Summary of the Conference Call on China's Property Market Industry Overview - The conference call discusses the property market in China, specifically focusing on the data from the National Bureau of Statistics (NBS) regarding house prices in 70 cities. Key Points 1. **Property Price Trends** - The weighted average property price in the primary market fell by **2.0% month-over-month (mom) annualized** in July, following a decline of **2.5% in June**. Year-on-year (yoy), the price decreased by **2.7%** in July compared to **3.1%** in June [2][8][11]. 2. **Divergence Between City Tiers** - Tier-1 cities experienced a **0.2% increase** in primary home prices in July, contrasting with Tier-2 and Tier-3 cities, which saw declines of **2.4%** and **2.3%** respectively [8][11]. 3. **Secondary Market Performance** - Secondary market data indicates price declines ranging from **5% to 20%** over the past year, highlighting a significant drop in market activity [1][8]. 4. **Market Dynamics** - The number of cities with sequentially higher property prices decreased in both primary and secondary markets in July, indicating a broader market slowdown [8][14]. 5. **Transaction Volume Decline** - A high-frequency tracker noted that the **30-city new home transaction volume declined by 20% yoy** in August month-to-date, with inventory months in major cities increasing to **26.3** in August from **25.9** in July, primarily driven by Tier-3 cities [11]. 6. **Policy Measures** - Policymakers have implemented measures to stabilize the property market, including relaxing home purchase restrictions in the outskirts of Beijing and potential state-owned enterprise (SOE) purchases of unsold homes totaling **RMB 300 billion**. However, a repeat of the previous shantytown redevelopment program is deemed unlikely [11][12]. 7. **Market Challenges** - The property markets in lower-tier cities continue to face significant challenges due to weaker growth fundamentals and severe oversupply issues compared to top-tier cities [8][11]. Additional Insights - The analysis emphasizes that the data presented is specific to primary market transactions (new home sales) and does not encompass the broader secondary market dynamics [1][8]. - The report indicates that despite easing policies, the overall sentiment in the property market remains cautious, particularly in lower-tier cities where the economic fundamentals are weaker [8][11]. This summary encapsulates the critical insights from the conference call regarding the current state and challenges of the property market in China, highlighting the ongoing divergence between different city tiers and the impact of recent policy measures.

Core Viewpoint - Lennar Corporation reported mixed results for Q2 fiscal 2025, with adjusted earnings missing estimates while total revenues exceeded expectations, but both metrics declined year over year [2][5]. Financial Performance - Adjusted EPS was $1.90, missing the Zacks Consensus Estimate of $1.94 by 2.1%, down from $3.38 in the prior year [5]. - Total revenues reached $8.38 billion, surpassing the consensus mark of $8.24 billion by 1.6%, but down 4.4% from $8.77 billion year over year [5]. Segment Performance - Homebuilding revenues totaled $7.84 billion, a decrease of 6.4% from the prior year, with home sales contributing $7.79 billion, down 6.8% [6]. - Home deliveries increased by 2.2% to 20,131 units, exceeding projections, while the average sales price (ASP) of homes delivered was $389,000, down 8.7% year over year [7]. - New orders rose 6.1% to 22,601 homes, but the potential value of net orders fell to $8.58 billion from $9.19 billion [7]. Market Conditions - The performance was negatively impacted by a soft housing market, affordability challenges, and declining consumer confidence [3]. - The company is implementing strategies to drive housing starts and sales, aiming to improve long-term efficiencies and consumer confidence [4]. Financial Health - At the end of Q2, Lennar had cash and cash equivalents of $1.17 billion, down from $4.66 billion a year ago, with total homebuilding debt increasing to $2.79 billion [13]. - The gross margin on home sales was 17.8%, down 480 basis points year over year, primarily due to decreased revenues per square foot and increased land costs [9]. Future Guidance - For Q3 fiscal 2025, the company expects home deliveries between 22,000-23,000 units and an ASP range of $380,000-$385,000, down from $422,000 a year ago [15]. - Gross margin on home sales is anticipated to be around 18%, with SG&A expenses projected to rise to 8-8.2% [16]. Market Sentiment - Following the earnings release, there has been a downward trend in estimates, with a consensus estimate shift of -23.12% [17]. - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating expectations of below-average returns in the coming months [19].

