Vi e w p o i n t | 10 Dec 2025 10:55:22 ET │ 54 pages See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations. New round of local stimulus; watch for pro-leverage initiatives but unlikely for now — i) we believe new round of demand-side local stimulus (incl. purchase subsidies) in 4Q25 might help but are unlikely to alter home price expectations; ii) we would watch for targeted monetary easing or pro-leverage initiatives but see low likelihood for now; iii) urban ...

Summary of China Property Conference Call Industry Overview - **Industry**: China Property - **Event**: CPC Forth Plenary Session (20-23 Oct) Key Points and Arguments 1. **Development Model and Economic Focus**: The Plenary emphasized promoting high-quality development and advancing people-centric urbanization, indicating a shift in focus from real estate to manufacturing and technology sectors. The property sector is expected to account for an estimated 13% of GDP by 2025, down from a peak of 32% [1][1][1] 2. **Economic Stabilization**: The limited mention of property and absence of new stimulus measures suggest a focus on stabilization rather than stimulus. The decline in real estate investment (REI) was offset by growth in other sectors, contributing to a resilient GDP growth of 4.8% in Q3 2025 [1][1][1] 3. **Impact on Household Confidence**: With property assets constituting 66% of household assets, the decline in home prices is negatively affecting household confidence and consumption, particularly among the working class. Measures to support home prices in core cities are anticipated by 2026 [1][1][1] 4. **New Development Model**: The new development model aims to transform the property industry by focusing on quality improvement rather than scale expansion. This shift is expected to benefit luxury-home builders and landlords of recurring profit [1][1][1] 5. **Three-Pronged Housing System**: The proposed housing system includes commodity housing for high-end buyers, rental housing for urban migrants, and social housing for low-income classes. It is expected that rental and social housing could account for approximately 45% of supply in the future [2][2][2] 6. **Optimization of Production Factors**: A linkage mechanism to optimize the allocation of production factors (people, housing, land, and capital) is proposed to coordinate land supply, property supply, and government budget in relation to population flow [2][2][2] 7. **Property Development Improvements**: Recommendations include improving property development, financing, sales systems, and supervision, as well as deepening urban renewal in key cities [2][2][2] 8. **Promotion of Good-Quality Homes**: The focus will be on renovating aged buildings, energy-saving measures, and adopting advanced construction technologies [2][2][2] Additional Important Content - **Analyst Ratings and Valuations**: The report includes various company valuations and ratings, indicating a significant NAV discount for many property companies as of October 23, 2025. The average NAV discount for H-share companies is noted to be -65% [5][8][8] - **Investment Recommendations**: The report provides investment ratings for various companies, with a mix of "Buy," "Neutral," and "Sell" ratings based on expected total returns and risk assessments [22][24][24] This summary encapsulates the critical insights from the conference call regarding the China property sector, highlighting the shift in focus towards stabilization and quality improvement in the industry.

Summary of the Conference Call on China's Property Sector Industry Overview - **Industry**: China's Property Sector - **Focus**: Transformation and upgrade during the 15th Five-Year Plan (2026-2030) aimed at establishing a new development model to enhance living standards and stabilize the property market [1][7] Core Points and Arguments New Development Model - The property sector will transition from construction to providing full life-cycle property services, emphasizing quality over scale [1][9] - Key features include: - Establishing a three-pronged housing system: commodity housing for affordable buyers, rental housing for urban migrants, and social housing for low-income classes [1][9] - Optimizing production factors (people, housing, land, capital) through Hukou and land reforms [1][12] - Urban renewal initiatives to enhance city capacity and promote high-quality homes [1][9][23] Housing Supply and Demand - Land sales revenue is projected to stabilize at approximately RMB 4 trillion annually from 2026 to 2030, reducing local government reliance on land sales for fiscal revenue [1][2] - The government aims to increase annual investments in social housing and urban renewal to around RMB 0.9-1 trillion, with a focus on rectification and upgrades rather than full demolitions [2][50] - Supply-side measures include revitalizing existing lands, controlling new land supply, and enhancing the quality of property supply [3][26] Urbanization and Market Dynamics - Top-10 cities are expected to outperform in property sales, land sales, and rental markets due to urbanization and population concentration [4][65] - The new urbanization policy aims to reshape the value of satellite cities, enhancing their attractiveness through improved logistics and infrastructure [67] Policy Support and Financial Measures - The government is implementing supportive fiscal and monetary policies, including special bonds for social housing and urban renewal projects [68][71] - Local governments are encouraged to repurchase idle land and housing inventory to stimulate the market [68][69] Important but Overlooked Content - The shift in focus from "having a home" to "having a good home" reflects changing consumer preferences and the need for better living conditions [8][9] - The integration of building information modeling (BIM) technology and energy-saving innovations in housing construction is emphasized as part of promoting good-quality homes [24][23] - The expected decline in new supply due to the transition to selling completed properties may lead to cautious land purchases by property firms, impacting cash flow [22][21] Conclusion - The 15th Five-Year Plan outlines a comprehensive strategy for the transformation of China's property sector, focusing on quality, sustainability, and social equity. The emphasis on urban renewal, affordable housing, and policy support indicates a proactive approach to addressing the challenges faced by the industry.