Summary of Real Estate Market Conference Call Industry Overview - The conference call discusses the performance of the real estate market in October 2025, particularly focusing on the top 100 real estate companies in China. The overall sales amount for these companies was 253 billion yuan, reflecting a year-on-year decline of 42% [1][2][7]. Key Points Sales Performance - The sales performance of the top 100 real estate companies in October 2025 was significantly impacted by ongoing market pressures, with a cumulative decline of 16% over the first ten months of the year, which is an increase of 4.2 percentage points compared to the previous nine months [2][7]. - Major state-owned enterprises like China Resources and China Overseas experienced year-on-year declines exceeding 50% due to high base effects from the previous year [7]. Market Dynamics - The luxury housing market showed signs of differentiation, with high-end areas in cities like Shanghai, Beijing, and Shenzhen maintaining some demand, but overall sales were weak, particularly in secondary locations [4][5]. - The second-hand housing market continued to see rapid price declines, with no signs of stabilization. New building regulations in Shanghai have pressured prices of older properties, leading to expectations of continued price drops in the short term [6][12]. Supply and Demand - The new supply of properties in 30 cities dropped significantly, with a month-on-month decrease of 51% and a year-on-year decrease of 21%, marking the lowest monthly supply since 2020 [8][9]. - The land auction market has cooled, with a notable decline in both the area and monetary value of land sold across 300 cities, reflecting cautious behavior from developers [19]. City-Specific Insights - In first-tier cities, new home transactions have cooled, with significant month-on-month declines in cities like Shanghai (down 15%) and Shenzhen (down over 20%) [11][12]. - The performance of second and third-tier cities showed some resilience, with an average month-on-month increase of 1%, although year-on-year figures still reflected a decline of 36% [13]. Future Outlook - The market is expected to see increased supply and promotional efforts from developers in November and December to boost sales performance, although year-on-year declines may widen to around 50% due to high base effects from the previous year [4][21]. - The anticipated market stabilization point may be pushed further into the future, with predictions suggesting a potential turning point in 2026 or 2027, indicating a longer-term adjustment cycle rather than a short-term fluctuation [20]. Additional Insights - The impact of recent policy changes, such as the lifting of certain purchase restrictions in major cities, has dissipated without leading to sustained market recovery [3][4]. - The average premium rate in land auctions has dropped below 3%, indicating a more cautious approach from developers regarding land acquisition [19][17]. This summary encapsulates the critical insights from the conference call regarding the current state and future expectations of the real estate market in China.

Core Insights - The current real estate market is experiencing fluctuations, leading to confusion among potential buyers and sellers regarding whether to sell or buy properties in 2025 [1][3] - Notable entrepreneur Cao Dewang emphasizes that housing should primarily serve as a residence rather than an investment, suggesting that families with genuine needs should consider purchasing homes if financially feasible [1][3] Market Overview - In 2024, the national sales area of commercial housing was 1.02 billion square meters, a year-on-year decrease of 8.7%, with sales amounting to 9.5 trillion yuan, down 12.3% [3] - In the first quarter of 2025, 42 out of 70 major cities saw new home prices decline, with an average drop of approximately 3.2% [3] - The market shows significant differentiation, with first-tier and strong second-tier cities maintaining stable prices, while third and fourth-tier cities experience larger declines, some exceeding 15% [3][6] Population Dynamics - Over 25 million people moved between cities in 2024, with about 65% relocating to first-tier and strong second-tier cities, driving housing demand in these areas [3] Future Predictions - The real estate market adjustment is expected to continue, but a sharp decline is not anticipated, with average price drops projected to remain under 5% in 2025 [6] - The differentiation among cities will become more pronounced, with first-tier cities likely to maintain stability while third and fourth-tier cities face ongoing downward pressure [6] Policy Environment - The policy landscape is expected to remain relatively loose, with measures aimed at stabilizing the market rather than stimulating investment demand [6] - Approximately 70% of homebuyers view the current policy environment as favorable for genuine housing needs [6] Recommendations for Buyers - For genuine homebuyers, if financial conditions allow (with a down payment not exceeding 50% of total assets and monthly payments under 40% of monthly income), 2025 may present a good opportunity to enter the market [6][8] - For investors holding properties in third or fourth-tier cities, it may be wise to consider divesting during stable market conditions to reallocate funds to other investment channels or properties in quality cities [8][10] Investment Considerations - The average return on real estate investment in 2024 was 2.1%, lower than the average return of 3.5% from bank financial products, indicating that real estate may no longer be the optimal investment choice [8] - Diversifying asset allocation is recommended, as real estate should not dominate a household's asset portfolio, which averaged 68% in China compared to 40% in developed countries [12] Conclusion - The real estate market in 2025 is in a state of adjustment but also presents opportunities for informed decision-making based on individual needs and financial situations [13]

