30 January 2026 | 5:15PM CST Equity Research China Property: 3RL removal not new, but raise market expectations on timely policy support to strengthen YTD positive momentum On Jan 28th, onshore news reported that multiple property developers (spanning SOE/POE entities of stable/distressed operating conditions) confirmed that central regulators no longer require monthly submission of "Three-Red-Lines" ("3RL") indicator data. Our conversations with a couple of developers indicate that such monthly reporting h ...

Vi e w p o i n t | 29 Jan 2026 01:59:47 ET │ 13 pages China Property Three Red Lines to Ease but Unlikely to Leverage Up for Investment in ST CITI'S TAKE Policies pacing up: talk of easing "three red lines" — Property firms are no longer required to report "three red lines" indicators to authorities (Bloomberg, 29 Jan). We note the "three red lines" were implemented since Aug'2020 in an aim to limit debt and encourage sector deleveraging. Indeed, after the Qiushi Journal article (link) that set a supportive ...

Summary of China Property FY25E Preview Industry Overview - The report focuses on the **China Property** sector, particularly the financial outlook for FY25E and the implications for FY26-30E. Key Points and Arguments Financial Performance Expectations - **Kitchen Sinking**: Anticipated write-offs and lower gross profit margins (GPM) in FY25E are expected to create a lower base for a fresh start in 2026-30E, with most companies likely to report profits rather than losses, especially state-owned enterprises (SOEs) [1] - **Sales Targets Ambiguity**: There is uncertainty regarding sales targets for FY26E due to challenges in the second half of FY25 and a high base in Q1 2025, leading to expected declines in Q1 2026 [1] - **De-stocking and Inventory Management**: De-stocking efforts are on track, but lower sales are expected due to new product offerings (version 4.0) that provide better quality [1] - **Restructuring Outcomes**: Companies that have completed restructuring are projected to post significant net profits following debt reductions or debt-to-equity swaps, with questions raised about potential second restructuring plans [1] Earnings Downgrades and Misses - **Core Profit Decline**: A 34% decline in core profits is expected across 15 companies with no credit issues, with GPM dropping to 13.9% from 15.5% in 2024 [2] - **Specific Company Performance**: - **CRL**: Expected to miss expectations with a 17% year-over-year decline, reporting RMB 21.2 billion, primarily due to the absence of REIT disposal gains [2] - **Longfor**: Anticipated loss of RMB 2 billion, with stable recurring profits but no dividends [2] - **Poly Development**: Announced an 85% profit decline [2] - **Yuexiu**: Expected to report minimal profit due to write-offs [2] - **Greentown**: Similar challenges noted [2] Land Investment Trends - **Land Acquisition Growth**: Listed companies are expected to increase land investments by 15% year-over-year, with 58% of acquisitions occurring in the first half of FY25 [4] - **Top Buyers**: The top five companies accounted for 71% of the sector's land acquisitions, with notable growth from COGO (+96% year-over-year) and Jinmao (+78%) [4] Balance Sheet and Cash Flow - **Cash Flow Pressure**: Expected to alleviate in FY26E as capital expenditures for pre-sales delivery peak in FY25 [5] - **Debt Management**: Companies are likely to focus on extending debt tenures at low costs while maintaining positive cash flow [5] Market Reactions and Policy Implications - **Short-lived Rebound**: The sector saw a positive reaction to policy easing expectations, but any rebound is expected to be short-lived due to anticipated sales declines and earnings cuts [6] - **Luxury Retail Performance**: Positive same-store sales growth in luxury malls was noted, but December showed a deceleration, missing expectations [6] Strategic Recommendations - **Top Picks**: Recommended stocks include Jinmao, CRL, and COLI based on their performance outlook [6] Additional Insights - **Dividend Payout Ratios**: Companies like Midea Real Estate are expected to maintain high payout ratios, while others like Longfor and Greentown are likely to cut dividends [12] - **Valuation Metrics**: The report includes various valuation metrics for companies within the sector, indicating significant NAV discounts and varying P/E ratios [18] This summary encapsulates the critical insights and projections for the China Property sector as outlined in the conference call, highlighting both challenges and potential opportunities for investors.

