Core Insights - Longyan Baorun and Yuan Housing Rental Co., Ltd. has been established with a registered capital of 50 million yuan [1] - The company is wholly owned by Poly Development (600048) through indirect shareholding [1] Company Overview - The legal representative of the newly established company is Xue Shuai [1] - The business scope includes non-residential real estate leasing, housing leasing, land use rights leasing, and rental of counters and stalls [1]

Investment Rating - The investment rating for the company is "Buy" and is maintained [12]. Core Views - The company's earnings are under short-term cyclical pressure, but as a leading state-owned enterprise, there is still room for valuation recovery. The cyclical pressure is reflected in the settlement end, with Q3 performance falling short of expectations. However, considering the ample unrecognized resources, the gradual recognition of high-profit land reserves, and the diminishing impact of asset impairment, future performance is expected to maintain a certain scale. The company remains the industry leader in sales, actively expanding investments, and continuously optimizing land reserve quality through adjustments [2][12]. Summary by Sections Financial Performance - In the first three quarters of 2025, the company achieved revenue of 173.7 billion yuan, a decrease of 5.0%, and a net profit attributable to shareholders of 1.9 billion yuan, down 75.3% [6][12]. - The completion area decreased by 12.1% year-on-year, which pressured revenue. The comprehensive gross margin for Q3 was 10.8%, a decline of 4.8 percentage points, marking a new low in recent years [12]. Sales and Investment - Despite industry downturns, the company achieved sales of 201.7 billion yuan in the first three quarters of 2025, a decrease of 16.5%, with a sales area of 10.1 million square meters, down 25.1%. The average price per square meter increased by 11.5% to 20,000 yuan [12]. - The company actively expanded its investment, with land acquisition amounting to 60.3 billion yuan, an increase of 45.3%, and the area acquired was 2.9 million square meters, up 30.1% [12]. Business Diversification - The company reported operational income of 2.54 billion yuan in the first half of 2025, an increase of 13%. The property management segment showed stable performance, with a net profit of 890 million yuan, up 5.3% [12]. - The successful issuance of 8.5 billion yuan in convertible bonds at a low interest rate of 2.20% reflects investor recognition of the company's value [12]. Future Outlook - Although the projected delivery volume for 2025 is expected to decline, the rising average sales price is anticipated to support revenue. The company is expected to maintain a certain scale of performance despite cyclical pressures [12]. - The estimated net profits for 2025-2027 are projected to be 1.7 billion, 2.2 billion, and 2.7 billion yuan, respectively, with corresponding P/E ratios of 53, 42, and 34 times [12].

Group 1 - Poly Development and Poly Real Estate are both subsidiaries of China Poly Group and operate independently [1] - Poly Development indirectly holds a 50% stake in Poly Real Estate through its ownership of Poly (Hong Kong) Holdings Limited [1]

Core Viewpoint - The company acknowledges the significant decline in its stock price and the lack of implemented valuation enhancement measures, while emphasizing its commitment to shareholder rights and operational stability amidst industry challenges [1] Group 1: Company Performance - The company's stock price has shown a poor performance this year, losing rebound momentum and remaining deeply undervalued for over half a year [1] - Profit levels have decreased due to market influences, but the company aims to maintain a stable development [1] Group 2: Shareholder Engagement - The company is committed to optimizing its asset-liability structure and improving operational quality to protect shareholder interests [1] - For the fiscal year 2024, the company plans to adhere to its shareholder return plan, with a cash dividend payout ratio exceeding 40% [1]

Core Insights - The company experienced a significant improvement in sales during the National Day holiday period compared to September, although it still lags behind the same period last year [1] Group 1: Sales Performance - The company increased the promotion of quality projects and conducted sales activities during the National Day holiday [1] - Sales performance showed a notable improvement on weekends compared to September [1] - Despite the improvement, sales are still affected by overall industry conditions and market sentiment, resulting in a gap compared to the previous year [1] Group 2: Future Outlook - The company encourages investors to monitor monthly sales announcements for October's sales performance [1]