Core Viewpoint - The current real estate market in China is facing significant challenges, leading to uncertainty among potential investors and homeowners regarding property investments [1][4][10]. Group 1: Market Conditions - Since 2022, China's housing prices have entered a downward adjustment cycle, affecting both second-tier cities and major first-tier cities like Shanghai and Shenzhen [1][4]. - As of September 2025, national real estate development investment has decreased by 13.9% year-on-year, with residential investment down by 12.9%, indicating a deep-seated supply-demand imbalance [4][5]. - Approximately 40% of urban households are facing unprecedented housing challenges, exacerbated by high vacancy rates and declining purchasing power [1][5]. Group 2: Supply-Demand Imbalance - China has around 600 million residential units, theoretically capable of housing 3 billion people, while 96% of households own at least one property, leading to high vacancy rates [5][9]. - The proportion of families owning two or more properties is 41.5%, contributing to the oversupply of housing and increasing pressure on property values [5][9]. - A study predicts that about 40 million housing units will face inheritance issues in the next decade, further complicating the supply-demand dynamics [5]. Group 3: Debt and Financial Pressure - As of early 2025, China's total household debt has surpassed 200 trillion yuan, with an average debt of 140,000 yuan per person, indicating a high debt-to-income ratio [6][7]. - Among indebted urban households, 76.8% have housing loans, with an average loan balance of nearly 400,000 yuan, making up 75.9% of total household debt [6][7]. - The rising debt levels combined with falling property values create a "double whammy" effect, increasing the risk of mortgage defaults, especially in a challenging economic environment [6][7]. Group 4: Vacancy Rates and Resource Allocation - The average housing vacancy rate in Chinese cities is approximately 12%, with first-tier cities at 7%, second-tier cities at 12%, and third-tier cities reaching 16% [9]. - High vacancy rates lead to wasted resources and increased maintenance costs for empty properties, particularly affecting families with multiple homes [9]. - Urban areas with higher aging populations tend to have higher vacancy rates, indicating a correlation between demographic trends and housing demand [9]. Group 5: Policy Responses and Future Outlook - Various government measures are being implemented to stabilize the real estate market, including promoting quality housing construction and innovative sales models [10][12]. - Experts suggest that the real estate market may stabilize by 2025, entering a new phase of development characterized by healthier market dynamics [10][12]. - Recommendations for households include managing debt levels, diversifying investments, and focusing on income growth to navigate the current economic landscape [12].

Core Insights - The performance of A-share listed real estate companies continues to be under pressure, with 41 out of 77 companies reporting net losses in the first three quarters of 2025, totaling a loss of 872.16 billion yuan [1][5][9] - The ongoing losses in the real estate sector are attributed to low-profit project settlements, impairment provisions during market adjustments, and increased interest expenses [9][10] - Despite the challenging environment, there are indications that some companies may recover if the housing market gradually improves [1][9] Financial Performance - The total operating revenue for the 77 listed real estate companies reached 973.3 billion yuan, with a significant portion of companies reporting substantial losses [1][5] - Vanke reported an operating revenue of 161.39 billion yuan with a net loss of 28.02 billion yuan, primarily due to declining settlement scales and low gross margins [2][3] - *ST Jinke experienced a 73.57% decline in total revenue to 5.699 billion yuan, resulting in a net loss of 10.778 billion yuan, exacerbated by liquidity issues [2][3] - Huaxia Happiness reported a revenue of 3.882 billion yuan, down 72.09%, with a net loss of 9.829 billion yuan [3] - Greenland Holdings and Xinda Real Estate also reported significant losses, with net losses exceeding 6.69 billion yuan and 5.31 billion yuan, respectively [3][4] Company Restructuring and Recovery - A few companies, such as *ST Zhongdi, managed to turn a profit due to significant asset restructuring, reporting a net profit of 4.827 billion yuan [6][7] - The restructuring involved transferring real estate development assets to its parent company, which resulted in a profit boost from asset disposals [7] - Companies like China Merchants Shekou, Nanjing High-Tech, and Binjiang Group reported net profits exceeding 2 billion yuan, indicating some resilience in the sector [8] Market Outlook - The real estate sector has faced continuous losses since 2022, with sales expected to decline further until 2024, impacting revenue recognition and gross margins [9] - Despite the challenges, there are signs of potential recovery in core cities, where companies are focusing on higher-margin projects to improve profitability [9][10] - The decline in land and financing costs, along with improved sales performance, may lead to a reversal in fortunes for some companies, although most will prioritize cash flow management [10]

