China Property_ Nov NBS_ Widen Completion_REI Decline; Weak Starts; Less Price Drop

Summary of China Property Research Conference Call Industry Overview - The report focuses on the China Property sector, highlighting trends and forecasts for the real estate market in China for 2024 and beyond [2][10]. Key Points and Arguments Sales and Market Trends - Sales Resilience: November sales were more resilient than expected, with December likely to show a mild "tail bounce" in Tier 1 and good Tier 2 cities, but a potential cooling in 1Q25 [2][3]. - Sales Forecast: Estimated sales for December are around Rmb 260 billion, concluding FY24 at -32% YoY [53]. - Completion and Starts: November saw a 39% decline in completions, the sharpest year-to-date decline, while starts remained low at -26.8% YoY [4][3]. Market Dynamics - Destocking Cycle: A property destocking cycle is expected to continue into 2025-2027, with price stabilization anticipated [2][3]. - New Home Market Size: New starts and land sales are at their lowest since 2005, indicating further downside for the new home market size [2][3]. - Inventory Levels: The national completed but unsold residential inventory reached 377 million sqm by November 2024 [26]. Policy and Economic Environment - Policy Vacuum: The property sector may underperform due to a policy vacuum until March NPC, with local execution of new policies pending [3][17]. - Monetary Limitations: There are expected monetary limitations on RMB FX and capital outflow due to the upcoming US presidential inauguration in January 2025 [3]. - Proactive Fiscal Policy: A proactive fiscal policy stance was noted at the December Politburo/CEWC, indicating a move towards stabilizing the property market [17]. Price Trends - Price Stabilization: Property prices in key cities are expected to stabilize, but this depends on inventory levels, which currently stand at 28 months for new homes [17]. - Price Index Changes: The NBS monthly primary price index for 70 key cities showed a -6.1% YoY change in November 2024 [14]. Investment Opportunities - Top Picks: Recommended stocks include Beike, CRL, and Greentown, which are viewed as having strong fundamentals despite the overall market challenges [3][17]. Macro Economic Indicators - New Loans and TSF: November new loans were Rmb 580 billion, significantly below expectations, indicating weak household and corporate demand [4]. - Retail Sales: Retail sales increased by 3.0% in November, down from 4.8% in October, reflecting a cooling consumer sentiment [4]. Additional Important Insights - Land Sales: Land sales in November showed a -9% YoY decline in GFA and a +28% YoY increase in value, indicating a shift in market dynamics [4]. - Valuation Metrics: The report includes various valuation metrics for listed property companies, indicating significant discounts in NAV and P/E ratios across the sector [34]. This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the China Property sector, highlighting both challenges and potential investment opportunities.