Investment Rating - The report maintains an "Outperform" rating for the real estate industry, indicating a positive outlook for the sector despite current challenges [3][28]. Core Insights - The report emphasizes the importance of high-quality development in the real estate sector, linking it closely to price stability. It notes that as of September 2025, no cities among the 70 major cities experienced a month-on-month increase in housing prices, with the price gap between new and second-hand homes widening [3][28]. - The central government's focus on real estate is expected to increase over the next five years, with new housing products improving in line with demand trends and outdated restrictive policies being lifted [3][30]. - The report highlights a competitive landscape where demand and resources are increasingly directed towards leading cities and blue-chip developers, suggesting that strong regional development will continue to stimulate market vitality [3][31]. Summary by Sections Investment Recommendations - Recommended companies include: 1) Development: A-Shares - China Vanke, Poly Developments, China Merchants Shekou, Gemdale; H-Shares - China Overseas Land & Investment 2) Commercial and residential: China Resources Land, Longfor Group 3) Property management: Onewo, China Resources Vientiane Life, China Overseas Property, Poly Property Services, China Merchants Property 4) Cultural tourism: Shenzhen Overseas Chinese Town [3][28]. Market Dynamics - The report notes that the share of core cities in the real estate market is expected to increase significantly by 2025, with concentrated land supply cities accounting for 40% of national sales in the first three quarters of 2025 [3][31]. - It discusses the government's strategy to optimize regional economic layouts and promote coordinated development, which is anticipated to enhance market vitality [3][30].

Core Viewpoint - Poly Developments' stock price has dropped 13% year-to-date, reflecting a significant contrast with its status as a "central enterprise leader" in the A-share real estate sector [2] Financial Performance - In the third quarter of 2025, Poly Developments reported revenue of 568.65 billion yuan, a year-on-year increase of 30.65%, but total profit turned to a loss of 0.6 billion yuan, with net profit attributable to shareholders dropping to a loss of 7.82 billion yuan, a nearly 300% decline [4] - The company's net profit margin has been severely impacted, with a 75.31% year-on-year decrease in net profit attributable to the parent company, indicating weakened core business profitability [2][4] Project and Cost Structure - The shift in project delivery and high costs from previous acquisitions are contributing to financial strain, with a reported loss of 10 billion yuan from non-consolidated projects in Q3 [6][12] - The average land acquisition cost has surged from 0.68 million yuan per square meter in 2021 to 2.08 million yuan per square meter by the end of 2024, a 205.88% increase, while the average selling price only rose by 12.15% during the same period [13] Market Dynamics and Strategy - The company continues to acquire land aggressively, with 290 million square meters added in the first three quarters of 2025, indicating a structural confidence in high-tier cities despite current profitability challenges [7][8] - The industry is shifting focus from mere sales expansion to prioritizing project profitability and product structure adaptability, reflecting a broader trend in the real estate sector [8] Shareholder Dynamics - The share of net profit attributable to minority shareholders has increased significantly, with the ratio reaching 7:3, indicating a fundamental shift in profit distribution [10][11] - This structural challenge has been exacerbated by the ongoing market adjustments, where cooperative development projects have become a hidden risk source, diluting the company's profit margins [15]

Group 1 - Hangzhou's Fuyang, Lin'an, Tonglu, Chun'an, and Jiande districts will launch a "home purchase + consumption voucher" subsidy program from October 27 to December 31, offering 100,000 yuan electronic vouchers for each new residential unit purchased and signed within the period, totaling 56 million yuan [1] Group 2 - Poly Developments successfully issued 3 billion yuan in medium-term notes, with a 3-year note at a 2% interest rate and a 5-year note at a 2.21% interest rate, both starting from October 22, 2025 [2] Group 3 - Shenzhen Shenfang A reported a net profit attributable to shareholders of 145 million yuan for the first three quarters of 2025, with a revenue of 899 million yuan, marking a year-on-year increase of 331.66% and a net profit increase of 2791.57% [3] Group 4 - China Merchants Jinling's total sales for the first three quarters of 2025 reached approximately 25.662 billion yuan, a decrease of about 8.44% year-on-year, with a total sales area of approximately 994,500 square meters, down 23.26%, while the average selling price increased by 19.32% to approximately 25,800 yuan per square meter [4] Group 5 - Jinke Properties announced a 250 million yuan loan from a restructuring investor as part of its restructuring plan, with a total of at least 750 million yuan to be provided, aimed at supporting the company's liquidity and new project investments [5]