Summary of China Property Market Conference Call Industry Overview - **Industry**: China Property Market - **Key Data**: - Real Estate Investment (REI) recorded a significant decline of **-35.8% year-on-year** in December, marking the largest drop since December 2009 [1] - New home prices decreased by **-3.0% year-on-year** in December, while secondary home prices fell by **-6.1% year-on-year** [1] - The overall residential sales volume dropped by **-26% year-on-year** in December [1] Core Insights - **Investment Trends**: - REI for FY25 is projected at **Rmb8.3 trillion**, a **-17.2% year-on-year** decline, falling below residential sales of **Rmb8.4 trillion** [2] - New housing starts are at a **21-year low**, with **588 million sqm** started, down **-20% year-on-year** [2] - The area under construction decreased by **-10%**, reaching **6.6 billion sqm** [2] - **Market Conditions**: - The market is expected to face a structural decline into 2026 unless liquidity improves, with anticipated REI dropping by **-13% year-on-year** [3] - National sales are projected to decline by **-11% year-on-year**, with new home average selling prices expected to fall by **-3% year-on-year** [3] - **Policy Impacts**: - Recent government policies aim to stabilize the market, including a reduction in the down payment for commercial properties from **50% to 30%** and extending tax refunds for home sellers [4] - The easing measures are seen as risk control rather than a direct boost to the market [4] Additional Important Points - **Sales and Earnings Outlook**: - Weak sales and earnings downgrades are anticipated, with a potential short-lived rebound in share prices driven by policy expectations [5] - The luxury retail sector showed positive same-store sales growth in Q4, but December results were below expectations [5] - **Land Sales**: - Land sales in 300 cities decreased by **-9% in area** and **-23% in value**, reaching an 18-year low [2] - The government land revenue for the first 11 months of 2025 was down **-11%** [1] - **Macro Economic Indicators**: - China's GDP growth for FY25 is projected at **+5.0% year-on-year**, with a slight deceleration in retail sales growth to **+0.9% year-on-year** in December [1] This summary encapsulates the critical insights and data points from the conference call regarding the current state and future outlook of the China property market.

Vi e w p o i n t | 05 Jan 2026 10:38:45 ET │ 13 pages China Property Qiushi Journal Commentary on the Sector: Positive but Not Overread CITI'S TAKE Commentary from Qiushi Journal (official media under the CPC Central Committee) (2-Jan-2026) mentioned: [1] property exhibits notable characteristics of financial assets with wide-ranging interconnections, thus enhancing expectation mgmt is critical; [2] property is a pillar industry ('24: 13% of GDP incl. construction; 70m employment) & major source of resident ...

Summary of China Property Market Conference Call Industry Overview - The conference call focused on the **China Property** market, highlighting significant declines in various metrics related to real estate investment and sales. Key Points Real Estate Investment (REI) Trends - **November REI** experienced a record drop of **30.3% YoY**, marking the sharpest decline on record, with a total of **RMB 0.5 trillion**, the lowest monthly figure since April 2012 [1][11] - **Completion rates** fell by **26% YoY** in November, slightly improved from **28%** in October [1] - **Starts** decreased by **28% YoY**, consistent with a **29%** decline in October [1] - **Residential sales** dropped by **28% YoY**, the largest single-month decline since May 2024 [1] - The **70-cities price index** for new homes decreased by **2.8% YoY** in November, while secondary homes saw a **5.7% YoY** decline [1] Market Dynamics - **Secondary market sales** in 18 key cities fell by **22% YoY** in November, with average weekly volume showing a **13% MoM** increase, driven by price cuts [2] - Listings in 39 cities remained stable, but cities like Shenzhen and Xi'an saw increased listings, putting pressure on prices [2] - A survey indicated only **9%** of depositors expect housing prices to rise in 2026, a historical low [2] Future Projections - The outlook for 2026 suggests a **structural decline** in the market unless liquidity improves, with expectations of: - **REI** down **13% YoY** - National sales down **11% YoY**, with residential sales projected at **RMB 6.8 trillion** [3] - New home average selling prices (ASP) expected to fall by **3% YoY** [3] - Starts anticipated to drop to levels last seen in 2003, with a **15% YoY** decline [3] Policy and Regulatory Environment - The **Central Economic Work Conference (CEWC)** indicated a more proactive policy tone, with potential demand-side easing measures expected in Q4 2025 [4] - Urban renewals and REIT approvals are likely to accelerate, but significant changes in home price expectations are not anticipated due to ample supply [4] - Monitoring for targeted monetary easing or pro-leverage initiatives is advised, though the likelihood remains low [4] Market Sentiment and Investment Recommendations - The sector's share prices corrected in early December amid debates over weak sales and expectations of policy-driven rebounds, particularly following Vanke's debt extension [5] - Anticipated earnings downgrades in December and January for well-known names in the sector [5] - Luxury mall retail sales are expected to maintain a positive trend in Q4 after outperforming in Q3 [5] - Recommended stocks include **Jinmao, C&D, and CRL** as top picks [5] Additional Insights - The **macro environment** shows mixed signals, with November exports beating expectations at **5.9% YoY**, while retail sales decelerated to **1.3% YoY** despite a higher CPI of **0.7%** [1] - Fixed Asset Investment (FAI) remains weak, down **12%** YoY, with a cumulative decline of **2.6%** for the first eleven months [1] This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the China property market, emphasizing the significant challenges and potential policy responses.

