中国房地产：从 2H25 迈入新篇章，利润率将改善，重点关注-China Property_ Turning to a New Chapter from 2H25_ Margin to Improve; Biz Recurring

Summary of the Conference Call on China Property Sector Industry Overview - The conference call focused on the China Property sector, particularly the luxury home market and the performance of top-10 cities in 1H25 - Key trends indicate a shift towards recurring business operations and improving margins in the sector Core Insights and Arguments 1. Sales Performance: - Sales in top-10 cities increased by 4% year-on-year (yoy), contrasting with a 17% decline in the overall sector [1][24] - Luxury home sales (priced over Rmb10 million) rose by 19% yoy [1][30] - New sales gross profit margin (GPM) improved to 13-18% from 12% in 1H24 [3][33] 2. Land Acquisition: - 82% of land purchases were concentrated in top-10 cities, indicating a strategic focus on core urban areas [4][27] - State-owned enterprises (SOEs) were particularly active, with land acquisitions up 120% yoy in 1H25 [4] 3. Financial Health: - The sector reported a core loss of Rmb69 billion in 1H25, with mixed margins; GPM improved to 12.2% but net profit margin (NPM) eroded to -7% [6] - Companies like COLI and Poly were the top land acquirers, indicating strong market positioning [3] 4. Recurring Business Focus: - Companies such as COLI, SZI, and Jinmao are shifting focus towards rentals and services, aiming for 10% rental growth in FY25 [2] - Recurring profits for CRL and Longfor are projected to reach Rmb12 billion and Rmb8 billion respectively in FY25 [2] 5. Policy Environment: - Local governments are accelerating policy execution to stabilize the property market, including easing purchase restrictions in cities like Shanghai and Beijing [7][42] - The State Council has called for measures to solidify the stabilizing trend of the property market, emphasizing urban renewal [46] Additional Important Points 1. Inventory Levels: - Inventory of properties held for sale decreased by 3% in 1H25, indicating a gradual reduction in excess supply [36] - The overall new home inventory area in key cities was down 17% compared to historical highs [36] 2. Market Outlook: - The sector is expected to see a gradual recovery, particularly in top-10 cities, with 2-3 more cities showing signs of recovery in 2H25 [23] - The anticipated sector correction in September is viewed as an opportunity to invest in quality property names [1] 3. Top Picks: - Recommended stocks include Jinmao, C&D, and CR Land for their strong market positions and growth potential [20][45] 4. Challenges: - Companies facing restructuring or significant asset write-downs are underperforming, highlighting the risks associated with the sector [12] 5. Investment Strategy: - Focus on luxury and quality products with active land purchases is recommended for partial recovery before earnings scale and return on equity (ROE) improve in 2H25 [14] This summary encapsulates the key points discussed in the conference call regarding the China Property sector, highlighting both opportunities and risks for investors.