Summary of China Merchants Shekou's Conference Call Company Overview - **Company**: China Merchants Shekou - **Date**: November 17, 2025 Key Points Industry and Market Conditions - The real estate market is currently in a bottoming phase, with core assets in first and second-tier cities showing strong demand and improvement in transaction volume [2][3][6] - Core city housing prices are stabilizing, particularly in Shanghai where multiple key land parcels have been acquired, supporting future sales [2][3] - The company is focusing on the top 10 core cities in China, gradually reducing its land acquisition scope [2][5] Financial Performance - As of the end of Q3, the company reported a cash balance of 85 billion yuan and a net cash flow from operating activities of 3.1 billion yuan [2][3] - Revenue and pre-tax gross margin increased in the first three quarters, but net profit attributable to shareholders slightly declined [2][3] - The company anticipates a potential decline in gross margin in Q4, but overall is in a bottoming process, with expectations for gradual recovery post-2026 [2][3][7] Sales and Project Development - From January to October, the company achieved a signed sales area of 5.64 million square meters and a sales amount of 156 billion yuan, remaining stable compared to the previous year [3][4] - New projects in Hangzhou have high sales rates, with many achieving over 90% sell-through on first launches [5] - Total available sales value as of the end of October is approximately 200 billion yuan, with strong land acquisition performance this year supporting future sales expectations [4][5] REITs and Asset Management - The company has issued REITs for industrial parks and rental housing, with plans to introduce consumer-oriented commercial real estate REITs [2][8] - The issuance of REITs is slow, impacting revenue minimally but significantly affecting profits [9][10] - The company is actively working on asset disposal and land exchange to improve cash flow and reduce non-core assets [11] Dividend Policy and Shareholder Returns - A three-year shareholder return plan has been established, maintaining a dividend payout ratio of over 40%, not less than 50%, regardless of performance fluctuations [4][12] Impairment and Valuation - The company expects some impairments this year due to market price pressures, but overall impairment pressure is manageable given its conservative net asset and debt levels [4][13] Future Outlook - The company believes that macroeconomic improvements will enhance supply-demand relationships in the real estate market, with expectations for policy support to stabilize the market [6][7] Strategic Focus - The company aims to lead the future direction of real estate development with a focus on quality housing, products, and services [6][7] This summary encapsulates the key insights from the conference call, highlighting the company's strategic direction, financial health, and market outlook.

Investment Rating - The report rates the real estate industry as "Outperform the Market" [5] Core Insights - New home transaction area has turned positive on a month-on-month basis, with a narrowing year-on-year decline. The transaction area for new homes in 40 cities reached 194.1 million square meters, up 12.7% month-on-month, but down 32.8% year-on-year, with the year-on-year decline narrowing by 14.2 percentage points compared to the previous week [5][16] - The second-hand home transaction area also turned positive month-on-month, with a year-on-year decline narrowing. In 18 cities, the transaction area for second-hand homes was 163.2 million square meters, up 5.7% month-on-month, but down 22.7% year-on-year, with the year-on-year decline narrowing by 9.2 percentage points compared to the previous week [5][50] - The inventory area of new homes increased month-on-month but decreased year-on-year, with a total inventory area of 11,338 million square meters across 12 cities, reflecting a month-on-month increase of 0.3% and a year-on-year decrease of 11.5% [5][41] - The land market saw a decrease in transaction volume and price on a month-on-month basis, with total land transaction area at 938.5 million square meters, down 67.1% month-on-month and down 1.3% year-on-year. The total transaction price was 23.2 billion yuan, down 65.1% month-on-month and down 35.4% year-on-year [5][61] - The report highlights a positive outlook for the real estate industry, suggesting that companies with strong liquidity, high market share in key cities, and innovative business models in commercial real estate are likely to outperform [5] Summary by Sections 1. Key City New Home Market, Second-Hand Home Market, and Inventory Tracking - New home transaction area has turned positive month-on-month, with a narrowing year-on-year decline [15] - Second-hand home transaction area also turned positive month-on-month, with a narrowing year-on-year decline [50] - New home inventory area increased month-on-month but decreased year-on-year [41] 2. Land Market Tracking - Total land transaction area decreased significantly month-on-month and year-on-year [61] - The average land price per square meter increased month-on-month but decreased year-on-year [61] 3. Policy Overview - The report discusses various policies aimed at stimulating the real estate market, including easing conditions for withdrawing housing provident fund for home purchases [102][104] 4. Sector Performance Review - The real estate sector showed an absolute return of 2.7%, with relative returns increasing compared to the market [105]

