Investment Rating - The report maintains a "Recommended" rating for the real estate sector, indicating an expected increase in the industry index exceeding the benchmark index by more than 5% in the next 3-6 months [32]. Core Insights - The alpha of real estate stocks depends on the precision of land acquisition, with the current macroeconomic environment not supporting a general rise in housing prices, making it challenging for companies to ensure project profitability [6][7]. - The value of real estate stocks is derived from the discounted future residual earnings, which are based on the profitability of each project, ultimately reflecting on ROE and valuation [6][7]. - The report highlights that the market for new homes is contracting, and the effective market area for new homes is shrinking, complicating the identification of valuable land parcels [7][24]. - The report suggests that future sector opportunities will primarily arise from improved land acquisition comfort for real estate companies, transitioning from a contracting to an expanding market [24]. Summary by Sections Industry Basic Data - The real estate sector comprises 107 listed companies with a total market capitalization of 1,233.623 billion and a circulating market value of 1,183.334 billion [2]. Relative Index Performance - The absolute performance over 1 month, 6 months, and 12 months is 7.6%, 16.6%, and 3.4% respectively, while the relative performance is 4.4%, -1.9%, and -12.1% [3]. Project Profitability and Market Dynamics - The profitability of real estate companies is increasingly dependent on project-level earnings, with past profits driven by rising property prices and a focus on debt leverage [6][7]. - The report notes that the supply of quality land has increased, leading to heightened competition among projects, and some older projects may face challenges in sales due to new building regulations [7][24]. Investment Recommendations - The report recommends focusing on companies that have demonstrated precise land acquisition over the past three years, such as Greentown China, China Resources Land, and Jianfa International Group, while also monitoring companies like China Overseas Grand Oceans and China Jinmao for improvements in land acquisition in the latter half of 2024 [24].