Investment Rating - The report maintains an investment rating of "Hold" for the company [1][12]. Core Views - The company experienced a significant loss of 4.37 billion RMB in the first three quarters of 2025, an increase in loss of 2.02 billion RMB year-on-year, primarily due to a 42% decline in revenue to 17.02 billion RMB and a decrease in project turnover [3][12]. - The company is under financial pressure, with a net debt ratio of 146% and a decrease in cash reserves by 25% year-on-year, although it maintains positive operating cash flow of 4.9 billion RMB [4][12]. - The real estate market is still stabilizing, with the company facing sales pressure, as evidenced by a 22% decline in contract sales amounting to 13.25 billion RMB [5][12]. - The company has initiated land acquisition again, with a new plot in Chongqing costing 460 million RMB, but remains cautious in investment due to ongoing sales pressure [5][12]. - The new chairman, Wu Bingqi, has taken office, bringing experience from major companies, which may signal a new direction for the company [5][12]. Financial Summary - The company reported a revenue of 17.02 billion RMB in Q1-3 2025, down 42% year-on-year, with a net loss of 4.37 billion RMB, reflecting a 20.2% increase in losses compared to the previous year [3][12]. - The projected EPS for 2025 has been adjusted to -0.64 RMB, down from -0.50 RMB, with a target price set at 2.33 RMB based on a 0.39x PB ratio [6][18]. - The company’s financial metrics indicate a continued decline in profitability, with a projected net profit of -5.12 billion RMB for 2025, and a significant reduction in revenue forecasted for the coming years [11][19].

Core Viewpoint - China Energy Construction's stock has dropped over 5%, currently trading at 1.17 HKD, with a transaction volume of 117 million HKD [1] Financial Performance - For the first three quarters of 2025, the company reported new contract signings, operating revenue, and total profit of RMB 992.775 billion, RMB 323.544 billion, and RMB 8.507 billion, respectively, representing year-on-year growth of 0.40%, 9.62%, and 0.09% [1] - The net profit attributable to shareholders decreased to RMB 3.156 billion, a decline of 12.43% year-on-year [1] - In the third quarter alone, operating revenue was RMB 111.453 billion, showing a year-on-year increase of 10.5% [1] - The net profit attributable to shareholders for the third quarter was RMB 354 million, down 56.9% year-on-year, primarily impacted by adjustments in the real estate market [1]

