over RMB10k/sqmTier-2 cities27th Xiamen18th Hangzhou7th Suzhou20th Zhuhai1th QingdaoThe household registration The household registration HPR is not applicable to talents No more than 12 months of social Lottery for house purchasing has been requirement for non-local residents isrequirements for non-local residents who purchase the first housing security proof is needed for the suspended,effective in Jan-19 within relaxed to 5 years of staying(from 8)have been further relaxedproperty.Max.housing allowance non-local talents to purchase the first Qingdao High-tech Zone.of RMB5mm is available for talentshome.18th FuzhouDown payment of housing properties 24th Qingdao20th Zhuhai(Rumor)with co-ownership has been lowered Household registration proceduresOnly one year of social security proofto 30%of self-financed portion rather for talents have been simplifiedis needed for residentail home than 30%of total housing pricepurchase in Jinwan and Doumen.HangzhouXiamen21th HangzhouThe mortgage rate of first purchase is Most banks have lowered theirThe social security proof for homelowered to 10%premium over mortgage premium over base ratepurchasing has been relaxed.base rate(from 15%-20%)to different extents.No employment contract is in needand make-up of social security less Nanjingthan 3 months is accepted.Many banks have lowered theirmortgage premium over base rateto different extents.Types of relaxationHPRWuhanFinancingThe mortgage rate of first purchase is Price cap/resale restrictionlowered to 20%-25%premium over Attraction of talentsbase rate(from 30%)Tier-3/4 cities 18th Xuancheng 8th Hefei(Rumor)19th HezeDownpayment and mortgage rate for Non-local residents only need oneThe locking period of 2-3 years before first home are lowered to encourage month of social security proof forresale of residential properties has birth ratehouse purchasing and make up the been cancelledleft 11 months in one batch.2th Haikou20k units of talents housing properties are proposed to start construction before year end12th JiangmenHousing purchase discount of 15%offand 10%off are available to Master and Bachelor degree holders two years after graduation2th LiuzhouNew talents who would like to buythe first residential home have accessto housing allowances ranging fromRMB20k to RMB5mm.FoshanThe mortgage rate of first purchase is lowered to 15%premium over base rate(from 20%)24th Xuchang(rumor)Relaxation on HPR is being proposedProvincial level18th HainanTalents meeting specific standardscan access housing allowances up tothree yearsNote:1.Lanzhou:HPR was cancelled in Xigu,Jiuzhou,and remote areas of Gaoping district in Jan-18.2.Taiyuan:The resale restriction of two-year locking period had been cancelled in Jul-18.Macquarie Research China property sector 8 January 2019 6 Price restrictions the first admi