20131227-招商证券_香港_-Property_Sector_2014_Outlook_40页_2mb

Property Sector 2014 Outlook Summary

Core Content

The 2014 outlook for the property sector highlights a transition from traditional real estate development to innovative service models, with a focus on sales, financing, and community services. The industry is expected to stabilize, with growth driven by brand strength and service quality rather than asset price inflation. The document also emphasizes the importance of valuations, liquidity, and debt ratios in assessing real estate companies.

Main Views and Key Information

Industry Trends and Innovation

• The real estate services industry is expected to enjoy a "golden decade" due to its alignment with long-term trends and the formation of competitive advantages.
• Traditional real estate developers are shifting focus to niche markets, with some concentrating on ordinary residential development, others on high-end housing, and some on commercial complex development.
• Community services are identified as a growing trend, with companies like Fantasia (1777.HK) aiming to gain first-mover advantages through their community service platforms.

Investment Strategy

• The real estate industry's absolute and relative valuations are at a historical low.
• Macroeconomic factors affecting valuations have not changed significantly, and investors should focus on companies with favorable growth, scale, and risk profiles.
• Key companies to watch include:
  • Kaisa (1638.HK) and Sunac (1918.HK): Expected to achieve high revenue growth and significant debt reduction.
  • Green town (3900.HK), R&F (604.HK), and Evergrande (3333.HK): Have decent growth rates and scale, but their valuations have not yet been reexamined by the market.
  • China Resources Land (1109.HK) and China Overseas (0688.HK): Strong management and stable performance.
• Companies with low valuation and growing performance include Greentown (3900.HK) and Evergrande (3333.HK).
• Companies with rapid development supported by major shareholders: OCT Asia (3366.HK) and China Merchants Land (978.HK).
• Companies with core strengths in specialization: China Resources Land (1109.HK) and China Overseas (0688.HK).

Valuation Analysis

• The valuation of real estate companies is expected to remain low due to the slowing RMB appreciation trend and stable liquidity.
• P/E and P/B ratios of the industry are historically low, with a P/B of 65.4% for Kaisa and 76.5% for Sunac.
• The real estate industry's valuation is closely tied to the M1-M2 growth gap, which reflects market sentiment.

Sales and Debt Performance

• Sales performance in 2013 laid the foundation for profit carry-over in 2014.
• Housing starts increased in 2013, leading to a stable supply-demand balance in 2014.
• Land prices surged in 2013, negatively impacting real estate gross margins.
• The debt ratio of real estate companies is generally under control, but only a few are expected to see significant reductions.

HK Subsidiaries of Mainland Developers

• Many mainland developers are focusing on their HK subsidiaries for financing and capital operations.
• Examples include Wanda's Hengli Comm, Greenland's Greenland HK, and Vanke's Vanke PPT OVS.
• These subsidiaries are attracting market attention due to their financing capabilities and land resource acquisition.

Business Models under Different Innovative Patterns

Key Areas of Innovation

• Sales service innovation
• Financing service innovation
• Project operation innovation

Soufun (Sfun.N) Model

• A leading property information provider with a massive user base and offline resources.
• Revenue growth is driven by internet marketing, e-commerce, and classified information services.
• Soufun has a large number of active users, with over 60 million in Q3 2013.
• The company has established partnerships with most real estate companies and agencies, with over one million agents publishing information on its platform.

Noah Model

• Focuses on wealth management for high-net-worth individuals.
• Noah is the first independent wealth manager in mainland China, offering global and comprehensive asset allocation services.
• The company has diversified its business mix, forming a financial services group with various segments, including family wealth management, high-end products, and overseas wealth management.

Community Service Model

• Community service is emerging as a key trend in real estate innovation.
• Integration of community resources and users through a service platform is crucial for future earnings.
• Fantasia (1777.HK) aims to gain first-mover advantage with its Colourlife platform, which has the largest community management area in the industry.

Conclusion

The property sector in 2014 is expected to stabilize, with growth opportunities in sales, financing, and community services. Investors should look for companies with strong fundamentals, including favorable valuations, earnings growth, and reduced debt ratios. The document highlights the importance of innovation and diversification in the sector, with a particular focus on real estate services and community-based models.