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<Research>CCBI: CN Housing Outlook Uncertain; But Individual Stocks Still See Opportunities
Recommend 28 Positive 25 Negative 16 |
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CCBI’s report wrote that the weak performance of Chinese property developers in 1H24 came as no surprise. In August, major property developers announced feeble interim results, with performance characterized by sinking profits, lower dividend and a slight deterioration in financial positions. The broker focused on 18 property developers, including 14 SOEs and 4 POEs. The core profits of these real estate enterprises fell by an average of 26.8% and 47.2% respectively, mainly due to a decline in revenue and profit margins. Of the 18 key real estate enterprises, only 7 announced interim dividends, which dropped by an average of 14.7%. At the results press conference, the management of key real estate enterprises was generally conservative about the prospects of the market and their companies. Many of them were uncertain about the timing of market recovery and believed that supporting policies will take time to take effect. Only a few property developers, such as CHINA OVERSEAS (00688.HK), GREENTOWN CHINA (03900.HK) and YUEXIU PROPERTY (00123.HK), predicted a sharp rebound in contracted sales in 2H24, but most property developers were not confident in the sales revival. Although the fundamentals of key real estate enterprises were weak, the broker viewed that individual stocks still saw opportunities. The current valuation of the industry was extremely low, at only 0.34x PB, for which the broker believed that a revaluation may occur with the support of macro policies. The fundamentals of individual companies improved, such as the restructuring of MIDEA REAL EST (03990.HK), the spin-off of different businesses by China Resources, the transformation of LONGFOR GROUP (00960.HK)’s business model, and the accelerated investment in land reserves and destocking of China Overseas/Greentown/Yuexiu. The sector top picks of CCBI were China Overseas, Longfor and Greentown. AAStocks Financial News |
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