silence for a while, Hong Kong stocks domestic real estate stocks exploded again today, becoming the sector with the largest increase, with many individual stocks hitting new highs.
China Evergrande has the largest increase, closing up 9.1% to HK$9.48, a record high, with a high of 12% intraday, reaching HK$9.77. China Evergrande's market value is now HK$123.714 billion, and its share price has risen by more than 96% since the beginning of 4 years.
rating agency Standard & Poor's published a research report today stating that it will upgrade China Evergrande (03333) long-term corporate credit rating from "B-" to "B", and the rating outlook is stable, mainly due to the significant improvement in the group's liquidity, benefiting from strong sales performance, stable cash income, and more diversified financing channels, so Evergrande's liquidity evaluation has shifted from weak to abundant.
At the same time, Evergrande has repurchased shares this year. From March 29 to April 27, 2017, Evergrande repurchased the company's shares nine times, with totaling approximately 723 million shares, and a total expenditure of HK$6.3 billion (approximately RMB 5.595 billion).
China Evergrande repurchase record
Country Garden closed up 6.080%, closing at HK$8.20, with a stock price hitting a 9-year high with a market value of HK$174.993 billion.
Country Garden achieved an astonishing sales of 204.16 billion in the first four months of this year, an increase of 2.14 times year-on-year, ranking first among all real estate companies, exceeding Vanke's 12 billion.
In terms of land acquisition, Country Garden is also the most enthusiastic. As of May 10, Country Garden spent a total of 58.241 billion yuan this year, acquired 109 land lots and planned construction area of 1,482 square meters, the best in the same industry. The second is , Poly , Evergrande, and China Overseas, with land acquisition expenditures of more than 40 billion. Vanke's land acquisition expenditure was 33.9 billion yuan, ranking seventh.
Among other domestic real estate stocks, Sunac China rose 5.7%, Greentown China rose 4.9%, Poly Real Estate rose 3.7%, Country Garden rose 3.2%, Country Garden Pacific rose 3.1%, and Shimao Real Estate rose 2.7%. I won’t go into details about the other editors, you can see the picture below.
The following picture is the 20 Hong Kong real estate stocks with the largest increase this year. Except for Taiwan Ni International (not real estate stocks, their main business is cement... It is not the editor's fault, I blame Wind), Kerry Construction , Huidefeng , Jiahua International , all other real estate stocks are domestic real estate stocks.
Hong Kong real estate stocks rose the top 20 this year, Source: Wind
Analysis: Three major reasons for the surge in Hong Kong's domestic real estate stocks
0The reason for the explosion of domestic real estate stocks today is generally believed that the fuse is the housing price data of 70 large and medium-sized cities in the country released by the National Bureau of Statistics on the 18th, showing that the year-on-year increase in housing prices in 15 first- and second-tier cities in April all fell, while the year-on-year increase in housing prices in third-tier cities further expanded compared with March.
Previously, JPMorgan Chase html published a research report on May 10, stating that The bank maintained a long-term positive view of domestic real estate stocks . Because the real estate developers' business model is correct, it is expected to gain profit growth and increase market share. The market underestimated the profits that could be generated by strong sales in the first four months, and sales of some real estate developers increased by more than twice year-on-year, reaching the target of half of the contract sales for the whole year. Therefore, the bank firmly believes that until the third quarter profit harvest period this year, some domestic real estate stocks that have won market share are expected to be revaluated, and their stock prices even surpassed the highs in September last year and March this year.
Hong Kong domestic real estate stocks have risen frequently, and there may be three reasons: extremely low valuations, excellent performance, capital promotion and industry policy support.
first, with extremely low valuation and excellent performance. Mainland real estate stocks listed in Hong Kong are generally in an undervalued state, which is also an important reason why Wanda Business wants to return to the A-share listing. Data shows that on the last trading day before Wanda Commercial started to return to the A-share listing, Wanda Commercial's dynamic price-to-earnings ratio was only about 6 times, far lower than the valuation level of A-share-related stocks. The valuation at that time was basically the valuation level of the main domestic blue-chip stocks when domestic real estate stocks had not yet started. In addition to the extremely low valuation level, the performance of listed companies' real estate companies was also excellent last year. Taking listed real estate companies in the A-share market as an example, 15 of the 18 listed real estate companies that have announced their annual reports have positive net profits year-on-year; 17 listed real estate companies that have announced their express reports have positive net profits year-on-year; 44 of the 64 that have announced their forecasts are expected to increase positive net profits year-on-year.
