Investment Rating - The report maintains a "Buy" rating for C&D International, CR Land, and China Jinmao, while holding a "Hold" rating for COLI [27][29]. Core Insights - The strong share price momentum in the China real estate sector is attributed to the market's rapidly rebuilding of policy expectations, with investors optimistic about government efforts to stabilize the housing market [2][3]. - A bottom-up approach is emphasized, focusing on stocks that can remain resilient despite potential sales slowdowns, particularly state-owned enterprises (SOEs) that can monetize their assets effectively [3][4]. - The report highlights three key stocks: CRL for its quality investment property portfolio, C&D for its young landbank, and China Jinmao for its luxury project track record [4][8]. Summary by Sections Market Overview - Recent sales data shows a mixed performance across different tiers of cities, with Tier-1 cities experiencing a 36% year-on-year decline in sales, while Tier-2 and Tier-3 cities showed smaller declines of 19% and 18% respectively [9]. Stock Analysis - CR Land is noted for its strong sales momentum and solid execution track record, with a target price of HKD 36.30, implying a 26.5% upside [29]. - C&D International is highlighted for its competitive edge and expected margin recovery, with a target price of HKD 21.20, indicating a 27.4% upside [29]. - China Jinmao is recognized for its turnaround story and ambitious sales targets, with a target price of HKD 1.60, suggesting a 28% upside [29]. - COLI faces uncertainty regarding its investment thesis, leading to a "Hold" rating, with a target price of HKD 14.80, reflecting a 10.8% upside [29]. Valuation Metrics - The report provides a valuation summary for various property developers, indicating significant discounts to net asset values (NAV) for several companies, with CR Land and C&D International showing promising upside potential based on their current valuations [27][29].

Investment Rating - The report maintains a positive view on select covered developers, reiterating Buy ratings on CRL, COLI, Greentown, Jinmao, and Longfor [6][50][51]. Core Insights - The housing supply ratio in China is currently at 1X, which is lower or comparable to other sample countries, indicating potential for improvement as inventory is disclosed [2][8]. - The report identifies that 37% of sample cities have a housing supply ratio below 0.9X, while 26% have a ratio above 1.1X, with the excess inventory concentrated in Tier-3 and Tier-4 cities [8][14]. - The analysis suggests that a long-term housing supply ratio of 1.1X is reasonable, implying a potential funding need of Rmb0.7tn-1.6tn for inventory buybacks, which is equivalent to 0.5-1.2% of national GDP [6][35][36]. - The government has accelerated land buyback efforts, announcing nearly Rmb400bn in buybacks, primarily focused on lower-tier cities [6][37][47]. Summary by Sections Housing Supply Ratios - The report examines 78 cities, accounting for approximately 50% of China's population and housing stock, revealing a housing supply ratio of 0.7X for Tier-1 cities, 0.89X for Tier-2 cities, and 1.02X for Tier-3/4 cities [6][8][11]. - The report builds four illustrative cases to analyze how housing ratios could change based on different assumptions regarding urban household formation and living space per capita [27][28]. Inventory Analysis - As of end-1Q25, the sample cities are estimated to have 1.5 billion square meters of unsold residential inventory, with nearly half remaining as raw land [22][25]. - The average saleable inventory is projected to last 26 months, while total unsold inventory could take up to 6 years to clear [25][22]. Developer Performance - The report highlights that covered developers have shown more resilient primary average selling price (ASP) performance compared to secondary markets, with a significant portion of land investment concentrated in top-performing markets [50][51]. - The expected improvement in margins and return on equity (ROE) beyond 2027 is supported by better investment strategies and decreasing contributions from older low-margin land banks [51][60].

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]

20 May 2025 | 7:01AM CST China Property Weekly Wrap Week 20 Wrap - Transactions rebounded with more upbeat performance from export-oriented cities Key highlights for the week: Our tariff impact assessment (Exhibit 1 to Exhibit 4, more details on methodology) showcases more upbeat performance from export-reliant cities: 1) transaction: under web-registration metrics, the most export-reliant cities outperformed in primary (+26% wow in aggregated volume vs. flattish for rest cities) but lagged peers in seconda ...