Investment Rating - The report rates the real estate industry as "Outperforming the Market" [1] Core Views - The real estate market is experiencing a decline in sales, with new home transaction volume turning negative year-on-year due to high base effects from the previous year and weakening policy impacts [2][3] - The "14th Five-Year Plan" emphasizes high-quality development in real estate, indicating a shift in focus from speculative investment to improving living conditions [2][3] Summary by Sections New Home Transactions - In October, new home transaction area increased by 3.6% month-on-month but decreased by 26.6% year-on-year, with a cumulative year-to-date decline of 7.2% [3][12] - First-tier cities saw a significant year-on-year decline in new home transactions, with Beijing down 28%, Shanghai down 32%, and Shenzhen down 61% [3][13] - Second-tier cities experienced a 19.5% year-on-year decline, while third and fourth-tier cities saw a 26.7% decrease [3][14] Second-Hand Home Transactions - Second-hand home transaction area decreased by 14.8% month-on-month and 30.0% year-on-year in October, with a cumulative year-to-date increase of 3.4% [20][21] - First and second-tier cities also reported negative year-on-year growth in second-hand home transactions, with notable declines in cities like Beijing and Shenzhen [20][21] Inventory and Absorption - New home inventory and absorption cycles decreased, with a total inventory area of 11,291.6 million square meters, down 1.3% month-on-month and 12.3% year-on-year [3][9] - The overall absorption cycle is 18.2 months, indicating a slight improvement in inventory management [3][9] Land Market - The land market saw a 12.5% year-on-year decline in transaction volume, with average land prices decreasing by 14.7% [3][10] - The average land premium rate was 3.5%, reflecting a slight increase from the previous month but a decrease year-on-year [3][10] Real Estate Companies - The top 100 real estate companies reported a 39.8% year-on-year decline in total sales in October, with a cumulative decline of 16.7% year-to-date [3][10] - However, land acquisition amounts increased by 8.2% year-on-year, indicating a potential recovery in land investment [3][10] Policy Developments - The "14th Five-Year Plan" emphasizes high-quality development in real estate, with specific strategies to improve housing quality and meet the needs of urban workers [3][20] - Local policies are being optimized to support the construction of quality housing, with cities like Chengdu and Guangzhou implementing new design standards [3][20] Investment Recommendations - The report suggests focusing on companies with stable fundamentals in core cities, smaller firms showing significant breakthroughs, and commercial real estate companies exploring new consumption scenarios [3][20]

