Country Garden plans to ask Hong Kong’s High Court to delay its liquidation case until later this year, sources say, a move that would give the Chinese developer more time to work on its restructuring https://t.co/3gg81ip50i ...

Report Industry Investment Rating - Not provided in the documents Core Viewpoints - Maintain a buy recommendation for HYUELEs due to SK Hynix's resilience against trade - wars, strong global market position, solid operating cash flow, and a more balanced risk - return profile [2][6] - Expect SK Hynix's revenue and operating profit growth momentum to continue in 2025, supported by strong demand for memory used in AI services [11] Summary by Relevant Catalogs Trading Desk Comments - In Chinese IGs, TENCNT 30/BABA 31 tightened 1bp, MEITUA 30 widened 1bp, ZHOSHK 28 tightened 5bps [1] - In financials, CMINLE/CSILTD/BCLMHK Float 27 - 30s were unchanged to 2bps tighter, SUMIBK/MIZUHO 30 - 31s were 1 - 2bps tighter, BBLTB 36 - 40s closed 1 - 3bps tighter [1] - In insurance, CATLIF 34 tightened 1bp, NSINTW 34 widened 1bp, MYLIFE/NIPLIF 55s were up 0.1pt [1] - In AT1s, BNP 7.75/HSBC 6.95 Perps were up 0.2 - 0.4pt, EFGBNK 5.5/INTNED 4.25 Perps were up 0.4 - 0.6pt [1] - In HK, DAHSIN/BNKEA 32 - 34s were 1 - 2bps tighter, REGH 6.5 Perp/HYSAN 4.1 Perp/LASUDE 26 lowered 0.5 - 0.9pt [1] - In Chinese properties, ROADKG 28 - 30s were 0.2 - 2.3pts lower, ROADKG Perps were unchanged. Road King launched a holder identification for all of its three perps [1] - Outside properties, WESCHI 26 was 1.7pts higher following 1H25 positive profit alert, FOSUNI 25 - 28s were up 0.1 - 0.5pt after Fosun announced early redemption [1] - In SEA, GLPSP Perps were up 0.4 - 0.5pt, VLLPM 29 was down 0.7pt [1] - In CNH space, new CNH TEMASE 1.85 30/TEMASE 2.05 35 were 0.1 - 0.2pt lower, TEMASE 2.55 55 was 0.3pt higher; new CNH CHMEDA 2 30/CHMEDA 2.3 35 were 0.2 - 0.3pt lower [2] - LGENSO 27 - 35s tightened 1 - 3bps following a 31% qoq rise in 2Q25 operating profit from 1Q25 [2] - HYUELE 1 ½ 01/19/26 and HYUELE 2 ⅜ 01/19/31 were 2 - 5bps tighter post - results announcement, while HYUELE 6 ¼ 01/17/26 and HYUELE 6 ⅜ 01/17/28 were 2 - 5bps wider [2] - ROADKG 28 - 30s were 0.2 - 2.3pts lower yesterday and unchanged this morning. Road King and CVC seek full exit from Indonesian toll road business for USD1bn [2] - In SOE perps, CHPWCN Perp was up 0.1pt, SPICPD Perp was down 0.1pt [3] Last Trading Day's Top Movers - Top Performers: WESCHI 4.95 07/08/26 price was 92.3 with a change of 1.7; GRNLGR 5 7/8 07/03/30 price was 23.2 with a change of 1.3; NSANY 7 3/4 07/17/32 price was 101.4 with a change of 0.7; NSANY 4.81 09/17/30 price was 91.4 with a change of 0.6; EFGBNK 5 1/2 PERP price was 97.2 with a change of 0.6 [4] - Top Underperformers: ROADKG 5.9 09/05/28 price was 24.8 with a change of - 2.3; ROADKG 5.2 07/12/29 price was 23.7 with a change of - 2.3; ROADKG 6.7 03/30/28 price was 25.1 with a change of - 1.4; ROADKG 6 03/04/29 price was 24.6 with a change of - 1.2; REGH 6 1/2 PERP price was 21.7 with a change of - 0.9 [4] Macro News Recap - On Thursday, S&P was up 0.07%, Dow was down 0.70%, and Nasdaq was up 0.18%. US Jul'25 S&P Global Manufacturing PMI was 49.5 (lower than the market expectation of 52.7), and US