Investment Rating - The report indicates a cautious outlook for the Chinese economy, suggesting a potential demand cliff in H2 2025, leading to a GDP growth forecast drop to 4.0% year-on-year from approximately 5.1% in H1 2025 [3][4]. Core Insights - The report highlights a recurring pattern in China's economic performance, where optimism in the first half of the year is often followed by disappointing outcomes in the second half, particularly in 2023 and 2024 [2]. - Austerity measures initiated in mid-May are expected to significantly impact consumption, particularly in the services sector, leading to a notable slowdown in retail sales growth to 3.1% year-on-year in H2 from an expected 5.1% in H1 [8][11]. - The property market continues to face severe challenges, with new home sales volume and value declining significantly, indicating a prolonged correction phase [32][35]. Summary by Sections Economic Outlook - The report anticipates a demand cliff in H2 2025 due to multiple factors, including austerity measures, a payback effect from durable goods sales, and ongoing issues in the property sector [3][4]. - GDP growth is projected to decrease to 4.0% year-on-year in H2 from around 5.1% in H1 2025 [3]. Austerity Measures - The new anti-extravagance campaign has led to a significant drop in demand for services, particularly in the catering and alcohol sectors, with retail sales growth expected to slow to 3.1% year-on-year in H2 [6][11]. - The average funding for the consumer trade-in program is projected to decrease, further impacting retail sales growth [7][13]. Property Market - The property market is entering its fifth year of correction, with new home sales and prices continuing to decline, particularly in large cities [32][33]. - Existing home prices in tier-1 cities fell by 0.9% in April-May 2025, indicating ongoing weakness in the housing market [34]. Export Sector - China's export growth is expected to slow sharply in H2 2025 due to payback effects from front-loading and high tariffs, with a full-year export growth forecast of 0.0% [44][45]. - High-frequency data indicates strong headwinds for exports, with manufacturing sector PMIs reflecting contraction [45][46]. Investment Trends - Investment growth in key sectors has decelerated, with significant declines noted in the solar and lithium-ion battery sectors, highlighting the need for regulatory intervention [26][27]. - The report emphasizes that the ongoing issues of overinvestment and capacity underutilization are likely to create short-term economic headwinds [24][25].

Core Viewpoint - Goldman Sachs reports that China's demand for new homes will remain low, with annual new demand expected to be slightly below 5 million units from 2025 to 2030, a 75% decline from the peak of 20 million units in 2017, driven by demographic changes, policy shifts, and a reversal in investment demand [1][14][42]. Demographic Changes Impacting Housing Demand - China's population peaked in 2021 and is projected to decline, leading to a negative contribution to new home demand, shifting from an average of 1.5 million units per year in the 2010s to -0.5 million in the 2020s and -1.4 million in the 2030s [2][15]. - Urbanization is slowing, with the urbanization rate expected to increase by only 0.5 percentage points annually from 2024 to 2030, contributing an average of 3.8 million units per year in the 2020s, down from 6.4 million in the 2010s [2][18]. - The trend of shrinking household sizes is partially offsetting the negative impacts of population decline and urbanization, with contributions to new home demand expected to rise from 1.4 million units in the 2010s to 1.8 million in the 2020s [2][19]. Declining Demolition and Renovation Demand - The average demolition demand is projected to decrease from 4.7 million units per year in the 2010s to 2.7 million in the 2020s due to improved housing quality and a shift in government focus from demolition to renovation [3][27]. - The government’s shanty-town redevelopment program (2015-2018) accelerated demolitions, leading to a front-loaded demand that will result in fewer demolitions in the coming years [3][35]. Investment Demand Reversal - Investment demand, which was a significant driver of housing demand in the 2010s, is expected to turn negative, with an average of -1.8 million units per year from 2025 to 2030 and -1.2 million in the 2030s, as owners are likely to sell vacant apartments [4][39]. - The urban housing vacancy rate was approximately 20% in 2020, indicating a substantial number of empty apartments that could suppress new construction [4][41]. Overall Housing Demand Outlook - Overall, urban demand for new properties in China is expected to remain slightly below 5 million units per year, reflecting a combination of declining population, slowing urbanization, reduced demolition needs, and a fundamental shift in investment demand [4][42].

