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]

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 - The core viewpoint of the article highlights the steady growth of China's consumption market and the reduced impact of online shopping on offline consumption, presenting new opportunities for the commercial real estate sector [1][2] - From January to September 2023, the total retail sales of consumer goods in China reached 36.6 trillion yuan, a year-on-year increase of 4.5%, indicating a stable expansion of the overall consumption market [2] - The contribution rate of final consumption expenditure to GDP growth in the first half of 2023 was 52%, an increase of 7.5 percentage points compared to the previous year, emphasizing the significant role of consumption in economic growth [2] Group 2 - The competition among existing centralized commercial properties is intensifying, with the number of new openings slowing down due to market saturation and reduced investment in commercial projects [4] - As of 2024, the number of new centralized commercial projects is expected to be 436, down from an average of 660 per year from 2015 to 2019 [4] - The total number of existing centralized commercial projects in China has surpassed 10,000, with a total commercial area of 708 million square meters [4] Group 3 - The operational performance of domestic brand commercial real estate companies has been strong, with retail sales growth outpacing the overall retail sales growth [5] - Major listed companies like China New Town Development and China Resources Land have reported significant increases in rental income and retail sales, with China Resources Land's rental income reaching 19.4 billion yuan and retail sales reaching 195.3 billion yuan in 2024 [5] - The successful operation of commercial real estate companies relies on their ability to position themselves effectively in different consumer markets, categorized into high-end, high-energy, and sinking markets [5] Group 4 - In the high-end market, the ability to attract customer traffic has become crucial for successful mall operations, with luxury sales showing signs of recovery [6] - The opening of the "Louis" maritime-themed landmark at Xinyi Taikoo Hui in Shanghai significantly boosted foot traffic and sales, with weekend visitor numbers increasing by over 100% [6] - High-end malls are diversifying their offerings by incorporating dining and experiential retail to reduce reliance on traditional retail sales [7] Group 5 - The high-energy market, including outlets and themed commercial spaces, has shown strong performance, particularly in core cities where consumer preferences are shifting towards practical and emotional value [8] - Outlets have outperformed overall retail sales growth, with visitor numbers and sales increasing significantly compared to national averages [8] - The two-dimensional market is rapidly growing, with the number of related brand openings increasing significantly, indicating a new growth point for offline commercial spaces [9] Group 6 - The sinking market is experiencing higher consumption growth rates, with three to four-tier cities showing better performance compared to first and second-tier cities [10] - New Town Holdings' Wu Yue Plaza has successfully attracted foot traffic and sales growth by leveraging its extensive brand partnerships, achieving a 19% increase in both metrics in 2024 [11]

Core Viewpoint - The information disclosure evaluation results for listed companies in 2024 show a significant decline in ratings for several companies, including New城控股, which dropped from an A rating to a C rating compared to 2022 [1][2]. Group 1: Company Performance - New城控股's information disclosure rating decreased two levels from A to C in 2024 [1]. - The company is primarily engaged in real estate development and sales, with its revenue composition being 68.63% from real estate development sales, 29.06% from property leasing and management, and 2.31% from other sources [3][4]. Group 2: Industry Context - New城控股 belongs to the real estate development sector, specifically commercial real estate, and is associated with various concept sectors including REITs, elderly care industry, new retail, mid-cap, and heavily held by funds [4].