Summary of Conference Call on China Property Market Industry Overview - The conference call focuses on the **China Property** market, highlighting ongoing challenges and forecasts for 2026 and beyond. Key Points and Arguments Market Conditions - **Weak Construction Activity**: Primary housing market construction is expected to remain weak in 2026E-2027E due to persistent liquidity stress and high inventory levels in the industry [1] - **Property Fixed Asset Investment (FAI)**: A potential deceleration in the current double-digit year-on-year decline in property FAI may occur if it reaches 85% of property sales by 2027E, as property FAI primarily reflects the cost of property sales [1] - **Secondary Housing Market**: The supply/demand imbalance in the secondary housing market is anticipated to take longer to adjust, delaying price stabilization [1] Financial Stress and Developer Challenges - **Loan Maturity Extensions**: There is uncertainty regarding the scope for further loan maturity extensions for developers, as high debt levels and declining property sales have offset benefits from interest rate reductions [1] - **Interest Expense**: Interest expenses for privately owned enterprises (POE) developers account for approximately 70% of total developer industry expenses, significantly higher than the 5-6% for larger state-owned enterprises (SOEs) [1] - **Liquidity Stress**: The liquidity stress in the industry is deepening, with increasing risks of credit defaults [1][36] Mortgage Market Dynamics - **Elevated Loan-to-Value Ratios (LTVs)**: The ongoing decline in property prices is raising LTVs for mortgages and operating loans, with a base-case scenario estimating Rmb5.2tn and Rmb0.8tn in outstanding mortgages and operating loans meeting the 80% LTV threshold [2][86] - **Bear-case Scenario**: A potential 30% decline in property prices could lead to Rmb14.7tn in mortgages meeting the 80% LTV threshold, indicating significant risk in the mortgage market [86] Economic Implications - **Household Debt Service Burden**: The household debt service burden in China is projected to remain high at over 15% in 2025E-2027E, raising concerns about a negative feedback loop affecting home prices and credit availability [5][77] - **Policy Stimulus**: Key factors to watch include any new policy stimulus aimed at reviving demand and targeted liquidity injections to developers with land banks in tier-1 and tier-2 cities [6] Adjusted Forecasts - **EPS Estimates**: The underlying EPS estimates for developers have been cut by 7-31% on average for 2025E-2027E, reflecting a weaker fundamental outlook [10] - **ASP Trends**: The average selling price (ASP) forecast for the secondary housing market has been revised down due to ongoing price cuts and weak transaction volumes [9] Developer Liquidity and Debt Restructuring - **Distressed Developers**: The report highlights the ongoing liquidity pressures faced by developers, with 28 major listed developers experiencing significant declines in asset turnover ratios and increasing numbers of distressed developers [42][52] - **Debt Restructuring Progress**: As of October 2025, 19 companies have had their debt restructuring plans approved, with a total estimated debt reduction exceeding Rmb1.2tn [69][70] Market Outlook - **Overall Market Weakness**: The overall outlook for both primary and secondary markets is expected to weaken further, with sell-through rates declining [22][25] - **Land Sales and Construction**: Land sales and construction activities are projected to remain weak until property FAI aligns more closely with property sales [27] Additional Important Insights - **Rental Price Stabilization**: Rental price stabilization is viewed as a key driver for property price stabilization in higher-tier cities [13] - **Fair Value Gap**: There is an estimated 10%-15% property price gap to fair value, which could widen to 30% if deflationary pressures persist [16] This summary encapsulates the critical insights and forecasts regarding the China property market, emphasizing the ongoing challenges and potential risks for investors and stakeholders in the industry.