Group 1: Real Estate Loans - As of the end of Q3 2025, the balance of RMB real estate loans reached 52.83 trillion yuan, showing a year-on-year decline of 0.1%, with a reduction of 840 billion yuan in the first three quarters [1] - The balance of real estate development loans was 13.61 trillion yuan, down 1.3% year-on-year, but increased by 925 billion yuan in the first three quarters [1] - The balance of personal housing loans was 37.44 trillion yuan, down 0.3% year-on-year, with a decrease of 241.1 billion yuan in the first three quarters [1] Group 2: Foreign Exchange Management - As of the end of September 2025, the Guangdong branch processed 3,870 transactions for overseas residents purchasing properties in mainland China, with cross-border income amounting to 34.19 billion yuan [2] - The policy of facilitating "Hong Kong and Macau residents' property purchase settlement" has been expanded throughout Guangdong province, effectively meeting the reasonable housing needs of overseas individuals [2] Group 3: Company Developments - On October 27, 2025, Shangkun Real Estate will be delisted due to failure to meet the resumption guidelines set by the stock exchange, reflecting ongoing deterioration in the company's operational and financial conditions [3] - Jinke Co., Ltd. secured a loan of 250 million yuan from related parties to support its restructuring plan, alleviating liquidity pressure and restoring market confidence in its operational sustainability [4] - Poly Developments successfully issued 3 billion yuan in medium-term notes, with proceeds aimed at refinancing maturing debts and improving cash flow, benefiting from low-interest financing advantages [5]

Investment Rating - The report maintains a "Positive" rating for the real estate and property management sectors [3][28]. Core Views - The "Good House" policy is expected to create new pathways for recovery in core cities, leading to a resurgence in leading companies and opening new development avenues with "new products, new pricing, and new models" [3][28]. - The current monetary easing cycle highlights the advantages of commercial real estate, with a reassessment of the value of quality commercial properties already beginning to manifest [3][28]. Industry Data Summary New Home Transaction Volume - In the week of October 18-24, 2025, new home transactions in 34 key cities totaled 2.566 million square meters, a decrease of 1.9% week-on-week [4][6]. - Year-on-year, October transactions in these cities fell by 23%, with first and second-tier cities down 20.7% and third and fourth-tier cities down 42.6% [6][7]. Second-Hand Home Transaction Volume - In the same week, second-hand home transactions in 13 cities totaled 1.155 million square meters, down 6.1% week-on-week [12]. - Cumulatively, October transactions were down 20.1% year-on-year, with a significant drop of 38.4% compared to September [12][13]. Inventory and Supply - In the week of October 18-24, 2025, 15 cities launched 710,000 square meters of new supply, with total transactions of 1.05 million square meters, resulting in a transaction-to-launch ratio of 1.48 [20]. - The total available residential area in these cities was 89.75 million square meters, a decrease of 0.4% week-on-week [20]. Policy and News Tracking Macro Policies - The 20th Central Committee's Fourth Plenary Session emphasized the need to promote high-quality development in the real estate sector [28][31]. - The National Bureau of Statistics reported a 13.9% year-on-year decline in real estate investment for the first nine months of 2025, totaling 6.7706 trillion yuan [28][29]. Company Dynamics - China Overseas Development reported a 14% decline in sales revenue for the first nine months of 2025, totaling 170.5 billion yuan [35]. - Poly Development issued new bonds totaling 5 billion yuan with a 2% interest rate and 25 billion yuan with a 2.21% interest rate [35][36]. Market Performance Review - The SW Real Estate Index rose by 1.51%, underperforming the CSI 300 Index, which increased by 3.24%, resulting in a relative return of -1.73% [38]. - The average price-to-earnings (P/E) ratio for mainstream AH-listed real estate companies for 2025 and 2026 is projected at 19.7 and 17.5 times, respectively [38][42].