Jul'25 S&P Global Services PMI was 55.2 (higher than the market expectation of 53.0) [5] - Trump and Powell clashed at Fed headquarters. UST yield was higher on Thursday, with 2/5/10/30 yield at 3.91%/3.98%/4.43%/4.96% [5] Desk Analyst Comments - Maintain a buy recommendation for HYUELEs. Prefer HYUELE 1 ½ 01/19/26 and HYUELE 2 ⅜ 01/19/31 for lower cash prices. They were traded at YTM of 4.7%/Z + 34bps and YTM of 4.8%/Z + 117bps respectively, and provide 6 - 30bps yield pick - up over Micron's bonds [6] SK Hynix Business and Financial Analysis - SK Hynix achieved record - high revenue and operating profit in 2Q25, driven by aggressive AI investments from leading tech companies and customers accelerating inventory purchases ahead of tariff policy changes [9] - DRAM bit shipments rose by mid - 20% qoq, ASP increased by a low - single digit qoq. NAND bit shipments surged 70% qoq, but ASP declined by a high single - digit qoq [10] - SK Hynix expects DRAM bit shipments to grow by low - to - mid single digit in 3Q25, and increase in NAND bit shipments to be limited. It shipped the industry's first HBM4 samples in Mar'25 and is optimizing performance with partners [11] - As of Jun'25, cash balance increased by 19% qoq to KRW17.0tn. Capex is expected to be higher than the original plan, especially for HBM - related equipment. M15X fab will open in 4Q25 and start full - scale DRAM production in 2026. Yong - in fab (Phase 1) is on track for completion in 2Q27 [12] - SK Hynix's leverage was lower as of Jun'25. Net debts decreased by 46% qoq to KRW4.9tn. Upcoming USD bond maturities are HYUELE Float 11/17/25 of USD300mn due in Nov'25 and two USD bonds totaling USD1.75bn due Jan'26. It is expected to refinance at reasonable costs [13] Offshore Asia New Issues - No new offshore Asia issues were priced today - Pipeline issues include Dazhou Kaisheng Construction Development Group (USD, 3yr, 7.0%, Unrated), Sichuan Zigong Huidong Development (USD, 3yr, 6.8%, Unrated), and Tianjin Binhai New Area Construction & Investment Group (USD, 3yr, 5.8%, Baa2/ - / - ) [17] News and Market Color - 134 credit bonds were issued onshore yesterday with an amount of RMB137bn. Month - to - date, 1,722 credit bonds were issued with a total amount of RMB1,842bn, a 15.8% yoy increase [18] - Adani Enterprises and MetTube partner to build copper tube ecosystem; Adani Energy 1Q26 total EBITDA rises 14.5% yoy to INR20.17bn (cUSD233.5mn) [18] - China Energy Reserve and Chemicals Group adjourns meetings for six bonds due to lack of quorum; Country Garden agrees to key terms with key bank creditors on offshore restructuring [18] - Fosun unit looks to issue RMB1bn yulan bonds by mid - Aug'25; Danantara looks to buy Jiangsu Delong smelter unit in Indonesia through MIND ID [18] - JD.com in advanced talks to buy German retailer Ceconomy for EUR2.2bn (cUSD2.6bn); Mongolian Mining 2Q25 washed coking coal sales drop 25% yoy to 1.74mn tons [18] - Samsung Heavy Industries 1H25 sales rise 6% yoy to KRW5.18tn (cUSD3.76bn); Sands China eyes USD2.7bn annual EBITDA run rate [18] - Sinopec 1H25 oil and gas production rises 2% yoy to 262.81mn barrels of oil equivalent; SoftBank - backed tech startup InMobi plans India IPO at up to USD6bn valuation [18]