Summary of Conference Call on China Property Sector Industry Overview - The conference call discusses the **China Property** sector, focusing on potential mortgage subsidies and their implications for the market. Key Points and Arguments 1. **Mortgage Subsidies Speculation**: - Market speculation suggests that China may provide **Rmb400 billion** in mortgage subsidies, potentially effective from early **2026** for purchases made between **September 1, 2025**, and **August 31, 2026**. The subsidy is speculated to be **1%**, with a possibility of up to **2%** in higher-risk areas [1][3][4]. 2. **Impact on Homebuyers**: - The average mortgage rates are currently **3.0%** for first homes and **3.3%** for second homes. With a **1%** subsidy, effective rates could drop to **2.0%-2.3%**, aligning closer to average rental yields of **~1.5%** in tier-1 cities and **~2%** in tier-2 cities. This could reduce monthly payments by **Rmb694-1,143** for homes valued at **Rmb1-2 million**, translating to total savings of **Rmb25,000 to 41,100** over three years [3][9]. 3. **Market Reaction**: - Following the speculation, shares of Vanke surged by **13%**, while Sunac and Jinmao rose by **9%**. In contrast, large-cap SOEs like CR Land and COLI saw only mild increases of **0-1%**, indicating that excitement was primarily driven by short covering rather than strong investor confidence in the policy [1][13]. 4. **Long-term Effectiveness**: - The effectiveness of the subsidies is questioned, as the core issue remains weak expectations for home prices. Secondary home prices have been declining at a rate of **~1.5%** monthly, which could negate the benefits of the subsidies shortly after implementation [4][12]. 5. **Policy Timing**: - The next potential policy window for discussing housing market support is the **CEWC** in the next **1-2 weeks**. If no new narrative emerges, the next opportunity for announcements would be during the **Two Sessions** in **March 2026** [5]. 6. **Retail Sales Impact**: - The mortgage subsidies, if fully utilized, could represent **0.8%** of China's retail sales, suggesting that the savings from mortgage repayments may have a more significant impact on retail sales than on the housing market itself [5]. Additional Important Information - **Historical Accuracy of Speculation**: The historical accuracy of market speculation regarding housing policies has been around **40%**, indicating a level of skepticism regarding the reliability of such forecasts [1][6]. - **Local Subsidy Examples**: Cities like Wuhan and Changchun have already implemented similar subsidies with caps ranging from **Rmb20,000 to 40,000** [8]. - **Share Price Performance**: The report includes detailed share price performance data for various companies in the sector, highlighting the mixed reactions to the speculation [13][19]. Conclusion - The potential introduction of mortgage subsidies in the China Property sector has generated significant market speculation and short-term excitement among investors. However, the long-term effectiveness of such measures remains uncertain, primarily due to ongoing declines in home prices and the need for stronger government commitment to stabilize the market.

Country Garden names President Mo Bin co-chairman of the board as the embattled Chinese developer restructures leadership https://t.co/gUy8hcsMPE ...

What this tells us. We had this obviously expectations, but now it's finally happened. And what do we understand.You know, you definitely show bankers under severe liquidity strains now. And I think the plan we are seeing about a one year delay is actually worse than a lot of investors expectation. And that could also have another you know, it's over ¥3 billion coming due in late December.So right now, investor are expecting that you know, we'll probably see the same treatment. And you know overall Vancouve ...