20131029-DBS_Group-China_Property_Weekly_Digest_42页_1mb

China Property Weekly Digest Summary (Issue No. 52)

Core Content

This report provides an overview of the Chinese property market as of 29 October 2013, focusing on sales performance, policy updates, and key developments in the sector. It also highlights a specific project and the performance of major developers.

Main Project: Dynasty on the Bund, Shanghai

• Developer: Greentown/Sunac
• Project Type: High-rise, fitted
• Location: Shanghai, Huangpu District
• Land Cost: Rmb24,206 per square meter
• Planned GFA: 660,668 square meters
• Maiden Launch: September 2013
• ASP (Average Selling Price): Rmb80,000 per square meter
• YTD Sales (2013): Rmb1.2 billion
• 2013 Target Sales: Rmb2.5 billion
• Saleable Resources (2013): Rmb4.0 billion
• Target Sale-through Rate: 63%
• Achievement Rate (2013): 48%
• 2014 Target Sales: Rmb4.0 billion
• Estimated Gross Margin: 44%
• Estimated Net Margin: 19%

Key Policy Updates

• State Council Research Central: Proposed land reforms and property taxes as part of a long-term mechanism to increase land supply and improve property utilization.
• Ministry of Housing: Plans to promote construction prefabrication starting with public housing, with a trial action plan expected in 2014 and around 20 cities selected by 2015.
• Beijing: Introduces self-use commodity housing with a 30% discount to market price, with 20,000 units planned for 2013 and 50,000 for 2014. These units are non-tradable for 5 years.
• Shenzhen: Tightening mortgage policies for second home buyers, with potential adjustments to down-payment ratios and mortgage rates.
• Wuhan, Chengdu, and others: Adjusted policies on mortgage caps and housing purchase restrictions.
• Malaysia: Introduced measures to curb property speculation, including higher Real Property Gains Tax and removal of Developer Interest Bearing Scheme, though less onerous than expected.

Weekly Sales Performance

Tier I Cities

• Total Units Launched: 4,332
• Average Sale-through Rate: 68%
• Sales Volume Growth (w-o-w):
  • Beijing: -11%
  • Shanghai: +3%
  • Shenzhen: -26%
  • Guangzhou: -8%
• Average ASP (Rmb/sm):
  • Beijing: Rmb23,795
  • Shanghai: Rmb20,893
  • Shenzhen: Rmb21,063
  • Guangzhou: Rmb13,153
• Tier I Average ASP (Rmb/sm): Rmb19,726

Tier II Cities

• Total Units Launched: 4,100
• Average Sale-through Rate: 70%
• Sales Volume Growth (w-o-w):
  • Tianjin: +11%
  • Wuhan: -6%
  • Hangzhou: -2%
  • Suzhou: +28%
  • Xiamen: -7%
  • Chengdu: +13%
  • Chongqing: +26%
  • Qingdao: +23%
• Average ASP (Rmb/sm):
  • Tianjin: Rmb10,254
  • Ningbo: Rmb13,859
  • Chongqing: Rmb7,551
  • Tier II Average ASP (Rmb/sm): Rmb10,307

Tier III Cities

• Total Units Launched: 75,000 (not specified in detail)
• Average Sale-through Rate: 68%
• Sales Volume Growth (w-o-w):
  • Dongguan: -14%
  • Weifang: +1%
  • Baotou: +53%
  • Guilin: +66%
  • Xuzhou: -22%
  • Shantou: -8%
  • Zhongshan: -30%
• Average ASP (Rmb/sm):
  • Dongguan: Rmb8,859
  • Weifang: Rmb3,977
  • Baotou: Rmb5,341
  • Tier III Average ASP (Rmb/sm): Rmb5,568

Market Trends

• Overall Sales Volume (Oct 21–27): Flat m-o-m
• ASP Trends (m-o-m):
  • Tier I: -1%
  • Tier II: +1%
  • Tier III: -2%
• Sales Growth (Oct 1–27):
  • Tier I: -11%
  • Tier II: +13%
  • Tier III: +18%

Developer Valuation and Recommendations

• Sector Valuation (FY14):
  • P/E: 6.4x
  • P/BV: 0.9x
  • Discount to NAV: 49%
• Recommendation: Investors are advised to focus on developers with strong fundamentals and sustainability due to policy uncertainties.
• Top Picks: COLI, CR Land, COGO, and Franshion

Inventory Level

• Inventory (000 sm):
  • Beijing: 7,420
  • Shanghai: 9,786
  • Shenzhen: 3,435
  • Guangzhou: 6,798
  • Hangzhou: 6,643
  • Suzhou: 6,487
  • Ningbo: 10,103
  • Qingdao: 13,286
  • Nanjing: 4,276
  • Fuzhou: 2,170
  • Nanning: 5,684
  • Huaian: 2,313
  • Zhoushan: 1,770
• Average Weeks to Digest Inventory: 52 weeks

Summary of Key Points

• The property market is showing mixed performance with strong sales momentum in Tier II cities and mixed trends in Tier I and III.
• The long-term policy mechanism includes land reforms and property taxes, but short-term administrative measures may still dominate.
• Developers are advised to focus on fundamentals and sustainability in light of policy uncertainties.
• Specific projects and their performance metrics are highlighted, with Dynasty on the Bund showing potential for decent margins.
• Inventory levels remain high, with varying digestion times across cities.