Core Viewpoint - The company reported a decline in revenue and net profit for the first three quarters of 2025, reflecting the challenges faced in the current real estate market and macroeconomic environment [4][5]. Revenue Performance - For the first three quarters of 2025, the company achieved revenue of 7.01 billion, a year-on-year decrease of 8.5%, with net profit attributable to shareholders at 680 million, down 26.0% [4]. - Revenue breakdown by quarter: Q1 at 2.04 billion (-3.5%), Q2 at 2.51 billion (-10.8%), and Q3 at 2.46 billion (-9.9%) [4]. - Net profit by quarter: Q1 at 10 million (-92.7%), Q2 at 310 million (-23.0%), and Q3 at 360 million (+1.4%) [4]. Brand Performance - The main brand, Sophia, generated revenue of 6.35 billion, down 7.8%, with a factory-end average transaction price of 23,000, a decrease of 4.9% [5]. - The Milan brand reported revenue of 300 million, down 18.4%, with a factory-end average transaction price of 18,000, an increase of 19.9% [5]. - The company is transitioning the Simi brand towards a full-home store model, currently having 132 dealers and 134 exclusive stores [5]. - The Huahai brand achieved revenue of 80 million, with 222 dealers and 270 exclusive stores, focusing on expanding quality dealers and new sales channels [5]. Channel Development - In the integrated channel, revenue for the first three quarters was 1.39 billion, down 14.1%, with 283 cooperative construction companies and 728 sample stores [6]. - The company has established strategic partnerships with multiple top 100 real estate clients and is optimizing its customer structure in the bulk business [6]. - The company is expanding its overseas market presence with 29 overseas dealers across 23 countries and regions, collaborating on approximately 132 projects [6]. Profitability and Cost Management - The gross margin for the first three quarters was 35.2%, a decrease of 0.6 percentage points, while Q3 gross margin improved to 36.8%, an increase of 1.0 percentage points due to lower raw material costs and improved operational efficiency [7]. - The company’s expense ratio for the first three quarters was 20.7%, up 0.5 percentage points, with specific expense ratios for sales, management, R&D, and finance detailed [8].

Core Viewpoint - Both Jack Ma and Li Ka-shing suggest that potential homebuyers should "wait a little longer" rather than "buy as soon as possible" due to significant changes in the Chinese real estate market [1][6]. Market Status - As of September 2024, the average price of second-hand residential properties in 100 cities has dropped to 14,447 yuan per square meter, continuing a decline for 29 months [3]. - From January to September 2024, the sales area of new residential properties was 70,284 million square meters, with a year-on-year decrease of 19.2%. The sales revenue for new residential properties was 68,880 billion yuan, down 24% [3]. Government Policies - Local governments have implemented various measures to stimulate the market, including lifting purchase restrictions, reducing mortgage rates from a peak of over 5.88% to 3.2%, and lowering down payment ratios to 15% [4]. - A tax reduction policy has been introduced, imposing a uniform contract tax rate of 1% for homes not exceeding 140 square meters [4]. Market Trends - The effectiveness of these stimulus policies appears limited, as the real estate market is in a long-term adjustment phase, leading to confusion about whether to buy now or wait until 2025 [6]. - Jack Ma predicts that with the slowdown of urbanization, housing prices are unlikely to see significant increases in the next decade, instead remaining stable or declining [7]. - Li Ka-shing echoes this sentiment, emphasizing that housing is primarily for living, and has been selling properties at discounted prices, indicating a cautious outlook on the market [8]. Market Logic - The trend of real estate adjustment is difficult to reverse, as the market has experienced 23 years of price increases since the housing reform in 1998, with a high likelihood of a bubble correction [10]. - The price-to-income ratio in first-tier cities is as high as 40, and 25 in second and third-tier cities, making homeownership increasingly unattainable for average residents [10]. - Continuous price declines have eroded market confidence, shifting buyer sentiment from speculation to caution, as the expectation of rising prices has diminished [10]. Conclusion - Considering macroeconomic conditions, resident income levels, and market sentiment, waiting until 2025 may be a more prudent choice for potential homebuyers, as they are likely to encounter lower prices and reduced purchasing costs [11].