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the transition of China's property industry from new construction to rental asset operations, driven by the emergence of the C-REIT (China Real Estate Investment Trust) market, which is expected to reshape the competitive landscape and long-term investment thesis of the industry [2][12][31]. Core Insights - **C-REIT Market Potential**: The C-REIT market is projected to reach a market capitalization of approximately US$1 trillion, which is over 30 times larger than its current size. This growth is anticipated to attract long-term yield investors [4][11]. - **Policy Support**: Since the third quarter of 2025, supportive policies have accelerated the issuance of onshore REITs, expanding the asset scope and issuer background, which is crucial for the growth of C-REITs [4][11]. - **Investment Strategy**: Listed developers are seen as a viable way to access the expanding C-REIT theme due to their large rental portfolios and strategic commitment to divesting mature properties into REITs [5][11]. Key Beneficiaries - **Short-term Beneficiaries**: CR Land (1109.HK) is identified as the primary beneficiary in the short term, followed by Seazen (601155.SS) and Longfor (0960.HK), due to their substantial but highly pledged malls [6][11]. - **Medium-term Beneficiaries**: Other developers such as COLI (0688.HK), Vanke (2202.HK), and Poly (600048.SS) may benefit from the expansion of REIT coverage due to their rich non-retail rental assets [6][11]. Market Dynamics - **Transition Drivers**: The transition is driven by diminishing housing demand due to aging demographics and regulatory changes that have lowered development returns on equity (ROE) [13][21][23]. - **Regulatory Changes**: The introduction of the "three red lines" policy has tightened leverage for developers, leading to a shift towards a dual-track housing supply system focusing on public and rental housing [22][23]. Competitive Landscape - **Shift to Rental Focus**: Developers are increasingly focusing on recurring income from rental properties as the attractiveness of traditional property development diminishes. This shift is expected to reshape the competitive landscape and investment thesis of the industry over the next 10-20 years [29][31]. - **Challenges in Transition**: The transition to a rental-focused model is slow due to the asset-heavy nature of rental businesses, slow asset turnover affecting ROE, and limited exit channels for unlocking asset value [29][30]. Long-term Investment Thesis - **Evolving Investment Logic**: The investment logic is expected to shift from high leverage and turnover models to a focus on stable recurring income and dividend visibility, reflecting a more balanced growth approach [31][35]. - **Future Focus on REITs**: As developers transform into landlords and the C-REIT market matures, the focus may shift from developers to REITs with strong recurring income assets, similar to trends observed in developed markets [35][41]. Regulatory Framework for C-REITs - **Development Stages**: The development of C-REITs has progressed through four stages: initial preparation, gradual progress, increased promotion, and full acceleration, with significant regulatory milestones achieved since 2021 [43][44]. - **Regulatory Characteristics**: C-REITs have stringent regulations compared to developed markets, including requirements for shareholding, leverage, and cash distribution [46][48]. Conclusion - The transition in China's property industry towards a rental-focused model and the growth of the C-REIT market present significant investment opportunities. Developers with strong rental portfolios are well-positioned to benefit from this shift, while the evolving regulatory landscape will further facilitate the growth of C-REITs in the coming years [4][11][31].

Core Viewpoint - New City Holdings reported a decline in both revenue and profit for the first three quarters of 2025, while commercial operation income increased, indicating a shift in focus amid ongoing challenges in the residential sector [2][3]. Financial Performance - For the first three quarters of 2025, New City Holdings achieved operating revenue of 34.37 billion yuan, a year-on-year decrease of 33.3%, and a net profit attributable to shareholders of 970 million yuan, down 33.1% year-on-year [2]. - The decline in performance is attributed to a reduction in the scale of development business turnover, with a completed area of 3.5 million square meters, down 59.8% year-on-year [3]. - Total assets decreased from 534.2 billion yuan in 2021 to 307.2 billion yuan in 2024, with liabilities reduced from 437.2 billion yuan to 224.5 billion yuan, indicating a significant contraction of over 200 billion yuan in three years [3]. Debt Management - New City Holdings is approaching the end of its debt repayment peak, with only two debts remaining due in 2025: a $250 million overseas bond maturing in October and a 2 billion yuan medium-term note maturing in December [3]. - As of the end of Q3 2025, the company’s payable construction funds were 38.39 billion yuan, down from 45.27 billion yuan at the beginning of the year, reflecting a reduction in cash outflow pressure [3]. Financing and Market Position - New City Holdings has successfully navigated financing channels, issuing two medium-term notes totaling 1.9 billion yuan and two unsecured U.S. dollar bonds totaling $4.6 billion in 2025 [4]. - Despite the successful financing, the company faces inventory pressure, with the overall real estate market experiencing a slowdown in sales [4]. Commercial Operations - The company has opened and managed 176 Wuyue Plazas, generating total commercial operation revenue of 10.51 billion yuan, an increase of 10.8% year-on-year, with an average occupancy rate of 97.7% [6]. - New City Holdings is expected to generate approximately 14 billion yuan in taxable rental income and around 13 billion yuan in revenue in 2025, while its market valuation stands at approximately 31.872 billion yuan [6]. Investor Sentiment - Investors express concerns regarding New City Holdings' ability to navigate through economic cycles, especially following recent incidents involving the misuse of funds by major shareholders, which have led to audit complications [6].