Core Insights - The real estate industry is experiencing a wave of executive changes, particularly among state-owned enterprises and major players [2][8] - Recent leadership adjustments are seen as a response to changes in the real estate sales market and the need for companies to adapt their operational strategies [2][8] Executive Changes - On November 14, China Merchants Shekou announced the resignation of Jiang Tiefeng as non-executive director and chairman, with Zhu Wenkai appointed as his successor [3] - On November 13, Longfor Properties announced the resignation of Chairman Li Wenjiang due to work adjustments, with Zhao Changsong temporarily taking over [6] - Five Mining Real Estate also reported the resignation of He Jianbo as chairman, with Dai Pengyu appointed as acting chairman [6] Market Dynamics - Since September, several leading real estate companies, including China Merchants Shekou, Vanke, and China Resources Land, have disclosed significant personnel changes [2][8] - The adjustments are primarily concentrated in key positions such as chairman, vice chairman, and general manager, driven by work reallocations and personal reasons [8][9] Cross-Group Movements - Recent trends indicate a "cross-group flow" of executives, with notable appointments such as Xu Rong becoming chairman of China Resources Land after previously serving in various roles within the group [10] - The movement of executives across different sectors is aimed at leveraging diverse management experiences to enhance operational efficiency and strategic alignment [12] Strategic Implications - The ongoing changes reflect a broader shift in the industry as it transitions from rapid expansion to a focus on refined operations, resource integration, and risk management [13] - State-owned enterprises are proactively restructuring their leadership to better position themselves for future growth opportunities in urban renewal and asset management [13]

Core Insights - The real estate industry is experiencing a wave of executive changes, particularly among state-owned enterprises and major players [1][5][6] - Recent adjustments in leadership are seen as a response to changes in the real estate sales market and the need for companies to adapt their operational strategies [1][5][6] Group 1: Executive Changes - On November 14, China Merchants Shekou announced the resignation of Jiang Tiefeng from his roles as non-executive director and chairman, with Zhu Wenkai appointed as his successor [1] - On November 13, Dalong Real Estate reported that Chairman Li Wenjiang resigned due to work adjustments, with Zhao Changsong appointed as acting chairman [3] - Five Mining Real Estate also announced leadership changes on the same day, with He Jianbo resigning and Dai Pengyu appointed as acting chairman [3] Group 2: Market Adaptation - The frequency of executive changes has increased as the year-end approaches, indicating a shift in corporate strategies in response to market conditions [1][5] - According to Yan Yujin from Shanghai Yiju Real Estate Research Institute, these personnel adjustments reflect the need for companies to align with market changes and internal operational adjustments [1][5] Group 3: Central State-Owned Enterprises - Central state-owned enterprises are at the forefront of these leadership changes, with key positions such as chairman and general manager being affected [5][6] - The adjustments are often due to work reallocations and personal reasons, highlighting the higher scrutiny and requirements for performance in these enterprises [6] Group 4: Cross-Group Movements - Recent trends show an increase in cross-group movements among executives, such as Xu Rong's appointment as chairman of China Resources Land after previously serving in various roles within the group [8] - The movement of executives like Wu Bingqi from China State Construction to China Overseas Land and Investment is aimed at leveraging cross-sector management experience to enhance business integration [8][9] Group 5: Industry Transformation - The real estate sector is transitioning from rapid expansion to a focus on refined operations, resource integration, and risk management, with state-owned enterprises leading this transformation [9] - The new generation of executives is expected to drive change and adapt to the evolving market landscape, reflecting a strategic shift in organizational and talent structures [9]

Core Points - The 27th High-Tech Fair C³ Future Architecture Conference opened in Shenzhen, focusing on integrating resources across the real estate, design, construction, technology, and solutions sectors to promote high-quality development in the industry [2][3] - The event was guided by the Shenzhen Municipal Housing and Construction Bureau and featured participation from various industry associations and government leaders, highlighting the importance of quality housing standards in response to national policies [3][4] - The concept of "good housing" has been officially recognized in China's government work report, marking a shift towards high-quality living standards as a national strategic direction [4][7] Company Initiatives - China Merchants Shekou officially launched the "Good Housing" quality standards and the "Good House+" brand, aiming to translate macro policies into actionable housing solutions [7][8] - The company has developed a comprehensive system that includes seven dimensions, 28 scenarios, and 485 technical details to address user needs and enhance living experiences [24][26] - The "Good House" technical system is designed to exceed national standards and provide a holistic living solution, addressing the core question of what a "good house" should be in the new era [8][9] Quality Standards - The "Good House" quality standards encompass seven key dimensions: safety, comfort, sustainability, intelligence, craftsmanship, aesthetics, and service [9][11][13][15][17][19][21] - Each dimension includes specific features, such as smart safety systems, health-focused designs, energy-efficient solutions, and comprehensive service offerings, ensuring a well-rounded living experience [9][11][13][15][17][19][21] - The initiative aims to create a new paradigm for quality housing that integrates technology and human-centered design [8][9] Market Response - The first batch of "Good House" projects will be implemented in key locations in Shenzhen, responding to market demand and showcasing the company's commitment to high-quality living [24][30] - The company has a long history of involvement in Shenzhen's development, having completed over 60 projects and served more than 100,000 families [24][26] - The launch of flagship projects like the Houhai and Guiwan projects is expected to set a benchmark for future developments in the region [30][31]