Investment Rating - The report indicates a negative trend in the primary property market, with a weighted average property price decline of 2.4% month-over-month annualized in May, following a decline of 1.8% in April [2][10]. Core Insights - The National Bureau of Statistics (NBS) data shows that the primary market experienced a broad-based decline in property prices across all city tiers, with year-on-year changes reflecting a decrease of 3.5% in May compared to 4.0% in April [1][7]. - Despite ongoing easing policies, the number of cities with sequentially higher property prices has decreased in both primary and secondary markets [7][15]. - The report highlights that Tier-1 and Tier-2 cities saw declines of 0.8% and 2.2% month-over-month annualized in May, while Tier-3 cities experienced a decline of 3.5% [7][14]. - Local housing easing measures have been implemented, but challenges remain, particularly in lower-tier cities due to weaker growth fundamentals and oversupply issues [8][7]. Summary by Sections Primary Market Performance - The weighted average property price in the primary market fell by 2.4% month-over-month annualized in May, with a year-on-year decline of 3.5% [2][10]. - The sequential decline was observed across all city tiers, with Tier-1 and Tier-2 cities showing declines of 0.8% and 2.2% respectively, and Tier-3 cities declining by 3.5% [7][14]. Market Dynamics - The report notes an 8% year-on-year increase in new home transaction volume in June month-to-date, indicating some recovery in major cities [8]. - Inventory months in major cities decreased slightly, primarily driven by Tier-3 cities [8]. Policy Response - Policymakers have intensified housing easing efforts, including a focus on a new real estate development model and the "good housing initiative" [8]. - Continued measures are expected to stabilize home prices and support the delivery of pre-sold homes, including potential cuts to mortgage rates and expanded bank lending for specific property projects [8].

Investment Rating - The industry investment rating is "Positive" [4] Core Viewpoints - In May 2025, the decline in new home sales area year-on-year has widened, but the sales price has rebounded month-on-month, leading to a narrowing of the year-on-year decline in sales amount [1] - Cumulative sales area of commercial housing from January to May 2025 has a year-on-year growth rate of -2.9%, while the cumulative sales amount has a year-on-year growth rate of -3.8% [1] - The cumulative new construction area from January to May 2025 has a year-on-year growth rate of -22.8%, and the cumulative completion area has a year-on-year growth rate of -17.3% [2] - The cumulative funds received by real estate development enterprises from January to May 2025 have a year-on-year growth rate of -5.3%, with a significant decline in domestic loans [3] Summary by Sections Sales - In May 2025, the year-on-year growth rate of new home sales area was -3.3%, and the sales amount had a year-on-year growth rate of -6% [1] - The average sales price in May showed a year-on-year growth rate of -2.8% and a month-on-month growth rate of 2.5% [1] Development Investment - The cumulative new construction area from January to May 2025 has a year-on-year growth rate of -22.8%, while the cumulative completion area has a year-on-year growth rate of -17.3% [2] - The cumulative development investment amount from January to May 2025 has a year-on-year growth rate of -10.7% [2] Funding - The cumulative funds received by real estate development enterprises from January to May 2025 have a year-on-year growth rate of -5.3% [3] - In May 2025, the year-on-year growth rate of funds received was -10.1%, with domestic loans showing a year-on-year growth rate of -13.1% [3] Investment Recommendations - Short-term focus on policy-driven valuation recovery opportunities, while long-term focus on leading companies with quality product resources and real estate operation capabilities in core cities [3] - Recommended companies include Poly Development and New Town Holdings, with potential benefits for China Resources Land and Longfor Group [3]

