中国房地产_第三季度业绩仍疲软；全面下调预期-China Real Estate_ 3Q results remain weak; broadly lowering estimates

Summary of Conference Call on China Real Estate Sector Industry Overview - The conference call focused on the performance of onshore developers in the China real estate sector, highlighting weak results for the third quarter of 2025 (3Q25) and the first nine months of 2025 (9M25) [1][4][8]. Key Financial Performance - Onshore developers reported a median year-over-year (yoy) topline contraction of -10% in 3Q25 and -27% in 9M25, indicating significant revenue decline [1][4]. - Gross Profit Margins (GPM) also faced pressure, with Poly A experiencing a GPM decline of -5 percentage points (pp) both quarter-over-quarter (qoq) and yoy [1]. - The bottom lines for most developers fell short of expectations, leading to a broad revision of earnings forecasts for 2025E-2027E, with reductions ranging from 26% to 66% for Poly A's core profit [1][2]. Company-Specific Insights - Poly A: Expected to carry forward a net loss into 4Q25E, with a subdued margin outlook for 2026 and beyond [1]. - Vanke: Anticipated deeper net losses, with a 1.3pp lower average GPM for 2025E-2027E and weaker profitability from joint ventures [1]. - Gemdale: Primarily impacted by a lowered topline estimate for 2025E and lackluster project completions [1]. - OCT: Continues to face challenges in its tourism business due to macroeconomic adversity and low consumer confidence [1]. Sales and Contract Performance - Contract sales remained lackluster, with a median -42% yoy decline in contracted sales for October 2025, leading to a -32% yoy decline for the first ten months of 2025 [4][10]. - The updated contract sales forecasts for 2025E suggest a median decline of -11% yoy for the remainder of the year [4]. Inventory and Impairment - Inventory impairment continued to be a significant issue, with Vanke, Gemdale, and OCT booking substantial impairments, resulting in a median cumulative inventory impairment of 4.9% of their inventory as of 9M25 [6][10]. Liquidity and Financing - Liquidity stress persists for non-state-owned enterprises (non-SOEs), with CMSK and Poly A managing to fulfill all Three Red Line (3RL) requirements as of 3Q25 [6][12]. - Deleveraging efforts are ongoing for Gemdale, OCT, and Vanke, with cash balances contracting faster than debts [6]. Construction Activity - Construction activity remained weak, particularly for Gemdale, which reported a 38% yoy decline in new starts for 9M25 [6][15]. - Completion rates also fell, with a median decline of -39% yoy for 9M25 [6]. Land Acquisition Trends - Land acquisition activities diverged, with state-owned enterprises (SOEs) remaining active while Gemdale and Vanke were largely muted in new land acquisitions [6][16]. - CMSK and Poly A continued to actively acquire land, with their new land acquisitions accounting for over 40% of their contract sales by both value and volume [6]. Valuation and Ratings - Target prices for onshore developers were revised down by an average of -4%, with companies trading at a 9% discount to end-2025E NAV [2]. - Sell ratings were retained for Gemdale, OCT, and Vanke, while CMSK and Poly A received Neutral ratings [2]. Conclusion - The China real estate sector is facing significant challenges, with declining revenues, pressure on profit margins, and ongoing liquidity issues. The outlook remains cautious, with potential for further revisions to earnings forecasts as market conditions evolve [1][2][4].