Summary of China Property Conference Call Industry Overview - The commentary from Qiushi, the official magazine of the CCP, suggests a potential shift in the official narrative regarding the housing market in China for 2026, following a lack of meaningful policy in 2025 [1][3] - The housing market has been experiencing deteriorating home prices and sales since the second half of 2025, prompting speculation about new policy directions [1][3] Key Messages from Qiushi Commentary 1. **Supply/Demand Dynamics**: There has been a significant shift in the supply and demand dynamics within the real estate market [3][20] 2. **Importance of Real Estate**: The sector remains vital to the national economy and household wealth, accounting for 13% of GDP and employing over 70 million people [21][22] 3. **Urbanization Support**: Urbanization and demand for housing upgrades are expected to continue supporting market demand [3][21] 4. **Transition in Development Model**: The traditional high-leverage development model is deemed unsustainable, necessitating a transition to a new model [3][21] 5. **Policy Coordination**: Policymakers are urged to provide decisive and coordinated support, with a call for policies to be introduced all at once rather than piecemeal [3][4][25] 6. **Supply Control**: There is a need for well-controlled supply management to stabilize the market [3][26] 7. **Expectation Management**: The government must strengthen information management to counter misinformation and monitor key industry indicators [3][27] Market Performance and Forecasts - The real estate sector has consistently underperformed since 2021, with a forecasted 7% drop in sales and a 5% decline in home prices for 2026 under the base case scenario [1][3] - In 2025, national sales value dropped by 11% year-over-year, while the top 100 developers saw an 18% decline [5][20] - The MSCI China Real Estate index rose by 1% in 2025, marking the first positive return since the liquidity crisis in 2021, but underperformed relative to MSCI China by 28% [5][10] Tactical Investment Insights - **Top Picks**: - **CR Land (1109 HK)**: Emerging as the largest commercial asset manager with attractive valuations [5][6] - **CR Mixc (1209 HK)**: Expected to see tenant sales growth of 5-10% in 2026 [5][6] - **Jinmao (817 HK)**: Notable for positive sales growth of 16% in 2025 [5][6] - **Longfor (960 HK)**: Considered a tactical play with potential upside amid policy-induced rallies [5][6] Conclusion - The commentary from Qiushi indicates a potential shift in policy direction for the housing market, with a focus on decisive and coordinated support to stabilize the sector. The current market conditions present both risks and opportunities for investors, particularly in selected stocks that are well-positioned to benefit from any forthcoming policy changes [1][3][5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Property - **Context**: The commentary from Qiushi, the official magazine of the CCP, suggests a potential shift in the official narrative regarding the housing market in 2026, following a lack of meaningful policy in 2025 [1][3][4]. Core Insights - **Policy Direction**: The commentary emphasizes that policies should be introduced "sufficiently all at once, not in a piecemeal manner" to effectively address the housing market's challenges [1][4]. - **Current Market Conditions**: Home prices and sales have been deteriorating since the second half of 2025, with a forecasted 7% drop in sales and a 5% decline in home prices for 2026 under the base case scenario [1][3]. - **Potential for Policy Support**: The weak home prices may lead to stronger policy support in 2026, presenting upside risks to current forecasts [1][3]. Key Messages from Qiushi Commentary 1. **Supply/Demand Dynamics**: There has been a significant shift in supply and demand dynamics within the real estate market [3][20]. 2. **Importance of Real Estate**: The sector remains vital to the national economy and household wealth [20][21]. 3. **Urbanization and Demand**: Urbanization and upgrade demand are expected to continue supporting housing demand [3][20]. 