Investment Rating - The investment rating for the real estate industry is "Positive" (maintained) [3][4] Core Viewpoints - The report emphasizes that real estate is a crucial asset allocation and investment direction for Chinese households, and stabilizing housing prices is significant for facilitating economic circulation. The policy environment is expected to strengthen further, promoting high-quality development in the real estate sector. There is an anticipated wave of development for high-quality residential properties due to policy guidance and changes in supply-demand structure [4][48]. Market Performance - The Shanghai Composite Index rose by 1.1%, while the real estate sector (Shenwan) declined by 0.2% during the week [4][7]. - In the new housing market, 154 million square meters were sold across 42 key cities from November 1 to November 7, representing a 38.7% decrease from the previous week and a 46.7% year-on-year decline [4][13]. - The second-hand housing market saw 191 million square meters sold in 21 key cities during the same period, reflecting a 7.6% decrease week-on-week and a 26.7% year-on-year decline [4][28]. Data Tracking - For new housing, the cumulative sales in November (up to the week of November 7) were 154 million square meters, showing a 195.2% increase month-on-month but a 46.7% decrease year-on-year [4][17]. - In the second-hand housing market, cumulative sales for November reached 191 million square meters, indicating an 895.9% increase month-on-month but a 26.7% decrease year-on-year [4][31]. Industry News - The National Development and Reform Commission and other departments issued a plan to promote the development of smart cities, aiming to establish over 50 fully digital transformation cities by the end of 2027 [4][45]. - Shenzhen is supporting the conversion of idle non-residential properties into affordable rental housing, while Hunan's Pingjiang County is implementing a comprehensive approach to selling existing homes [4][45]. Company Announcements - In October, major real estate companies reported significant declines in sales, with China Overseas Development at 186.6 billion (down 55.1% year-on-year) and Poly Development at 211.2 billion (down 50.1% year-on-year) [4][48].

Group 1 - Hong Kong real estate stocks experienced a general rise, with Longfor Group up 3.33%, China Resources Land up 3%, and Agile Group up 3.4% [1] - Other notable increases include R&F Properties, Jin Hui Holdings, Ronshine China, and Jianfa International Group, each rising approximately 2%, while Midea Real Estate, Longguang Group, New City Development, and China Overseas Macro Holdings rose over 1% [1] Group 2 - The China Index Academy recently released the October financing report, indicating that the total bond financing in the real estate sector for October 2025 reached 51.24 billion yuan, a year-on-year increase of 76.9% [1] - The issuance of credit bonds in October also saw a year-on-year increase, primarily from state-owned enterprises, with real estate credit bond financing amounting to 32.7 billion yuan, up 50.7% year-on-year, accounting for 63.8% of the total [1] Group 3 - CITIC Securities suggests that 2026 may be a critical year for real estate companies to enter a balance sheet repair phase, with some firms potentially reaching the bottom of a long-term profit cycle [1] - Companies that manage to recover first are likely those with well-positioned assets in good cities, operational investment properties, or financial assets with appreciation potential [1]

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [14] Core Insights - The industry is currently experiencing downward pressure, but after over four years of adjustment, it may have entered the latter half of the cycle. Individual performance among companies is beginning to show significant differentiation. Structural turning points in profitability are expected due to optimized land reserves, with some high-quality companies already seeing performance improvements [22][12][20] Summary by Sections Profitability - Revenue decline has narrowed, with a year-on-year decrease of 2.7% for key real estate companies in Q1-Q3 2025. The gross profit margin improved by 0.1 percentage points to 9.3%. However, individual profitability is increasingly differentiated, with companies like Binhai Group and Urban Development seeing over 40% growth in net profit [8][21][26] Debt Management - Maintaining financial safety is crucial, with a slight increase of 0.6% in interest-bearing debt by the end of Q3 2025. The overall debt risk in the industry is being cleared, and companies are beginning to tilt towards operational sustainability while ensuring financial safety [9][48][49] Cash Flow - Operating cash receipts saw a year-on-year decline of 9.3%, but the decrease has narrowed significantly. Investment activities remain restrained, and financing activities continue to show net outflows. Companies are focusing on cash flow safety through stringent cash management [10][24][48] Operations - Sales decline has narrowed, with a year-on-year decrease of 12.2% in sales amount for key companies. However, land acquisition has become more aggressive, with a 110.4% increase in land acquisition amount. The focus is shifting towards land quality, with floor prices rising by 38.9% [11][20][22]

