China Property_ Major Developers' February Sales Stayed Decent, but Sustainability Remains Key

Summary of Conference Call on China Property Market Industry Overview - The conference call focused on the China Property market, specifically the performance of major developers in February 2025, as tracked by CRIC [1][2]. Key Points Sales Performance - Contracted sales of 30 major developers dropped 16% year-on-year (y-y) in February 2025, following a low base [1]. - The top 50 and top 100 developers saw attributable sales growth of 3% and 2% y-y, respectively, compared to declines of -4% and -1% in January [2]. - Year-to-date (YTD) sales decline for the top developers narrowed to -1% and 0% y-y in the first two months of 2025, contrasting with +5% and +2% in Q4 2024 [2]. Divergence in Performance - State-Owned Enterprises (SOEs) outperformed others, with notable growth from Yuexiu (+63%), COLI (+55%), CR Land (+47%), and C&D (+36%) y-y [3]. - Conversely, some developers like Zhongliang, Zhongnan, and Seazen experienced declines exceeding 50% y-y [3]. - Semi-SOE developers such as Gemdale and Vanke also reported weak performance, with declines of -45% and -27% y-y, respectively [3]. Future Outlook - Sales for major developers are expected to weaken y-y in the coming months due to reduced saleable resources and a higher base [4]. - The housing policy response is anticipated to remain reactive, with limited demand-side stimulus until housing prices stabilize [4]. - There is a need for faster policy implementation, particularly regarding funding and inventory buybacks, to bolster homebuyer confidence [4]. Investment Recommendations - The industry performance may hinge on sustained sales and home price recovery, with mixed signals observed in the physical market [5]. - The recommendation is to focus on defensive SOE players with substantial saleable resources in tier 1 cities, such as CR Land (1109.HK), Greentown (3900.HK), and Yuexiu (0123.HK) [5]. Additional Insights - The fragility of residential sentiment is highlighted, as reflected in declining secondary listing prices [5]. - The aggregate sales for the top developers showed a -1% y-y change, with a -5% month-on-month (m-m) decline in February 2025 [9]. Conclusion - The China Property market is facing challenges with declining sales and a reactive policy environment. However, SOEs are showing resilience, and strategic investments in top-tier developers may present opportunities amidst the volatility.