20230310-招银国际-China_Property_Sector__Property+_Weekly__Facts_proved_that_market_is_over_worried_6页_821kb

China Property Sector Summary

Core Content

The document provides an analysis of the Chinese property sector, highlighting recent positive trends in property sales and their impact on related industries such as construction materials. It also discusses the supportive policy environment and investment recommendations for key property developers.

Main Points

Property Sales Performance

• March MTD New Home Sales: Increased by 21% YoY, surpassing market expectations.
• March MTD Secondary Home Sales: Surged by 82% YoY, showing a strong recovery.
• Year-to-Date Sales Decline: Narrowed to -10% YoY, indicating improvement.
• Tier 1&2 Cities: Led the growth with +22% YoY in March MTD new home sales.
• Tier 3/4 Cities: Also showed solid growth at +19% YoY, attributed to a low base.

Sales Momentum and Policy Support

• Sales Leading Index (GAIN): Indicates continued positive momentum in property sales.
• Mortgage Rates and Property Prices: Historically low mortgage rates and stabilized property prices are contributing to the sales recovery.
• Policy Relaxation: City-level policy relaxation is frequent, with new measures announced in Fujian Province, Dalian, and Zhumadian (Henan).
• Fujian Province Measures: Plans to issue housing coupons for shanty town redevelopment and potentially lift purchasing restrictions.
• Policy Outlook: Supportive policies are expected to continue, reversing market concerns about policy easing.

Impact on Basic Materials

• Cement Price: Rose 2% WoW and 4.3% MoM to RMB467/mt, up 5% after CNY.
• Cement Storage Ratio: Dropped to 61.5% as of 5 Mar, reflecting improved demand.
• Steel Rebar Price: Increased 1% WoW and 2% MoM to RMB4,357/mt, following the same trend as cement.
• Aluminum and Float Glass: Prices stabilized after recent declines, showing resilience.

Key Information

• The property sector is experiencing a strong recovery, with sales data better than expected.
• Positive momentum is expected to continue due to policy support and low mortgage rates.
• Construction materials such as cement, steel rebar, aluminum, and float glass are benefiting from the improved demand and stable prices.
• The report recommends buying quality names in the property sector, specifically highlighting CR Land, Yuexiu, Longfor, Binjiang, and Huafa.

Investment Recommendations

• OUTPERFORM: The China Property Sector is expected to outperform the relevant broad market benchmark over the next 12 months.
• Recommended Developers: CR Land, Yuexiu, Longfor, Binjiang, and Huafa are highlighted as quality names with strong potential.

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10% over the next 12 months.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over the next 12 months.

Important Disclosures

• The report is not investment advice and should not be relied upon for making investment decisions.
• Risks: Investing in securities involves risks, and past performance does not guarantee future results.
• Conflicts of Interest: CMBIGM may have investment banking relationships with the companies mentioned, which could affect the report's objectivity.

Conclusion

The Chinese property sector is showing strong recovery, driven by positive sales data and supportive policies. The demand recovery and low mortgage rates are contributing to the upward trend in construction materials. The report suggests that the market is overconcerned about sales sustainability and policy easing, creating a buying opportunity for quality property developers.