4. **Transition of Development Model**: The traditional high-leverage development model is deemed unsustainable, necessitating a transition to a new model [3][21]. 5. **Coordinated Policy Support**: Policymakers are urged to provide decisive and coordinated support to stabilize the market [3][20]. 6. **Supply Control**: There is a need for well-controlled supply management to prevent oversupply [3][20]. 7. **Information Management**: The government should enhance information management to stabilize market expectations [3][27]. Market Performance Recap - **2025 Performance**: The national sales value dropped by 11% year-over-year, while the top 100 developers' sales fell by 18% [5][20]. - **Price Declines**: Primary and secondary home prices decreased by 3% and 5%, respectively, in the first eleven months of 2025 [5][20]. - **Sector Underperformance**: Despite a 1% rise in MSCI China Real Estate in 2025, it underperformed MSCI China by 28% [5][10]. Tactical Investment Insights - **Stock Picks**: - **CR Land (1109 HK)**: Emerging as the largest commercial asset manager with attractive valuations [5][6]. - **CR Mixc (1209 HK)**: Expected to see tenant sales growth of 5-10% in 2026 [5][6]. - **Jinmao (817 HK)**: Notable for positive sales growth of 16% in 2025 [5][6]. - **Longfor (960 HK)**: Considered a tactical play with potential upside amid policy-induced rallies [5][6]. Additional Considerations - **Investor Sentiment**: The lack of confidence in home price growth is a core issue, with policymakers not explicitly stating "stabilizing home prices" as a goal [5][20]. - **Future Policy Expectations**: The next significant policy discussions are anticipated during the Two Sessions in March and the Politburo in April, which may create tactical opportunities for investors [1][5]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the China property market.

Summary of Conference Call on China Property Market Industry Overview - **Industry**: China Property - **Key Focus**: Potential lifting of home purchase restrictions (HPRs) in tier-1 cities such as Beijing, Shanghai, Shenzhen, and Sanya due to deteriorating market conditions [1][3][4] Core Insights and Arguments - **Policy Speculation**: Commentary from state media on accelerating the removal of unreasonable real estate policies has led to speculation about lifting HPRs [1][3] - **Market Sentiment**: Even if HPRs are removed, the positive impact on market sentiment is expected to be short-lived, categorized as a "Level 1" measure in the policy matrix [1][4] - **Price Trends**: Secondary home prices in tier-1 cities have fallen 38% from their peak, with a 9% decline year-to-date. Monthly average price drops are around 1.6% [3][4][10] - **Gradual Easing**: Any relaxation of HPRs is anticipated to be gradual rather than a one-off event, allowing policymakers to adjust as needed [4] - **Need for Stronger Measures**: A mere removal of HPRs is deemed insufficient to sustain market recovery; stronger measures are necessary to stabilize or recover home prices [4][15] Important but Overlooked Content - **Historical Context**: The narrative of removing unreasonable policies is not new, having been mentioned in the 15th Five-Year Plan [3] - **Current Market Conditions**: Despite calls for the housing market to stabilize, actual support measures have been minimal, indicating a need for more robust policy support [4] - **Comparative Analysis**: In cities like Guangzhou and Hangzhou, where HPRs have been eliminated, no significant recovery was observed post-initial volume increase [4] - **Investment Recommendations**: Top picks for investment include China Resources Land, China Resources Mixc, and Jinmao, with Longfor seen as offering the best risk-reward in a policy-induced rally [1][21] Conclusion - The China property market is facing significant challenges, with declining prices and sales volumes prompting speculation about policy changes. However, the effectiveness of potential measures remains uncertain, and stronger actions are needed to ensure a sustainable recovery.