Chinese developer Country Garden has agreed to some key restructuring terms a group of bank creditors had demanded https://t.co/uiYTsmCtOk ...

Country Garden’s sales slid again in June, with the developer faring worse than peers, as a lack of policy support dampened demand https://t.co/c4dVbZWSiB ...

Investment Rating - The report rates several developers as "Buy," specifically C&D International, CR Land, China Jinmao, and KE Holdings, while others are rated as "Hold" [8][22]. Core Insights - The report highlights a positive sentiment in the market due to progress in debt restructuring and the reopening of the offshore bond market, which is expected to benefit Longfor and distressed developers aiming for a turnaround in 2026 [8][22]. - Distressed developers are anticipated to gradually exit property development and shift towards asset-light project management, contingent on significant debt reduction to stabilize their balance sheets [2][8]. - Local governments are increasing the issuance of special bonds to acquire unsold inventories, which could create a virtuous cycle aiding distressed developers in housing delivery and debt repayment [4][8]. Summary by Sections Debt Restructuring - CIFI announced a successful offshore debt restructuring scheme involving a USD 5.3 billion reduction, representing a 66% haircut to offshore debt [2]. - Seazen successfully issued a USD 300 million note at an 11.88% coupon rate, indicating a rebuilding of offshore investors' appetite for the property sector [3]. Market Dynamics - The report notes that while share prices of distressed developers exhibit volatility, there is a preference for developers positioned to benefit from the primary market recovery, such as CRL, C&D, China Jinmao, and KE Holdings [5][8]. - The report anticipates that selected distressed developers may see a new beginning in 2026 as their debts are resolved and inventories cleared [5][8]. Financial Estimates - Revenue forecasts for several developers have been revised down by 1-37% due to slower-than-expected contracted sales, while Shimao's forecasts have been revised up due to better-than-expected performance [23]. - Gross margin forecasts for four developers have been cut by 0.7-7.8 percentage points, reflecting the impact of price cuts, while estimates for CIFI and Country Garden have been adjusted upwards [24]. Inventory and Impairment - Local governments are focusing on acquiring unsold inventories, primarily from projects developed by local government financing vehicles (LGFVs) or state-owned enterprises (SOEs), which may expand the scope for distressed developers [4][8]. - The report provides detailed metrics on inventory impairment across various developers, indicating a trend of managing inventory levels more effectively [11].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it. Core Insights - Top 100 developers' contract sales weakened by 10% YoY in May 2025, slightly worsening from a 9% decline in April 2025, while MoM sales increased by 3% [2][6][19] - The decline in sales is attributed to macro uncertainties amid the trade war, impacting homebuyer confidence, particularly in export-heavy cities like Ningbo and Guangzhou [2] - Tier-1 cities continue to drive the primary market, with primary sales volume in these cities increasing by 26% on a 30-day moving average basis, compared to a mere 3% for 30 cities combined [2] - SOE developers outperformed the overall market with a 4% YoY decline in contract sales, while semi-SOE and POE developers saw declines of 22% and 15% respectively [4][23] - The luxury housing market remains active, with notable sales such as Shanghai's Kangding 19 project, which sold out 91 units in 41 minutes with a 265% oversubscription rate [2] Summary by Sections Sales Performance - In May 2025, the combined sales of the top 100 developers dropped 10% YoY, with a 3% MoM increase, reflecting ongoing market challenges [6][19] - For the first five months of 2025, combined sales declined 8% YoY, consistent with the previous month [2][19] Secondary Market Activity - Secondary listings in 50 cities increased by 8.7% YoY and 7.8% YTD, while Tier-1 cities saw a 4.3% YoY and 5.6% YTD increase [3][9] - The secondary transaction volume for 12 cities increased by 7% YoY in May, although this was a slowdown from 17% in April [3][29] Developer Performance - SOE developers maintained a market share of 53%, outperforming POE developers at 32%, with Jinmao and COLI showing significant contract sales growth of 72% and 21% YoY respectively [4][23] - The report indicates a potential shift in sales models from presale to completed properties, which may favor SOE developers due to their lower financing costs [4] Market Outlook - The report anticipates stabilization in the property market, indicated by positive land sales YoY after three years of decline and a robust luxury housing market [2]

Core Viewpoint - The current real estate market policies, including interest rate cuts, inventory storage, and urban village renovations, are leading to significant structural differentiation in housing prices across different cities [1] Group 1: Interest Rate Cuts - Short-term stimulus from interest rate cuts has been observed, with the 5-year LPR reduced to 3.6%, allowing first-time homebuyers to access rates as low as 3.1%, resulting in a monthly payment reduction of approximately 600 yuan for a 1 million yuan loan [3] - In major cities like Shenzhen and Hangzhou, the increase in public housing loan limits has lowered the threshold for home purchases, leading to an 82% month-on-month increase in new home transactions in first-tier cities [3] - Long-term constraints exist, particularly in third and fourth-tier cities where inventory digestion periods exceed 36 months, limiting the demand stimulation effect of interest rate cuts [4] Group 2: Inventory Storage - The inventory reduction effect of the storage policy is evident, with 24 provinces initiating stock housing storage, converting 2.9 million square meters of idle housing into affordable housing [5] - The Central Index Research Institute estimates that 300 billion yuan in affordable housing re-loans could store approximately 7.161 million square meters of residential properties, accounting for 7.6% of the 2023 commodity housing sales area [5] - Execution challenges arise due to discrepancies between storage prices and developers' expectations, leading to conflicts in some cities [6] Group 3: Urban Village Renovation - In first-tier cities, the renovation of urban villages has led to significant value appreciation, with areas like Xiamen and Guangzhou restarting monetary compensation, and some projects seeing price increases of up to 74.4% [7] - However, in third and fourth-tier cities, the scale of renovations does not match demand, potentially exacerbating oversupply issues [8] Group 4: City-Level Price Trends - First-tier cities are experiencing structural price increases, particularly in core areas where population inflows and urban village renovations are driving prices up by 5%-10% [9] - Strong second-tier cities like Hangzhou and Chengdu are seeing moderate price increases of 3%-5%, while weaker second-tier cities like Harbin are facing significant price declines [11][12] - Third and fourth-tier cities are undergoing continuous adjustments, with resource-dependent cities experiencing price drops due to population outflows [13] Group 5: Conclusion and Strategy Recommendations - Housing price trends indicate that core areas in first-tier cities may see price increases of 5%-10%, while weaker cities may experience declines of 5%-10% [18] - Investment strategies suggest that first-time buyers should focus on core areas in first-tier cities or strong second-tier cities, while investors should avoid weaker cities and look for opportunities in urban renovation areas [19] - Policy expectations include potential further interest rate cuts and expanded inventory storage measures, particularly in cities with population inflows [20]

