China Property_ Secondary Home Pricing Improves On Policy Support

Summary of Conference Call Notes Industry Overview - Industry: China Property - Key Players Mentioned: Yuexiu Property Co Ltd (0123.HK), China Overseas Land & Investment Ltd. (0688.HK), China Resources Land Ltd. (1109.HK), China Resources Mixc Lifestyle Services (1209.HK), Greentown China Holdings (3900.HK) Core Insights and Arguments - Secondary Home Prices: - October secondary home prices increased by 0.4% month-on-month (m-m) but decreased by 10.7% year-on-year (y-y) across approximately 50 tracked cities. This is an improvement from declines of 1.3% in September and 1.4% in August [2][10] - 52% of cities recorded m-m price increases, a significant rise from 13% in both September and August [2][9] - Secondary Listing Prices: - Secondary listing prices fell by 0.1% m-m in October, a slight improvement from declines of 0.8% in September and 1.5% in August. 39% of cities saw upward price adjustments [2][10] - New Listings: - New secondary listings decreased by 3% m-m and 6% y-y in October, contrasting with a 4% m-m increase in September. 60% of cities experienced m-m decreases, primarily in tier 2 cities [2][10] - Market Activity: - Visitations to agent shops surged by 24% m-m and 34% y-y in October, with 92% of cities reporting y-y increases [2][10] - Sales Forecast: - A forecast of 15-20% y-y growth in secondary sales volume for Q4 2024 is maintained, while primary sales are expected to decline by 5-10% y-y [2][10] - Sustainability Concerns: - The sustainability of the recent price increases is under scrutiny, particularly as the impact of policy easing diminishes. The continuation of positive trends will depend on effective implementation of announced policies [2][10] Additional Important Points - Valuation Methodology: - The NAV for Yuexiu Property is estimated at HK$8.43/share, with a 35% discount applied based on a developers' scorecard [20] - China Overseas Land & Investment's NAV is estimated at HK$21.17/share, also with a 35% discount [23] - China Resources Land's NAV is estimated at HK$46.12/share, with a similar discount applied [25] - Risks: - Upside risks include stronger-than-expected contract sales and faster project launches. Downside risks involve weaker-than-expected sales and margin compression [21][22][24][26] - Stock Recommendations: - Suggested accumulation of stocks like CR Land and CR Mixc, which are seen as dual beneficiaries of housing and consumption [2][10] This summary encapsulates the key points from the conference call, highlighting the current state of the China property market, price trends, and the outlook for major players in the industry.