Summary of Conference Call on China Property Sector Industry Overview - The conference call focuses on the **China Property Sector**, highlighting the current market conditions and future expectations for developers and policies affecting the industry. Key Points and Arguments Market Conditions - The sector is expected to trade within a range due to sluggish fundamentals and potential policy support, with a current P/E ratio of **8.5x FY27E**, aligning with historical averages [1][2] - National inventory is projected to remain high at **24 months** through **2027**, but Tier 1 and top 15 cities may see inventory decrease to **15 months** by **2026/27** [3][4] - New home sales volume/value is forecasted to decline by **5%-7%** and **8%-10%** in **2025**, with further mid-single-digit declines in **2026** [3][4] Developer Performance - Top developers are focusing on major cities, acquiring land only in the **10-20 largest cities** since **2024**, despite generating sales from **60 cities** [4][5] - Developers with younger land banks (acquired after **2022**) tend to have higher returns on invested capital (ROIC), with **Binjiang, C&D, and COLI** having the youngest land banks [5][6] - The earnings estimates for the sector have been trimmed by single-digit percentages, reflecting minor changes in contracted sales forecasts [5][6] Policy Outlook - Policymakers are expected to emphasize quality housing in the upcoming **15th Five-Year Plan**, with no major new policy support anticipated until **March 2026** [2][24] - Potential policy tools include tax deductibility for mortgage interest, lower transaction taxes, direct subsidies to home buyers, and relaxation of urban redevelopment restrictions [2][29] - The **Fourth Plenary Session** is expected to provide preliminary guidelines for property policy over the next five years, focusing on balancing growth and risk control [24][27] Risks and Challenges - Secondary home prices have declined by **1.6% MoM** in September, nearing the steepest decline observed in the second half of **2023** [21][22] - Real estate investment fell by **20% YoY** in September, worsening from a **10%** decline in the first half of **2025** [22][23] - Home prices are expected to face significant downside risks, with estimates suggesting a potential **20%** correction for entry-level buyers in Tier 1 cities [56][58] Developer Ratings and Forecasts - Price objectives for several developers have been revised, with **Binjiang** seeing an increase from **12.8 billion** to **13.5 billion**, while **Poly** was cut from **8.0 billion** to **7.5 billion** [8][9] - The contracted sales forecast for key developers has been adjusted, with **CMSK** seeing an increase due to better-than-expected performance, while **COLI** and **Poly** have been trimmed due to deteriorating market conditions [76][79] Conclusion - The China Property Sector is currently facing a challenging environment with sluggish sales, high inventory levels, and declining prices. However, top developers are strategically focusing on major cities and improving their land bank quality, which may position them better for future recovery as policy support is anticipated in the coming years.

Summary of MSCI China 2Q25 Earnings Review Industry Overview - The report focuses on the **MSCI China** and **A-shares** performance during the second quarter of 2025 (2Q25) - It highlights the earnings results of various sectors within the Chinese equity market Key Findings MSCI China Performance - **Earnings Results**: MSCI China reported earnings in line with consensus forecasts, with a weighted surprise of **+2.7%** and a miss by number of companies of **-2.7%** [2][26] - **Comparison to 1Q25**: The results showed a similar trend to 1Q25, which had a miss of **-3.8%** by number of companies and a weighted surprise of **+3.1%** [2][26] A-Shares Performance - **Earnings Results**: A-shares missed consensus forecasts by number of companies by **-13.8%**, but were in line by weighted surprise at **+0.2%** [3][26] - **Comparison to 1Q25**: This represents a softening compared to 1Q25, which had a miss of **-4.8%** by number of companies and a weighted surprise of **+3.3%** [3][26] Revenue Performance - **MSCI China and A-shares**: Both indices missed consensus revenue estimates by number of companies but posted in-line results by weighted surprise [4][44] - **Cost Control**: The better revenue trends were attributed to improved cost-control measures and self-help strategies [4] Sector Performance - **Strong Performers**: - **Communication Services** and **Financials** led with solid earnings beats [5][26] - **Pharma & Biotech** and **Materials** saw strong returns with earnings upgrades, with gains above **20%** [6] - **Weak Performers**: - **Onshore Real Estate** and **Utilities** posted net earnings misses by both weighted surprise and number of companies [5] Market Returns - **Overall Returns**: MSCI China delivered a **13%** return from end-June to September 9, while MSCI China A onshore gained **15%** [6][18] - **Sector Returns**: Notable sectors with returns above **20%** included Consumer Staples Retailing, Pharma & Biotech, and Semiconductors [15][18] Earnings Revisions - **Upward Revisions**: Sectors such as **Pharma & Biotech**, **Materials**, and **Tech** saw upward revisions to 2025 consensus EPS estimates [6][16] - **Downward Revisions**: The **Semiconductors** sector experienced downward earnings revisions [6][16] Notable Contributors - **Key Contributors to Earnings Beats**: - **Communication Services**: Mango Excellent Media and Giant Network [28] - **Consumer Discretionary**: PDD, XPENG, and TCOM [28] - **Financials**: BOC and CCB [28] - **Key Drags on Earnings**: - **Consumer Staples**: China Feihe, China Mengniu, and Yanghe Brewery [28] - **Energy**: ShaanXi Coal and Yankuang Energy [28] Revenue Surprises - **Aggregate Revenue Miss**: Reported revenue missed consensus by number of companies by **-12.5%**, an improvement from **-16.6%** in 1Q25 [45] - **Sector-Level Revenue Beats**: Only **Communication Services** and **Real Estate** posted beats by number of companies [45] Conclusion - The earnings season for 2Q25 showed mixed results across sectors, with some outperforming expectations while others fell short. The overall market demonstrated resilience with positive returns, but challenges remain in specific sectors, particularly in revenue generation.