Group 1: Market Operations - The central bank conducted a reverse repurchase operation of 295.9 billion yuan for 7-day terms at a fixed rate of 1.5%, resulting in a net injection of 120.5 billion yuan after accounting for 175.4 billion yuan maturing on the same day [2][3]. Group 2: Funding Conditions - The weighted average interest rate for major deposit institutions in the interbank market remained high, with overnight borrowing rates for credit bonds between 1.9% and 2%, and 7-day funds slightly increased to 2.3%-2.4% [3]. Group 3: Interest Rates and Yields - The yields on major interbank bonds mostly declined, with 1-year government bonds at 1.6200% (down 0.50 basis points) and 10-year government bonds at 1.8675% (down 1.75 basis points) [7]. Group 4: Bond Market Developments - The Ministry of Finance plans to issue RMB green sovereign bonds in London, while the Shenzhen Stock Exchange aims to promote long-term capital into the bond market [18].

Summary of the Conference Call on Hong Kong and Mainland China Real Estate Industry Overview - **Industry**: Real Estate in Hong Kong and Mainland China - **Date**: 28 February 2025 Key Points and Arguments Hong Kong Real Estate 1. **New World Development**: Released a new price list for 41 units in State Pavilia, priced between HKD 7.8 million to HKD 14.3 million per unit, translating to HKD 21,807 to HKD 32,333 per square foot after discount [5] 2. **Centa-Valuation Index (CVI)**: Declined by 4.37 percentage points week-over-week to 36.89 points, indicating potential downward pressure on property prices if it does not recover above 40 points [6] 3. **Coasto Project**: Wang On Properties reported 1,100 indications of interest for 60 units, resulting in a 17x oversubscription, with unit prices ranging from HKD 3.8 million to HKD 7.2 million [7] 4. **Sun Hung Kai Properties**: Noted signs of business improvement in the first half of the year, including faster property sales and landbank replenishment, suggesting the end of the earnings decline cycle [4] Mainland China Real Estate 1. **Land Sales in Shanghai**: The city plans to sell 13 sites with a total reserve price of RMB 11.3 billion, with significant sites in Minhang and Qingpu districts [8] 2. **CR Land Acquisition**: Acquired a plot in Beijing's Shunyi District for RMB 6 billion, with a plot ratio of 1.0 and an average value of approximately RMB 35,000 per square meter [9] 3. **Logan Group**: Over 80.8% of offshore creditors approved a debt restructuring plan, indicating progress in financial recovery [10] Market Valuation and Performance 1. **Valuation Summary**: Various Hong Kong property developers have target prices significantly above current market prices, indicating potential upside. For example, CK Asset has a target price of HKD 44.60 compared to a current price of HKD 33.90 [12] 2. **Share Price Performance**: The report includes a detailed performance analysis of various companies, showing a mixed performance over different time frames, with some companies like New World Development experiencing significant declines [21] Additional Insights 1. **Rental Pipelines**: Solid rental pipelines are expected to provide visibility on dividend outlooks for companies like Sun Hung Kai Properties [4] 2. **Market Trends**: The report highlights a cumulative decline in the CVI over the past three weeks, suggesting a cautious outlook for property prices in the near term [6] Conclusion The conference call provided a comprehensive overview of the current state of the real estate market in Hong Kong and Mainland China, highlighting both challenges and opportunities. Key players are showing signs of recovery, but market indicators suggest caution moving forward.