Core Viewpoint - New City Holdings has received recognition from both domestic and international capital markets due to its robust performance and unexpected results in the commercial sector, leading to an upgrade in its rating by Morgan Stanley to "Overweight" and an increase in its target price by 25% to 19.7 yuan [1][2] Group 1: Company Performance - New City Holdings achieved a total commercial operation revenue of approximately 10.511 billion yuan in the first nine months of 2023, representing a year-on-year growth of 10.82% [1] - The company has established 205 comprehensive projects across 141 cities, with a total rental property occupancy rate of 97.7% as of the end of the third quarter [1] - Despite a lackluster overall retail market, New City Holdings recorded an 11% revenue growth in the first nine months of the year, attributed to its strong position in core urban areas [2] Group 2: Market Outlook - Morgan Stanley forecasts that New City Holdings' rental income will grow at a compound annual growth rate of approximately 8%, reaching 15.2 billion yuan by 2027, supported by government initiatives to boost consumption [2] - The recent "Urban Commercial Quality Improvement Action Plan" issued by the Ministry of Commerce and other departments aims to support commercial real estate projects, which may provide long-term financing support for New City Holdings [2] - The company is expected to leverage its scale advantage with over 200 Wuyue Plazas to gain more financing benefits, ensuring stable development in the new real estate cycle [2]

Investment Rating - The report assigns a "Buy-A" rating to several companies, including New城控股 with a target price of 18 yuan, 绿城中国 with a target price of 11.7 yuan, and 中国金茂 with a target price of 2.1 yuan [5]. Core Insights - The real estate market in core cities is experiencing accelerated price declines, particularly in the second-hand housing market, with a notable drop of 4.4% since April 2025 [1][11]. - The price of newly built homes in first-tier cities has shown resilience, with a year-on-year decline of only 0.7% in 2025, significantly narrowing from a decline of 3.8% in 2024 [1][22]. - The structural contradictions in the market are being released due to previous price control policies, leading to an influx of new homes into the second-hand market, which is exerting downward pressure on prices [2][11]. Summary by Sections 1. Market Trends - Since the third quarter of 2025, the real estate market has faced increasing adjustment pressures, particularly in the second-hand housing market of core cities, which is undergoing a rapid price decline [1][11]. - The price of newly built homes in first-tier cities has shown a strong anti-decline resilience, with a year-to-date decline of only 0.6% [1][22]. 2. Price Dynamics - The price of second-hand homes in first-tier cities has dropped significantly, with a 15.1% decline in the price of newly built homes from the second quarter to the third quarter of 2025 [1][37]. - The number of new listings for second-hand homes built between 2018 and 2025 has increased by 67.7% from 2023 to 2025, indicating a significant supply influx [2][36]. 3. Policy Environment - Following the relaxation of real estate control policies in August, there was a brief improvement in sales in September, but the downward pressure on prices has continued [3][12]. - The report suggests that companies like 金地集团 and 新城控股 may benefit from the improved policy environment and sales recovery [3][12]. 4. Regional Analysis - In cities like Shanghai and Hangzhou, new home prices have increased by 2.6% and 1.8% respectively since April 2025, while second-hand home prices have faced significant declines [22][23]. - The report highlights that the price dynamics in core cities are characterized by a divergence between new and second-hand homes, with new homes maintaining relative stability while second-hand homes experience significant price drops [21][22]. 5. Future Outlook - The report anticipates that the real estate policies may further loosen by the end of the year, which could provide additional support to the market [3][12]. - The ongoing structural changes in the market, particularly the influx of new homes into the second-hand market, are expected to continue influencing price trends [2][41].