Summary of China Property (H/A) Conference Call Industry Overview - The conference call focused on the **China Property** sector, particularly the performance of various developers in the first half of 2025 (1H25) and the outlook for the remainder of the year. Key Points and Arguments Earnings and Sales Performance - **1H25 Earnings**: The sector reported a core profit drop of approximately **50% YoY**, with exceptions like C&D International and Binjiang Property showing earnings growth [2][14]. - **Sales Decline**: Top 100 developers experienced a **22% YoY decline** in contracted sales for August, with a **6% MoM decrease** [4][22]. Year-to-date (YTD), contracted sales value for top 100 developers fell **14% YoY** [4][22]. - **Revenue Performance**: The sector saw an **8% YoY decrease** in topline revenue in 1H25, with notable declines for major players like China Vanke (-29%) and Poly Real Estate (-16%) [17][18]. Margins and Profitability - **Gross Margins**: Average gross margins stood at **15%**, stable HoH but down YoY, as lower-cost inventory from 2022 began to impact the booking pipeline [2][15]. - **Management Outlook**: Some management teams expressed optimism about margin improvements and potential supportive policies from the Central government [1][3]. Policy and Market Dynamics - **Policy Stimulus**: Investors are focused on potential policy measures, including lower mortgage rates and tax deductions for mortgage interest. A more forceful tone from the Central government may encourage local governments to implement supportive measures [3][4]. - **Market Conditions**: The sector is expected to be supported by policy expectations in the near term, but decisive actions are needed to escape the current trading range [1][3]. Developer-Specific Insights - **C&D International**: Estimates were raised due to a better contracted sales outlook, with a price objective (PO) increase of **2%** [8][11]. - **CR Land**: Estimates were raised based on better-than-expected contracted sales, with a PO increase of **5%** [8][11]. - **Longfor**: FY25 estimates were cut due to a faster-than-expected booking pace leading to larger net losses [9][10]. Financial Metrics - **Net Gearing Ratios**: The sector's net gearing was largely stable HoH, with C&D International at **33%**, China Vanke at **87%**, and CR Land at **39%** [20]. - **Dividends**: Four developers declared interim dividends, with Longfor seeing a **68.2% YoY decrease** in its dividend payout [16]. Market Valuation - **Valuation Metrics**: HK-listed developers trade at **8.8x 2027E P/E**, close to **1 standard deviation above historical averages** [1][34]. Other Important Insights - **Sales Trends**: Home sales volume registration in key cities has cooled off, with a **16% WoW decrease** in new home sales across 30 cities [26][29]. - **SG&A Costs**: The sector saw a **10% decrease** in selling, general, and administrative costs [19]. This summary encapsulates the key insights from the conference call, highlighting the challenges and opportunities within the China Property sector as of September 2025.