Core Viewpoint - The real estate industry is experiencing a wave of executive changes, particularly among state-owned enterprises and major players, as companies adjust to shifts in the market and operational strategies [1][3]. Group 1: Executive Changes - On November 14, China Merchants Shekou announced that Jiang Tiefeng resigned from his positions as non-executive director, chairman, and chairman of the nomination committee, with Zhu Wenkai appointed as his successor [1]. - On November 13, Wuzhou International announced that He Jianbo resigned from his roles as executive director and chairman, with Dai Pengyu appointed as acting chairman [2]. - Other companies, including China Resources Land and Vanke, have also reported significant executive changes since September, indicating a broader trend in the industry [1][3]. Group 2: Market Adjustments - According to Yan Yujin from the Shanghai E-House Real Estate Research Institute, the changes in management are a response to evolving market conditions and the need for companies to adjust their operational costs and strategic goals [1][3]. - The adjustments are primarily seen in key positions such as chairman, vice chairman, general manager, and CFO, driven by work relocations and personal reasons [3]. Group 3: Cross-Group Movements - Recent trends show an increase in "cross-group movements" among executives, such as Xu Rong's appointment as chairman of China Resources Land after previously serving in various roles within the group [5]. - Wu Bingqi's transition from China State Construction to the leadership of Overseas Chinese Town Group is another example of this trend, aimed at leveraging cross-sector management experience [5][6]. Group 4: Strategic Focus - The ongoing executive changes reflect a strategic shift within state-owned enterprises towards growth and adaptation in a more competitive environment, emphasizing the importance of experienced management in navigating the current market landscape [6].

Core Viewpoint - The 27th High-Tech Fair C³ Future Architecture Conference highlighted the launch of the "Good House" quality standards by China Merchants Shekou, emphasizing the integration of real estate, design, construction, technology, and solutions to promote high-quality development in the industry [3][4][7]. Group 1: Event Overview - The conference took place on November 14, 2025, at the Shenzhen International Convention and Exhibition Center, featuring participation from over 5,000 enterprises and international organizations [3]. - The event was guided by various authoritative institutions and attended by around 400 representatives from government, industry, and media [4]. Group 2: Industry Context - 2025 marks a pivotal year for China's housing construction, transitioning from "housing for all" to "quality housing," with the "Good House" concept included in the government work report for the first time [7]. - The real estate market is currently undergoing significant adjustments, with a focus on enhancing residential quality and services as a means to achieve high-quality development [7]. Group 3: Company Initiatives - China Merchants Shekou's "Good House" quality standards aim to translate national policies into actionable housing solutions, reflecting the company's 46 years of experience in the residential sector [9][28]. - The company has developed a comprehensive system that includes seven dimensions and 485 technical details to address the evolving needs of customers [27]. Group 4: Quality Standards Framework - The "Good House" framework encompasses seven key dimensions: safety, comfort, sustainability, intelligence, craftsmanship, aesthetics, and service, each supported by specific technical modules [12][13][15][17][19][21][23][25]. - The initiative aims to create a holistic living experience that integrates safety, health, environmental sustainability, and smart technology into residential spaces [12][19][27]. Group 5: Future Directions - China Merchants Shekou plans to continue expanding the "Good House" standards across various cities, contributing to the high-quality development of the real estate sector and enhancing the living experience for families [33]. - The company emphasizes the importance of technological innovation and human-centered design in meeting the evolving demands of modern living [33].