Investment Rating - The report maintains a "Positive" rating for the real estate and property management sectors [3]. Core Insights - The real estate market is experiencing significant pressure with new home sales declining sharply due to high base effects from the previous year. The report highlights a 45% week-on-week drop in new home transactions across 34 key cities [3][4]. - Policy initiatives are being implemented to support the industry, including measures for digital transformation and localized policies to stimulate housing demand [3][29]. - The report identifies potential investment opportunities in the "Good House" policy and the revaluation of commercial real estate, suggesting a shift in business models for real estate companies [3]. Summary by Sections Industry Data - New home sales in 34 key cities totaled 158.6 million square meters, reflecting a 45% decrease week-on-week and a 47% year-on-year decline for November [3][4]. - The inventory of unsold residential properties in 15 cities increased slightly by 0.2%, with a current available area of 89.5 million square meters [3][20]. Policy and News Tracking - The National Development and Reform Commission has launched a digital transformation action plan aimed at promoting smart city initiatives and property digitalization [3][29]. - Localized policies include Fuzhou linking real estate company credit ratings to pre-sale fund supervision, and Suzhou offering tax rebates for home purchases [3][29]. Company Announcements - Major real estate companies reported significant declines in sales for October 2025, with Poly Developments at 211.2 billion yuan (-50.1%) and China Overseas Development at 186.6 billion yuan (-55.1%) [3][36]. - Financing activities include China Merchants Shekou providing an 800 million yuan loan guarantee for its subsidiary, and a reduction in bond interest rates by Joy City [3][36].

Investment Rating - The report maintains an "Overweight" rating for the real estate industry [4]. Core Views - The report emphasizes that policy measures are being driven by fundamental economic pressures, suggesting that the current policy intensity may exceed that of 2008 and 2014, and is still in progress [4]. - Real estate serves as an early-cycle indicator, making it a key economic barometer for investment [4]. - The competitive landscape in the industry is improving, with leading state-owned enterprises and select mixed-ownership and private companies performing well in land acquisition and sales [4]. - The report continues to favor investments in first-tier and select second- and third-tier cities, which have shown better performance during sales rebounds [4]. - Supply-side policies, including land storage and management of idle land, are crucial areas to monitor, with first- and second-tier cities expected to benefit more [4]. Summary by Sections 1. Current Resident Price Expectations - According to the central bank's survey, the proportion of urban depositors who are pessimistic about housing prices has returned to levels seen in Q3 2024, with optimism below 10% [11]. - In Q3 2025, 9.1% of residents expect prices to rise, while 55.6% expect them to remain stable, and 23.5% anticipate a decline [11]. - The report notes that the "924" policy was introduced during a period of market pessimism, leading to a marginal improvement in confidence, but this has waned over time due to a lack of new policies [11]. 2. Market Review - The Shenwan Real Estate Index decreased by 0.2% this week, underperforming the CSI 300 Index by 1.05 percentage points, ranking 24th among 31 Shenwan primary industries [2]. - New home sales in 30 cities totaled 134.6 million square meters, down 41.6% month-on-month and 47.2% year-on-year [2]. - Second-hand home sales in 14 sample cities totaled 190.2 million square meters, down 8.3% month-on-month and 28.0% year-on-year [34]. 3. Credit Bond Issuance - This week, 12 credit bonds from real estate companies were issued, totaling 10.25 billion yuan, an increase of 5.2 billion yuan from the previous week [3]. 4. Investment Recommendations - The report suggests focusing on real estate-related stocks due to the ongoing policy-driven recovery and the potential for improved performance in quality real estate companies [4]. - Recommended stocks include major players in both H-shares and A-shares, as well as local state-owned enterprises and property management firms [4].

Primary Market - A total of 26 offshore bonds were issued this week (November 3 - November 7, 2025), including 9 offshore RMB bonds and 17 USD bonds, with issuance scales of 10.3996 billion RMB and 10.58 billion USD respectively [1] - The largest single issuance in the offshore RMB bond market was 3 billion RMB by China Railway Construction Corporation, while the highest coupon rate was 6.6% issued by Shandong High Creation Holdings Group [1] - In the USD bond market, the largest single issuance was 500 million USD by China Cinda (Hong Kong) Holdings, with the highest coupon rate of 5.15% issued by the Asian Development Bank [1] Secondary Market - The yield on Chinese USD bonds mostly declined this week, with the Markit iBoxx Chinese USD Bond Composite Index down 0.02% to 251.02 [2] - The investment-grade USD bond index increased by 0.05% to 243.65, while the high-yield USD bond index decreased by 0.53% to 244.48 [2] - The real estate USD bond index fell by 1.16% to 184.4, while the city investment USD bond index rose by 0.06% to 153 [2] Benchmark Spread - As of November 7, 2025, the spread between the 10-year benchmark government bonds of China and the US narrowed to 228.72 basis points, a decrease of 1.52 basis points from the previous week [3] Rating Changes - On November 3, China Chengxin International Credit Rating Co. withdrew the long-term credit rating of "BBBg-" for Chongqing Fuling Lingang Economic Zone Construction Development Group due to commercial reasons [5] - On November 6, Fitch Ratings withdrew the "A-" rating for Jiangxi Railway Aviation Investment Group Co., Ltd. as the company chose not to participate in the rating process [5] Domestic News - The People's Bank of China resumed open market operations for government bond trading, with a net injection of 20 billion RMB in October [6] - On November 5, the Ministry of Finance successfully issued 4 billion USD in sovereign bonds in Hong Kong, with a total subscription amount of 118.2 billion USD, 30 times the issuance amount [7] - The Deputy Governor of the People's Bank of China, Lu Lei, announced measures to support the development of the offshore RMB market, including regular issuance of RMB central bank bills in Hong Kong [8] Offshore Debt Alerts - On November 5, Sunac China announced that its offshore debt restructuring plan was approved by the High Court [10] - On November 6, Yuexiu Property announced a financing agreement for a term loan of 600 million HKD [11] - On November 6, Country Garden's offshore debt restructuring plan was approved with over 75% of creditor votes in favor [12] - On November 7, Shimao Construction reported a significant lawsuit involving approximately 11.291 billion RMB and issues related to bond defaults and overdue debts [13]