Investment Rating - The report indicates a negative trend in the primary property market, with a weighted average property price decrease of 1.7% month-over-month annualized in April, and a year-over-year decline of 4.0% [2][6]. Core Insights - The divergence in property prices between top-tier and lower-tier cities continues, with Tier-1 cities experiencing a sequential increase in primary home prices, while Tier-2 and Tier-3 cities saw declines [6][10]. - Despite ongoing easing policies, the number of cities with sequentially higher property prices has decreased in both primary and secondary markets [6][10]. - The report emphasizes that the 70-city data pertains only to primary market transactions, with secondary market data indicating price declines of 5%-15% over the past year [6][10]. Summary by Sections Price Changes - The weighted average property price in the primary market fell by 1.7% month-over-month annualized in April, compared to a 2.0% decline in March [2][6]. - Year-on-year, the weighted average new home prices decreased by 4.0% in April, an improvement from the 4.5% decline in March [2][6]. City Tier Analysis - Tier-1 cities saw a sequential increase in property prices of 1.7% month-over-month annualized in April, up from 0.8% in March [6][10]. - Conversely, Tier-2 and Tier-3 cities experienced declines of 1.4% and 3.5% month-over-month annualized, respectively [6][10]. Market Dynamics - The report notes a 10% year-over-year decrease in new home transaction volume in major cities as of May [10]. - Policymakers have intensified housing easing efforts, including a recent 25 basis point cut on the housing provident fund mortgage rate, to counteract the property downturn [10].

Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words "anticipate," "believe," "consider," "estimate," "expect," "feel," "intend," "plan," "predict," "seek," "strategy," "target," "will" or other w ...

Group 1 - The real estate market in Hefei showed significant recovery in March, with new home sales increasing by 53.04% year-on-year and nearly 10,000 second-hand homes sold [1][9] - In March, 2,092 new homes were sold in Hefei, marking an 18.8% increase compared to January 2025 and a 53.04% increase compared to March 2024 [1][5] - The number of new homes entering the market in March reached 1,226, a 42.34% increase from January 2025 and a 9.82% increase from March 2024 [1] Group 2 - The second-hand home market in Hefei is particularly active, with 9,318 transactions recorded by March 30, indicating a trend of increasing volume with stable prices [9][11] - The average weekly sales of second-hand homes remained around 2,000 units, reflecting a high level of market activity [10] - There were 38,863 price increases for second-hand homes, while the number of price reductions exceeded 56,915, indicating a significant imbalance in pricing dynamics [11][15] Group 3 - A land auction on March 28 resulted in the successful sale of four residential plots, with the floor price for one plot reaching 14,018.18 yuan/m², an increase of approximately 3,382 yuan/m² compared to previous sales [17][19] - This auction marked a departure from the trend of low-price land sales seen in recent years, suggesting a potential shift in market sentiment [19] Group 4 - The overall transaction volume in 2025 shows a marked improvement compared to the previous year, indicating a recovery in market activity [21] - The government's focus on stabilizing the real estate market is evident, with policies aimed at preventing further declines and promoting stability [21]

3月过半新房同比增幅超2成 一线韧性较强近倍增 01 新房局部小阳春，沪深等热点恒热，二季度或将延续止跌企稳态势。 ◎ 文 / 俞倩倩 随着3月传统营销旺季来临，整体楼市也有复苏迹象，目前3月已度过半月有余，究竟当前小阳春成色几 何？各城市复苏有何差异化特征，基于当前市场逻辑，二季度楼市成交是否还有放量空间，哪些城市又存 在结构性机会呢？ 从项目开盘来看，目前仍处于3-4成相对高位。 据CRIC监测数据，武汉2024年去化率基本都处于3成以内 低位持稳，步入2025年以来，1月因推盘提质缩量去化率一度飙升至78%，2-3月虽略有回调，但仍在3-4成 相对高位。 从前端指 标项目来访、认购来看，节后快速反弹， 当前客户转化率仍延续增势：据CRIC监测重点项目显 示，节后来访、认购节节攀升，特别是进入3月以来，近2周单盘周均来访量均突破60组，认购量也达到了 3.2套和3.3套，显著好于去年同期。客户看房欲望有所回升，客户转化率攀升至5.2%。 据CRIC监测数据， 重点26城自2025年第5周春节周后，整体成交开始逐周回升，至第11周（2025.3.10- 3.16）已达187.32万平方米，环比由降转增，增幅 ...