Group 1 - The real estate sector is experiencing significant stock price increases, with Yingxin Development leading at 10.06%, followed by Shoukai Co. at 9.98%, Hefei Urban Construction at 9.97%, China Wuyi at 9.93%, and Huaxia Happiness at 9.85% [1] - The Real Estate ETF (515060) has risen by 0.51%, with a latest price of 0.783 yuan and a turnover rate of 3.12%, indicating strong performance among constituent stocks [1] - Dongguan Securities reports that while the transaction area for new and second-hand homes remains negative year-on-year in Q3, the decline has narrowed compared to 2024 [1] Group 2 - New construction and development investment continue to decline, with tight funding in the industry, indicating that the sector is still in a deleveraging phase [1] - The overall loss level of real estate companies has further expanded compared to the end of Q2, suggesting that the fundamentals are still in a "bottoming" phase [1] - Future policy measures and the stabilization and recovery of industry fundamentals will drive the sector's market trends [1] Group 3 - The industry is expected to shift from "high leverage, high turnover" to a focus on "quality, service, and sustainability," with urban renewal unlocking potential in existing stock [1] - In the context of industry reshuffling and clearing, there is a favorable outlook for stable operations of leading central state-owned enterprises and regional leaders focusing on first and second-tier cities, including Poly Development (600048), Binjiang Group (002244), and China Merchants Shekou (001979) [1]

Investment Rating - The report maintains a preference for high-quality companies in the real estate sector, specifically recommending: 1) Development: A-Shares - China Vanke, Poly Developments, China Merchants Shekou, Gemdale; H-Shares - China Overseas Land & Investment; 2) Residential: Longfor Group; 3) Property Management: Onewo, China Resources Mixc Lifestyle Services, China Overseas Property, Poly Property Services, China Merchants Property; 4) Cultural Tourism: Shenzhen Overseas Chinese Town [63][70]. Core Insights - October data showed a significant decline due to high base effects, expected to continue until year-end. Both investment and demand sides exhibited accelerated declines, with development investment year-on-year growth at -23.2% and new construction area at -29.3%. Sales amount and area decreased by -25.1% and -19.6% respectively [63][71]. - The base effect is anticipated to narrow the year-on-year decline in 2026, but it cannot be linearly extrapolated for long-term industry judgments. Continuous tracking of industry trends and high inventory levels is necessary [64][72]. - The current inventory reduction trend persists, with a rapid decline in completed areas indicating a decrease in unsold projects. The proportion of unsold units in construction is rising, suggesting that the industry faces significant challenges in inventory reduction [64][73]. Summary by Sections 1. Investment Decline and Sales - In the first ten months of 2025, real estate development investment decreased by 14.7% year-on-year, with a notable decline in new construction area by 19.8% [6][10]. - Sales figures also reflected a downturn, with total sales area down by 6.8% and sales amount down by 9.6% compared to the same period in 2024 [27][8]. 2. Funding Sources - Total funding sources for real estate reached 7.89 trillion yuan, a decrease of 9.7% year-on-year. Domestic loans accounted for 15.42% of funding sources, with a decline of 1.8% year-on-year [47][49]. 3. Inventory and Sales Ratios - As of October 2025, the nationwide unsold housing area was 7.56 billion square meters, with a sales-to-completion ratio of 2.06, indicating ongoing inventory challenges [39][44]. 4. Market Outlook - The report suggests that while short-term new projects may drive sales, long-term inventory issues remain due to high debt levels among developers. The market is currently treating new and old projects separately, which may be feasible in the short term but poses long-term pressures [64][73].