Core Insights - The real estate sector is experiencing significant pressure with high base growth rates leading to a decline in market performance [1] - The report maintains a "Buy" rating for the industry, indicating potential investment opportunities despite current challenges [2] Market Performance - In October 2025, the transaction volume of commodity residential properties in 46 cities decreased by 33.3% year-on-year, with a notable decline in first-tier cities at 39.1% [11][12] - The cumulative transaction volume from January to October 2025 shows a 10.9% year-on-year decrease [11] - The second-hand housing market also faced challenges, with transaction volumes in 11 cities down by 21.3% year-on-year [35] Market Sentiment - The second-hand housing prices fell by 1.7% month-on-month in October 2025, marking a total decline of 13.0% since the beginning of the year [5][35] - Inventory levels in the new housing market showed a slight decrease, with a 2.1% reduction in short-term inventory in 10 key cities [5] Policy Environment - The "14th Five-Year Plan" emphasizes promoting high-quality development in real estate, shifting from suppression to encouragement of reasonable demand [5][29] - The government is gradually lifting restrictive measures, which may positively impact market sentiment in the long term [5] Land Market Dynamics - In October 2025, the land transfer revenue in 600 cities dropped by 27.8% year-on-year, indicating a cooling land market [5] - The average land premium rate fell to 3.3%, the lowest since 2025, reflecting cautious bidding behavior among developers [5] Company Performance - The top 100 real estate companies reported a sales amount of 276.6 billion yuan in October 2025, a 41% year-on-year decline [29] - State-owned enterprises showed a year-on-year sales decline of 37%, while private enterprises faced a more severe drop of 52% [30] Investment Outlook - The SW Real Estate Index fell by 2.37% in October 2025, underperforming the broader market by 2.4 percentage points [5] - The report suggests holding quality real estate development companies, as the market is expected to stabilize and recover gradually [5]

Group 1: Policy and Industry Trends - Guangzhou will implement 100% prefabricated construction for residential land starting in 2026, with a target of exceeding 500 billion yuan in total output value for the smart construction and industrialized building industry by 2030 [1] - The new policy aims to drive high-quality development in the construction industry through a combination of mandatory standards and incentive measures, creating new opportunities for real estate companies and upgrading the industry chain [1] Group 2: Market Supply and Demand - In November, new home supply in 28 cities increased by 5% month-on-month but decreased by 46% year-on-year, indicating overall market pressure [2] - The recovery in first-tier cities is primarily driven by Beijing and Guangzhou, while second-tier cities show a mixed performance, and third- and fourth-tier cities have seen significant month-on-month increases from a low base [2] Group 3: Corporate Financial Developments - Country Garden's offshore debt restructuring plan received 96.03% approval from creditors, aiming to reduce interest-bearing debt by approximately 84 billion yuan and confirm around 70 billion yuan in restructuring gains [3] - Yuexiu Property secured a 600 million HKD term loan, indicating financial stability and potential for sustainable development amid industry risk clearance and policy support [4] - China Merchants Shekou successfully listed a 4 billion yuan corporate bond with a 1.90% fixed interest rate, reflecting ongoing low-cost financing and debt optimization strategies [5]

Group 1 - The company has entered into a financing agreement with a bank, providing a term loan of 600 million HKD with a maturity of 12 months from the first drawdown date [1] - The financing agreement includes a covenant that triggers a default event if the controlling shareholder, Yuexiu Enterprises (Group) Co., Ltd., holds less than 30% of the voting shares or ceases to be the single largest beneficial shareholder [1] - As of the announcement date, Yuexiu Enterprises beneficially owns approximately 44% of the company's issued shares [1]

Core Viewpoint - Yuexiu Property (00123) announced a financing agreement with a bank to secure a loan of HKD 600 million, with a term of 12 months starting from the first drawdown date [1] Group 1 - The company will act as the borrower in the financing agreement [1] - The loan amount is set at HKD 600 million [1] - The loan term is 12 months from the date of the first drawdown [1]