InvestIdeas

邁向共同富裕首部曲 中國將開徵房地產稅 TVBS文茜的世界周報-亞洲版 20211030 X 富蘭克林‧國民的基金
https://m.youtube.com/watch?v=ocZrC3X7cXE

"Unprecedented Liquidity Pressure" - Chinese Property Stocks Crater As Kaisa Misses Payment
https://www.zerohedge.com/markets/unpre ... es-payment

五年來最慘烈的 「金九銀十」滬二手房成交砍半 TVBS文茜的世界周報-亞洲版 20211113 X 富蘭克林‧國民的基金
https://m.youtube.com/watch?v=FJecwZ4Z31g

21.11.16【豐富│東南西北龍鳳配】Pt.2 房地產都是慢性病！住「恆大」套房怎麼辦？
https://m.youtube.com/watch?v=kmyFiS8x1hc

CHINA PROPERTY – SLOWLY CLIMBING THE WALL OF WORRY

The MSCI China Real Estate Index has underperformed the MSCI China Index YTD, given concerns over China Evergrande’s liquidity issues, continued regulatory headwinds facing the property sector and talks of imminent pilot property tax reforms.

However, since late Sep, we have started to see incremental positives, including supportive commentary from senior government officials and marginal policy easing.

This has helped to provide some boost to mortgage loans growth and bond issuances by selective developers.

However, one key overhang for the sector stems from pilot property tax reforms, which will be introduced to more cities given President Xi’s drive for “common prosperity” in the nation.

Uncertainties over the timing, tax rates and implementation has dampened consumer sentiment, which will continue to exert downward pressure on residential sales.

This has also been reflected in declines in the contracted sales of Chinese developers.

On a positive note, we note that over the past few months, there have been more Chinese property developers which have seen their ESG ratings being upgraded, such as China Resources Land, CIFI Group, Logan and Longfor.

This is certainly an encouraging sign and reflects the growing importance which the property sector is placing on environmental, social and corporate governance factors in their business operations.

Using the MSCI China Real Estate Index as a benchmark, valuations are unsurprisingly at cheap levels given the headwinds faced.

The MSCI China Real Estate Index is trading at a forward price-to-earnings (P/E) and price-to-book (P/B) ratio of 5.0x and 0.70x (as at 24 Nov 2021).

This is 0.8 and 1.5 standard deviations (s.d.) below their respective 5-year averages of 6.0x and 0.97x.

From a dividend standpoint, the forward dividend yield stood at 6.2%, which is 0.3 s.d. above the 5-year average of 5.9%.

We had highlighted in our previous report on 17 Sep 2021 titled “Expectations reset” that we did see selective buying opportunities in good quality developers with healthy balance sheets and an increasing ESG focus.

Since then, we have seen incrementally positive developments in the industry as what we have discussed in this report.

However, as volatile market conditions are likely to stay, we maintain our stance on being selective, and would urge a prudent and gradual approach in building up positions.

We keep Longfor Group (960 HK), China Resources Land (CR Land) (1109 HK), China Overseas Land & Investment (COLI) (688 HK) and Country Garden Services (6098 HK) as our preferred Chinese property picks.

Their share prices have rebounded 22%, 28%, 14% and 2% respectively, since our report in Sep.

On the other hand, we remain ‘Sell-rated’ on highly leveraged names such as China Evergrande (3333 HK) and Guangzhou R&F (2777 HK) and opine that they will continue to face difficulties in refinancing their debt, while future growth prospects have been severely hampered as they would have to divest their assets (especially their quality ones) and tighten their purse strings.


China property sector has unsurprisingly underperformed YTD

Seeing incremental positives within industry, but overall policy tightness and uncertainties likely to stay

Stick with quality; preferred BUYs: 960 HK, 1109 HK, 688 HK, 6098 HK; preferred SELLs: 3333 HK, 2777 HK

Source: OCBC

Abandoned Projects Shatter Confidence in China’s Home Market
https://www.theedgesingapore.com/views/ ... ome-market

Chinese real estate giants Evergrande and Kaisa continue unloading assets to cover debt
https://m.youtube.com/watch?v=9Nmv8fwm220

China home prices in biggest fall since 2015

China's property prices fell 0.3 percent month-on-month in November, the biggest decline since February 2015, according to Reuters calculations based on data released by the National Bureau of Statistics yesterday.

Source: AP

https://www.thestandard.com.hk/section- ... since-2015

Beijing Sends Warning With Evergrande
https://www.zerohedge.com/markets/beiji ... evergrande

China to ease "three red lines", encouraging state-led property M&A

Chinese policymakers plan to exclude debt accrued from acquiring distressed assets when calculating property developers' compliance with the "three red lines", financial intelligence provider REDD reported on Friday, amid unprecedented stress on the sector.

The "three red lines" policy restricts the amount of new borrowing property developers can raise each year by placing caps on their debt ratios.

Local governments including Shanghai and Guangdong held respective meetings with domestic state-owned developers last week, REDD added, after policymakers asked the firms in mid-December to acquire assets from 11 private developers with liquidity issues to ease their financial stress.

Source: Reuters

https://www.thestandard.com.hk/breaking ... -M&A%C2%A0