China Real Estate_100 days into easing

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the China Real Estate Equities sector, particularly analyzing the impact of recent policy easing on the market dynamics and sales performance in key cities [1][2]. Core Observations 1. Sales Performance: - 4Q24 sales in 30 key cities increased by 69% quarter-on-quarter (q-o-q) and 12% year-on-year (y-o-y), marking a significant recovery [5][5]. - December 2024 sales were 133% higher than September 2024, prior to the easing measures [5][5]. - Tier-2 cities showed the most rapid recovery, with December sales 182% above pre-easing levels [5][5]. 2. Market Dynamics: - The sales volume in December 2024 reached the highest levels in 21 months, indicating sustained demand [5][5]. - Secondary sales also peaked, reaching a 4-year high in December 2024, suggesting robust demand and potential conversion from secondary to primary sales [5][5]. 3. Land Sales: - National land sales rebounded dramatically in December 2024 to RMB737 billion, accounting for 28% of the total for the year [5][5]. - Major developers like COLI and CR Land were the top land purchasers in 2024, indicating aggressive land replenishment strategies [5][5]. 4. Market Share Gains: - COLI, CR Land, and C&D International increased their market share among the top 100 developers by 0.5 percentage points, 0.2 percentage points, and 0.2 percentage points, respectively, from 9M24 to the end of 2024 [5][5]. Key Stocks and Ratings - CR Land (1109 HK): - Current Price: HKD 22.15, Target Price: HKD 35.60, Rating: Buy, Upside: 60.7% [3][3]. - Yuexiu (123 HK): - Current Price: HKD 4.93, Target Price: HKD 8.20, Rating: Buy, Upside: 66.3% [3][3]. - Longfor (960 HK): - Current Price: HKD 9.90, Target Price: HKD 20.50, Rating: Buy, Upside: 107.1% [3][3]. - KE Holdings (BEKE US): - Current Price: USD 17.74, Target Price: USD 30.40, Rating: Buy, Upside: 71.4% [3][3]. - CR Mixc (1209 HK): - Current Price: HKD 27.60, Target Price: HKD 44.20, Rating: Buy, Upside: 60.1% [3][3]. Additional Insights - Supply Constraints: Sales Gross Floor Area (GFA) in top-tier cities has consistently exceeded newly supplied GFA for 70% of the time since 2021, indicating a supply squeeze [5][5]. - Price Stability: Secondary prices in tier-1 cities are stabilizing, with less tendency for price cuts, reflecting a more resilient market [5][5]. - Developer Performance: The report highlights the performance of various developers, with notable declines in sales for some, such as Agile, which saw a 72% y-o-y drop in December 2024 sales [17][17]. Risks and Considerations - Potential risks include slower-than-expected recovery in property transactions, macroeconomic uncertainties, and the impact of regulatory changes on the real estate market [37][37]. This summary encapsulates the key findings and insights from the conference call, providing a comprehensive overview of the current state and outlook of the China real estate sector.