Investment Rating - The investment rating for the real estate industry is "Positive" (maintained) [3] Core Views - The real estate sector is a crucial asset allocation and investment direction for Chinese households, with stable housing prices being significant for facilitating economic circulation. The 20th Central Committee's Fourth Plenary Session emphasized promoting high-quality development in real estate, indicating potential policy support [4][48] - There is an anticipated wave of development for high-quality housing due to policy guidance and changes in supply-demand structure, with a focus on core cities and strong land acquisition capabilities [4][48] Market Performance - The Shanghai Composite Index rose by 0.1%, the Shenzhen Component Index rose by 0.7%, and the ChiNext Index rose by 0.5%. The real estate sector (Shenwan) fell by 0.7% during the week [4][7] - In the new housing market, 42 key cities recorded a total transaction of 2.43 million square meters, a week-on-week increase of 4.8%, but a year-on-year decrease of 41.1% [14][18] - For the month of October, new housing transactions in 42 key cities totaled 8.43 million square meters, a year-on-year decrease of 34.6% [18][19] Data Tracking New Housing Transactions - In the week of October 25-31, new housing transactions in 42 key cities totaled 2.43 million square meters, with a year-on-year decrease of 41.1% [14] - For October, new housing transactions totaled 8.43 million square meters, a year-on-year decrease of 34.6% [18] Second-Hand Housing Transactions - In the week of October 25-31, second-hand housing transactions in 21 key cities totaled 2.05 million square meters, a year-on-year decrease of 23.6% [30] - For October, second-hand housing transactions totaled 7.32 million square meters, a year-on-year decrease of 21.2% [33] Industry News - The Ministry of Housing and Urban-Rural Development is promoting a system of selling existing homes to mitigate delivery risks. Additionally, five departments issued a plan to support qualified commercial real estate projects in issuing Real Estate Investment Trusts (REITs) [45] - Guangzhou has released guidelines for constructing quality housing, emphasizing green construction and energy-efficient appliances [45] - Policy adjustments in housing provident funds have been made, including increasing the maximum ratio of monthly repayments to family income from 55% to 60% in Hainan [45] Company Announcements - In Q3 2025, several companies reported their net profits, with notable figures including China Vanke at -16.07 billion yuan (a year-on-year decrease of 98.6%) and China Merchants Shekou at 1.05 billion yuan (a year-on-year decrease of 11.4%) [48][50] - Financing activities include a loan agreement where Shenzhen Metro Group will provide up to 22 billion yuan to China Vanke [48][50]

Group 1 - The real estate ETF (512200) has seen a 0.56% increase, with a trading volume of 39.944 million yuan as of November 5, 2025 [1] - The index it tracks, the CSI All Share Real Estate Index, also rose by 0.56%, with notable increases in constituent stocks such as Yingxin Development (up 9.33%) and Hainan Airport (up 6.45%) [1] - Since the beginning of the year, the real estate ETF has grown by 1.098 billion shares, indicating a strong interest in the sector [1] Group 2 - According to CICC, the real estate market is in the early "stabilization" phase, with a projected slight narrowing of the total housing sales decline to -5.0% in 2026 [2] - Huatai Securities suggests that the market is bottoming out, supported by reduced new home supply and marginal improvements in purchasing power, with a focus on policy adjustments to enhance buyer sentiment [2] - The industry is expected to show a "dumbbell" differentiation trend, with structural stabilization signals emerging, particularly in "good housing" companies and commercial real estate opportunities [2] Group 3 - The real estate ETF (512200) closely tracks the CSI All Share Real Estate Index, providing a comprehensive analysis tool for investors by categorizing the index into various industry levels [3] - The top ten weighted stocks in the index include Poly Developments, Vanke A, and Zhangjiang Hi-Tech, indicating a concentration of investment in these key players [3]