China - Housing 01 (May 08 - May 10)

[winston]

DJ MARKET TALK: GS Tips Steady 2010 Growth In China Ppty Market

1147 [Dow Jones] STOCK CALL: Goldman Sachs expects strong recovery in China's real estate market in 2009 to be followed by steady growth in 2010. Adds, stronger-than-expected property price performance in past two months has sent housing affordability closer to average 2007 level.

Notes continuing on such upward trend in 2010 hinges on supply outlook, strength of household income growth and developers' balance sheets. Tips balanced supply and demand dynamics in China's major cities will be largely intact in 2010.

Notes house prefers stocks that don't appear to have priced in solid margin trend in 2010-2011 on sufficient low-cost land bank, effective cost-cutting efforts.

Downgrades Shenzhen Investment (0604.HK) to Neutral from Buy.

Keeps Buy on R&F (2777.HK), Shimao (0813.HK), Agile (3383.HK).

Maintains Sell on China Resources Land (1109.HK) and Franshion (0817.HK).

Source: Dow Jones Newswire

[LenaHuat]

I find this ifeng program insightful. For those who understand Chinese :-
http://v.ifeng.com/society/200912/b0acba0b-353d-4ece-a6b3-f1efba143dc9.shtml

[winston]

DJ MARKET TALK: CICC Tips 30%-40% Upside For Mainland Developers

0828 [Dow Jones] CICC doesn't expect mainland developers' strong sales growth to continue in 2010, but "stable growth is certainly" underpinned by booming economy, lower interest rate, while supply will take time to catch up.

House expects "at least 30%-40% upside" for HK-listed mainland property stocks in next 6 months, with earnings, valuations to both rise, triggered by higher-than-market expected presales, less severe tightening policies.

Says good time to buy on dips right now; favors developers with strong balance sheets to expand like China Overseas Land (0688.HK), China Resources Land (1109.HK), higher presales with good earnings visibility such as Greentown China (3900.HK), recognized brand name with large growth potential such as Sino-Ocean Land (3377.HK), Longfor Properties (0960.HK).

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: CS Keeps Overweight On China Property Companies

1120 [Dow Jones] Credit Suisse maintains Overweight on China's property sector, saying central economic work conference results "officially removed the macro overhang for the China property sector at least for first half 2010," as there are now fewer uncertainties about real estate policy.

Adds government's focus on increasing supply of commodity housing would benefit companies like E-House (EJ), target price $30 vs $21.16 (down 1.5%) yesterday.

Accelerating urbanization by removing restrictions on urban residents' status in small, medium-size cities "long-term positive" for property sector as "companies that have more exposure in smaller cities should benefit."

Source: Dow Jones Newswire

[LenaHuat]

On Taiwanese TV last nite, there was a piece of news abt the rush to buy condo units at Hangzhou. The developer sold 600 units in one nite. A new record has just been set for Shanghai condos too

[LenaHuat]

I found the newslink for the above:
房價飆漲 億萬豪宅眾人搶破頭

I wish I could find the newsreel for the above. I saw the Chinese really 搶破頭 in Hangzhou.

[LenaHuat]

The Chinese govt will reinstate the property tax rule to 5 years. Earlier on, it was reduced to 2 years at the onset of the financial crisis. Looks like equity prices of Chinese property companies will slide more 2day.

[winston]

The State Council made an announcement last night clarifying various govt supportive measures on domestic consumption:

3) Property (Negative):

a. Exemption period of property transaction tax is resumed to 5 years (it was cut to 2 years at the end of last year to spur demand)

b. This means if you buy and sell a property within 5 years, the transaction is subject to a business tax of 5.5%

c. Other policies on property remain unchanged (i.e. discount on interest rate and down payment for first home buyers are still intact)

d. Sales view: Headline is definitely negative, but this should have more impact on the secondary market, which is still relatively small (only tier 1 cities like Shanghai, Beijing, Shenzhen and Guangzhou have meaningful secondary markets).

Demand from second/third tier cities should be a lot more sensitive to interest rate and down payment, and they will remain unchanged. We should also expect some of the demand to become front end loaded as there are more transactions being closed by the end of this year in order to enjoy this tax benefit.

It seems hard for the sector to hugely outperform into 2010, and stock picking will become much more important in this sector.

[winston]

From UOBKH:-

Recommendation

Wait for better entry levels. This news adds comfort to our belief that transaction volume will slow notably from early next year, which in turn will put pressure on share prices. We only have three BUYs for the sector: two laggards (Yanlord (YLLG SP/BUY/Target: S$2.74) and Sino-Ocean Land (3377 HK/BUY/Target: HK$9.80)) and a special situation (Poly HK (119 HK/BUY/Target: HK$12.67)). But in general, we continue to see better entry levels in the coming weeks.

[millionairemind]

Dec 10, 2009
China property prices surge

BEIJING - PROPERTY prices in Chinese cities rose at the fastest pace in 16 months in November, the government said on Thursday, amid growing concerns about bubbles building in real estate.

Property prices in 70 medium and large cities rose 5.7 per cent in November from a year ago, the biggest jump since July 2008, figures from the National Bureau of Statistics showed.

It was the sixth successive year-on-year increase, snapping a months-long slump dating from December last year when the government attempted to rein in runaway prices and as the global economic crisis kicked in.

After trying to cool the market a year ago, Beijing this year responded to the economic crisis with tax breaks and other measures to prop up the property sector, which accounts for more than 20 per cent of urban fixed investments.

But concerns are rising that bubbles are building in real estate due to rampant speculation. The house price-to-income ratio - the ratio of the median market home price and the median annual household income - is expected to hit 8.3 in China this year, the Chinese Academy of Social Sciences said in a report on Monday. A rational range is between three and six, the think tank said.

In response to mounting public complaints about excessively high house prices, the government said this week it would curb speculative home purchases next year - possibly by restricting bank loans to the sector. -- AFP.