second, funds continue to move south.Although has a low valuation and good performance, it is very important to have a large increase in stock prices without the promotion of incremental funds. With the opening of the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, the Hong Kong market is receiving continuous support from mainland funds. As of the latest, the total net inflow of Hong Kong Stock Connect is close to 520 billion yuan. Low-valuation real estate stocks may be the main target of net capital inflows.
Third, policy support. The real estate market in third- and fourth-tier cities where real estate inventory is still at its peak is expected to receive policy support. In fact, the leading varieties of domestic real estate stocks leading the rise, Country Garden, etc., are all listed real estate companies with huge land reserves in third- and fourth-tier cities.
brokerage: Sales slowed down in May. Pay attention to the new round of real estate market regulation.
. China Communications International said that we found that in the first 16 days of May, new supply in the 10 major cities fell by 30% month-on-month. Due to the slowdown in issuing pre-sale certificates and the ideal sales from the beginning of the year to the present, we found that many developers have slowed down their launch. The net sales rate rose from 130% last week to 270%. Therefore, the transaction volume in the 10 major cities fell only 10.2% month-on-month, while the transaction volume in the 30 major cities was even lighter, down 3.3% month-on-month. However, in the next two months, because developers do not have financial pressure and they need time to evaluate the impact of regulatory measures, we do not think developers will speed up the push. In addition, we believe that investors should pay attention to a new round of regulatory measures. For example, Beijing, Shanghai and Tianjin have strengthened the intensity of measures.
Therefore, we expect contract sales to continue to slow down in May, and the increase in house prices will also narrow. According to the National Bureau of Statistics, new housing prices in 70 major cities rose by 9.9% year-on-year and 0.7% month-on-month. The industry's net assets discount was 35.8% (31.8% in April 2017), but it is still 0.6SD higher than the five-year average.
Due to the lack of motivation for contract sales, we think it is difficult to re-rated stocks. We maintain the industry's ratings of the market and recommend focusing on developers with high lock-in rates, such as Longfor (960 HK).
Guotai Junan International said that in the first four months of this year, the growth rate of housing sales continued to decline, but investment recorded strong growth. From January to April 2017, the year-on-year growth rate of commercial housing sales decreased compared with January to March 2017. At the same time, investment growth rate recorded strong growth in order to replenish inventory. In addition, the available area continues to decline.
Guotai Junan International said that the policy further tightened in April 2017, but in order to promote the stable and healthy development of the real estate market, measures based on the city will be maintained. We believe that the rising average sales price and inventory levels are low, triggering the introduction of policy tightening measures. These related policies mainly involve the increase in the minimum down payment, the upgrade of purchase restrictions and the restriction on housing sales. Policy tightening can simultaneously curb demand and supply of commercial housing, thus cooling the real estate market. Given the high average sales price and low inventory levels in first- and second-tier and some third-tier cities, policy tightening in these related cities will be maintained. On the other hand, low-tier cities with high inventory will be in an environment of loose policies.
Among the companies we cover, 9 companies announced contract sales in April 2017. In January-April 2017, contract sales performance was differentiated and large openers performed better than smaller developers. Country Garden (02007 HK) recorded the highest year-on-year growth rate of contract sales (214.5%) and the highest amount (RMB 201.416 billion). China Evergrande (03333 HK) announced a joint development agreement on May 12, 2017.
Guotai Junan International maintains the "neutral" real estate industry. Since housing sales in first- and second-tier and some third-tier cities account for the majority of housing sales, tightening policies may cool downward pressure on housing sales and may put downward pressure on the valuation of the real estate industry.
JPMorgan Chase's first choice is China Overseas (00688) and Vanke (02202) , medium-sized domestic real estate stocks are optimistic about Country Garden (02007) and Longfor (00960) , while small domestic real estate stocks are optimistic about China Jinmao (00817) , giving the above shares a rating to increase their holdings. Overall, the bank believes that medium-sized domestic real estate stocks have more room for upward trend.
