The Ministry of Natural Resources solicited public opinions on the revision of the Land Reserve Management Measures, and the land reserve funds will be earmarked for specific purposes. According to the document, local governments should prepare three-year rolling plans for land reserve and reasonably determine the scale of land reserve in the next three years according to national economic and social development plans and land space plans. Divide reserve areas in combination with urban renewal and development in large areas, and give priority to the reserve of idle, inefficient and other stock construction land. Compared with the 2017 Land Reserve Management Measures, this draft mentioned that the financial department should allocate a certain proportion of funds from the land transfer income to establish a state-owned land income fund for land reserve, and the specific proportion should be determined by the people's governments of provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan. Land reserve funds shall be arranged through the government budget and used for specific purposes. The new regulations will further promote the economical and intensive use of land and help achieve efficient land allocation.
The latest LPR over 5 years remains unchanged. According to the People's Bank of China, the latest LPR over five years in May was 3.95%, unchanged from last month, and has remained unchanged for three consecutive months.
Market review: The cumulative change of Shenwan Real Estate Index this week was - 5.3%, 3.18 percentage points behind the CSI 300 Index, and ranked 30th in 31 Shenwan industries.
New houses: The area of new houses sold in 30 cities this week was 2.165 million square meters, down 5.5% month on month and 35.0% year on year. Among them, the area of new houses sold in sample first tier cities was 460000 square meters, - 12.9% month on month and - 32.2% year on year; The sample of second tier cities was 1.161 million square meters, - 9.8% month on month, - 37.9% year on year; The sample of third tier cities is 544000 m3, 14.4% month on month and - 30.4% year on year.
Second hand housing: The transaction area of second-hand housing in 13 sample cities this week totaled 1.316 million square meters, down 7.1% month on month and up 2.4% year on year. Among them, the transaction area of second-hand houses in the sample first tier cities this week was 395000 square meters, - 11.2% month on month; The sample of second tier cities is 646000 square meters, - 3.2% month on month; The sample of third tier cities is 275000m3, with a link ratio of - 9.8%.
Credit bonds: A total of 5 real estate enterprise credit bonds were issued this week, unchanged on a month on month basis; The total issuance scale was 2.30 billion yuan, a month on month decrease of 1.295 billion yuan, a total repayment of 7.801 billion yuan, a month on month increase of 1.21 billion yuan, a net financing amount of -5.501 billion yuan, and a month on month decrease of 2.505 billion yuan. In terms of entity rating, AAA and AA (43.5% and 47.8%) are the main components of the entity rating disclosed in the issuance of real estate enterprise bonds this week. In terms of bond types, the issuance of real estate enterprise bonds this week is mainly composed of ultra short-term financing bonds and general corporate bonds (34.8%, 34.8%). In terms of bond maturity, this week's bonds are mainly 0-1 years and 3-5 years (34.8%, 34.8%).
Investment suggestion: maintain the industry's "overweight" rating. We believe that there are the following reasons for focusing on real estate related stocks: 1. The policy is pushed into the deep water area by the fundamentals. For example, we have repeatedly stated in our reports in 2022 and 2023 that the final policy strength of this round exceeds that of 2008 and 2014, and is still on the way.
2. As an early cycle indicator, real estate plays a directional role, and the allocation of real estate is equivalent to the allocation of economic indicators. 3. The logic for improving the industrial competition pattern is still applicable, and the number of real estate enterprises that have been involved in accidents is increasing. The top state-owned enterprises and a small number of mixed ownership and private enterprises still have outstanding land acquisition and sales performance. Quality real estate enterprises are expected to benefit more in the future pattern. 4. The "only optimistic about the first tier+2/3 second tier+a small number of cities" proposed by us last year still works, which is also confirmed by the better performance of this city combination in the occasional rebound in early sales. 5. The supply side policies, such as the purchase and storage of idle land and the proper disposal of idle land, have become the most important direction for observation and landing in the next stage, and it can be predicted that the first and second lines will still benefit more. Based on the above configuration logic, we recommend several dimensions at the stock level: 1. Fundamentals related stocks: 1) Development: Poly Development, CCB Development, China Merchants Shekou, Huafa, Binjiang Group; H-share Greentown China, Yuexiu Real Estate, China Resources Land, China Overseas Development, China Construction Development International Group, etc; 2) Property: A-share investment attraction surplus. H-share focuses on China Resources Vientiane Life, Zhonghai Property, Poly Property, All Things Cloud, Green City Services, etc; 3) Intermediary: shell; 4) Local urban investment undertakes more tasks such as housing guarantee and affordable housing, which is beneficial to major local urban investment enterprises. 2. Benefiting from the 5.17 conference policy, front-line local concept stocks in Shanghai, Beijing, Shenzhen and Guangzhou.
Risk tip: policy implementation is less than expected, demand recovery is less than expected, and risk of real estate enterprises' risk spread.