Core Viewpoint - Goldman Sachs has adjusted its forecasts for the real estate sector and covered developers due to the immediate impact of tariff measures on employment and household income, delaying the stabilization of housing prices in first- and second-tier cities to mid-2026 [2][4]. Group 1: Market Forecast Adjustments - The forecast for total housing sales volume in 2025E-2026E is expected to drop to levels comparable to 2010-2011 and 2014, with primary market GFA sold projected at 894 million sqm in 2025E, down from previous estimates [3][11]. - Property sales in RMB trillion are forecasted to decline from 11.7 in 2023 to 8.4 in 2025E, reflecting a year-on-year decrease of 13% [3][11]. - Average selling prices (ASP) in the primary market are expected to decrease by 5% in 2025E and 3% in 2026E, stabilizing by the end of 2026E [3][11]. Group 2: Secondary Market Insights - The secondary market is anticipated to face significant pressure, with sales volume expected to decline by an average of 13% for 2025-2027, driven by widening bid-ask spreads and deteriorating supply quality [4][15]. - The average ASP in the secondary market is projected to decrease by 7% in 2025E and 4% in 2026E, reflecting weakened demand-supply dynamics [17][21]. - The turnover rate in the secondary market is estimated to drop by 0.3 percentage points nationwide from 2024 to 2026E, indicating a contraction in market activity [16][20]. Group 3: Developer Performance and Strategy - Goldman Sachs has lowered the core EPS forecasts for covered developers by 4%-6% for 2025-2027, reflecting pressures from sales scale, profit margins, and land reserve quality [4][55]. - Developers are increasingly focusing on land banking in core cities, with over 80% of total land acquisition value in 2024 concentrated in the top-10 cities, indicating a strategic shift towards higher-quality land [40][54]. - The average gross profit margin (GPM) for new acquisitions in 1Q25 is estimated to show a 7 percentage point improvement compared to previous reported figures, suggesting a potential recovery in profitability for developers [51][55].

Investment Rating - The report rates the China Property sector as a "Buy" for a 2-year horizon, indicating a good time to accumulate due to improving return on equity (ROE) and expected strong sales in June [1][13]. Core Insights - The report highlights a two-year trend of improving ROE driven by asset turnover and pricing, with expectations for strong sales in June due to increased new launches in key cities [1][2]. - It notes that the top-10 cities are stabilizing with improved inventory months and less downside price risk, while earnings for 2025 are expected to be lackluster, marking the sector's peak valuation at distressed profit levels [1][4]. - The report emphasizes supportive government policies aimed at stabilizing the property market and boosting consumption, which are expected to positively impact asset prices [1][6]. Summary by Sections New Home Sales - New home sales in April showed a moderation due to supply shortages and trade dispute concerns, with a weekly average of 19.3k units sold across 34 key cities, reflecting a 24% month-over-month decline [2]. - Strong sales are anticipated in June, potentially showing positive year-over-year growth in the top 10 cities due to active replenishments [2]. Secondary Sales - Secondary sales remained robust in the top 10 cities, with an average weekly volume of approximately 30k units in mid-April, marking an 18% year-over-year increase [3]. - The National Bureau of Statistics (NBS) secondary price index showed a slight increase of 0.3% month-over-month in tier-1 cities, indicating a potential recovery in household confidence [3]. Land Purchases - Land acquisition by listed firms surged by 122% year-over-year in Q1 2025, with top-100 firms increasing land purchases by 42% [4][8]. - The competition for land has led to price hikes in tier-1 and key tier-2 cities, with major players like COLI and CR Land being the top purchasers [4]. Management Changes - The report notes significant management changes in mixed ownership firms since 2024, aimed at enhancing shareholder value and optimizing management efficiency [5]. Government Support - The State Council has expressed a supportive tone towards stabilizing the property market, with Premier Li emphasizing the need for stable employment and consumption [6].