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the reports. 2. Core View of the Report The PVC market is expected to oscillate in the near term due to high social inventory, upcoming end of maintenance for some producers, high futures warehouse receipts, and strengthening cost - side, despite current relatively high PVC operating rates and some positive signs in exports and downstream demand [1]. 3. Summary According to Relevant Catalogs 3.1 Market Analysis - The calcium carbide price in the northwest region, the upstream of PVC, remains stable. The PVC operating rate decreased by 0.12 percentage points to 76.57% week - on - week, still at a relatively high level in recent years. The downstream operating rate of PVC continued to rise, exceeding the levels of the past two years but still at a low level [1]. - India postponed the BIS policy for another six months until December 24, 2025. Formosa Plastics in Taiwan, China, lowered its November quotation by $30 - 40 per ton. India announced an increase in anti - dumping duties on imported PVC from the Chinese mainland by about $50 per ton on August 14, weakening the export outlook for Chinese PVC in Q4. However, exports in September were still good, and export orders have not weakened significantly [1]. - From January to September 2025, the real estate market was still in the adjustment phase, with significant year - on - year declines in investment, new construction, and completion areas, and further drops in year - on - year growth rates of investment, sales, and construction. The weekly sales area of commercial housing in 30 large - and medium - sized cities decreased week - on - week and remained near the lowest level in recent years [1]. - The comprehensive profit of chlor - alkali is still positive, and the PVC operating rate is higher than in previous years. New production capacities, such as Wanhua Chemical's 500,000 - ton/year, Tianjin Bohua's 400,000 - ton/year, Qingdao Gulf's 200,000 - ton/year, Gansu Yaowang's 300,000 - ton/year, and Jiaxing Jiahua's 300,000 - ton/year, have come into operation at different stages [1]. 3.2 Futures and Spot Market - The PVC2601 contract oscillated with increasing positions, closing at 4,716 yuan/ton, down 0.21%, with an increase of 37,096 lots in open interest to 1,248,205 lots [2]. - On October 28, the mainstream price of calcium carbide - based PVC in East China dropped to 4,630 yuan/ton. The basis of the V2601 contract was - 86 yuan/ton, weakening by 13 yuan/ton and at a relatively low - neutral level [3]. 3.3 Fundamental Tracking - **Supply**: Companies such as Hangjin Technology and Shandong Xinfafa are under maintenance. The PVC operating rate decreased by 0.12 percentage points to 76.57% week - on - week, still at a relatively high level in recent years. New production capacities have been gradually put into operation [4]. - **Demand**: The real estate market is still in the adjustment phase. From January to September 2025, national real estate development investment was 677.06 billion yuan, a year - on - year decrease of 13.9%. The sales area of commercial housing was 658.35 million square meters, down 5.5% year - on - year. As of the week ending October 26, the sales area of commercial housing in 30 large - and medium - sized cities decreased by 2.09% week - on - week after the National Day, reaching the lowest level in recent years [5]. - **Inventory**: As of the week ending October 23, PVC social inventory increased by 0.13% week - on - week to 1.0352 million tons, 24.87% higher than the same period last year. The social inventory is still relatively high [6].

Core Insights - The Chinese real estate market is undergoing unprecedented changes after decades of rapid development, with significant improvements in living conditions and a dramatic increase in average housing prices since the housing reform in 1998 [1][3] Historical Price Trends - Housing prices in China have experienced cyclical fluctuations, with major price increases occurring approximately every few years, notably from 2003 to 2007, 2009 to 2011, 2012 to 2014, and 2015 to 2020, before the momentum was halted by the COVID-19 pandemic [3] Recent Market Adjustments - Since the second half of 2021, the Chinese real estate market has shown clear signs of adjustment, with the national average housing price dropping from a peak of 11,100 yuan per square meter to 9,860 yuan by June 2022, reflecting an average decline of over 10% [5] - Among 70 major cities, 48 reported year-on-year price declines by June, indicating that the downturn is widespread rather than isolated [5] Corporate Performance - The performance of real estate companies has significantly declined, with the top 100 firms reporting a cumulative performance drop of 50.3% year-on-year in the first half of the year, and nearly 80% of these companies experiencing declines exceeding 30% [7] Government Response - In response to the market adjustments, 70 cities have implemented measures to relax real estate regulations, including easing purchase and loan restrictions, lowering down payment ratios, and offering subsidies to buyers [9] Future Price Outlook - Industry experts have differing views on future housing price trends, with some predicting a "devaluation wave" in the coming years, while others emphasize three major trends influencing the market [11] - The adjustment in housing prices is seen as an irreversible trend, with a "volume and price decline" scenario indicating that market adjustments will only conclude when prices return to reasonable levels [11] - The market is facing an "oversupply" situation, with estimates suggesting that the number of vacant homes has reached 100 million, indicating a growing imbalance between supply and demand [11][12] - The aging population in China is expected to reduce the demand for new homes, as the elderly population is projected to exceed 300 million by 2025, while the younger population is declining [12]