Investment Rating - The report maintains an "Overweight" (OW) rating for several companies including China Resources Land, China Overseas Land, and Longfor Group, indicating a positive outlook for these stocks [24][26]. Core Insights - The potential reopening of the offshore bond market for non-state-owned enterprises (non-SOEs) is highlighted by Seazen's consideration to issue USD bonds, which could symbolize a shift in market conditions [1][4]. - The report suggests that while Seazen's bond issuance may lower refinancing risk, the associated costs (estimated at 11-13%) are significantly higher than existing bonds (4-5%), making alternative refinancing options more attractive [1][5][8]. - Improving operating cash flows and new policies to boost property sales are seen as more sustainable methods for reviving developers in the sector [1]. Summary by Sections Offshore Bond Market - Seazen is considering raising USD 200-300 million through a bond offering, marking the first issuance by a non-SOE developer in two years, which may indicate a reopening of the offshore bond market [4][8]. - The proposed bond issuance is viewed as a positive liquidity signal for Seazen, potentially reducing its refinancing risk [4][5]. Refinancing Alternatives - The report identifies shareholder loans and commercial property loans as more cost-effective refinancing options compared to USD bonds, with costs significantly lower (e.g., Vanke at 2.34% and Longfor at 3-4%) [8][15]. - Leading SOE developers are unlikely to pursue USD bonds due to high costs, preferring onshore funding channels [8]. Investment Recommendations - Top equity picks include CR Land and CR Mixc, with additional upside potential seen in Longfor, COPH, and Jinmao [1].

Summary of Conference Call on China Property Sector Industry Overview - The focus is on the **China Property** sector, particularly the performance of developers in the **Top 10 cities** which include Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Suzhou, Hangzhou, Chengdu, Xi'an, and Tianjin [7][34]. Key Points and Arguments 1. **Land Investment Efficiency**: - 86% of land bank investments by the covered developers from 2024 to Q1 2025 are concentrated in the Top 10 cities, indicating a strategic shift towards better-performing markets [1][32]. - The analysis of six active land banking developers (CRL, COLI, Poly, CMSK, Greentown, and Jinmao) shows a potential for margin and ROE recovery [1][37]. 2. **Gross Profit Margin (GPM) and Return on Equity (ROE)**: - New acquisitions since 2024 are expected to yield GPM in the mid-teen% to over 20%, an improvement from below teen% levels for land acquired before 2024 [1][39]. - Average DP ROE from these new acquisitions is projected to be around 8%, aligning with the company-level ROE [1][39]. 3. **Earnings Estimates Revision**: - The 2026E/27E GPM for the six developers has been revised upwards by an average of 0.2pt and 0.7pt, respectively, with target prices increased by 1-5% [2][41]. - The earnings estimates for 2025E-27E are approximately 10% above consensus due to higher margin expectations [2][45]. 4. **Market Dynamics**: - The Top 10 cities have shown more resilient pricing trends and signs of price stabilization in both primary and secondary markets [8][11]. - Home sales volume in these cities has shown a year-on-year recovery trend, although still lower than peak levels in 2021 [13][15]. 5. **Supply and Inventory**: - The current inventory month in the Top 10 cities is at 17 months, which is healthier compared to the average of 40 months in 80 other cities [16][22]. - Primary supply levels have remained stable since 2021, while secondary supply has increased significantly, accounting for over 40% of total home supply as of April 2025 [22][24]. 6. **Rental Yield and Affordability**: - Residential rental yields in the Top 10 cities have exceeded the 30-year treasury yield since 2025, indicating a favorable investment environment [19][19]. - The new home price to income ratio in these cities has improved to levels seen in 2016, enhancing affordability [24][24]. 7. **Sensitivity to Rate Cuts**: - Home sales in the Top 10 cities have historically been more sensitive to mortgage rate cuts, although this sensitivity has diminished in the current downcycle [9][27]. Additional Important Insights - The rising land competition in key markets could pose risks to further margin improvement, but collaboration among developers may mitigate this risk [2][2]. - Faster-than-expected property price recovery could lead to additional upside in margins, ROE, and overall valuation [2][2]. - The analysis indicates a solidifying market leadership among the covered developers in the Top 10 cities, with their share of total land banking reaching 70% [31][35]. This summary encapsulates the critical insights from the conference call regarding the China Property sector, focusing on the performance of key developers and market dynamics.

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.