[Niu friends talk about hot topics] A rare explosion in real estate stocks

Background of the incident

Real estate stocks, which have been suppressed for almost half a year, have finally exploded.Early morning trading on August 11,Real estate stocks collectively surged, and the Hong Kong domestic housing stock sector surged nearly 6%. Among them, Sunac China surged 10%, China Resources Land rose more than 9%, and China Evergrande rose more than 7%. A-share real estate stocks are also showing a sharp trend，Poly Real Estate has rebounded nearly 30% since its recent low, rising 27% over the past 5 days.

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Real estate stocks in Hong Kong's A market have been hit “indiscriminately” by the market since this year. Whether it's leading “Hiring Ten Thousand Gold,” etc., or popular housing enterprises, stock prices have pulled back more than 20% across the board, and the industry's valuation level has fallen to an all-time low. However, the recent explosion of real estate stocks across the board made them quickly become the most beautiful boys in the bullring. Regarding this strong rebound in the real estate sector, many discussions have been held among netizens about the reasons for the sharp rise and investment logic. What kind of insight do cowboys have on this

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What is the reason for this wave of real estate stock explosions?

Is the inflection point of real estate stock investment coming?

Where are the future investment opportunities in real estate stocks?

What is the reason for this wave of real estate stock explosions?

@要买车买车：The sharp rise in real estate stocks came suddenly. In early trading on August 11, Poly, Goldland, and Jinke rose and stopped for a while; domestic housing stocks also all rose, with China Resources Land and Sunac rising by more than 11%. This unusual phenomenon points to a market rumor: the local auction policy will be adjusted, the premium rate must not exceed 15%, and the actual land price must not be increased by raising the reserve price, competing for personal ownership, etc. A number of industry insiders said that after the first batch of centralized land supply, land prices did not fall but rose. If policies were adjusted, it would be beneficial to developers.

@市值观察：What is the reason for the recent surge in real estate stocks? There are only three points. The first reason is that the real estate sector has declined sharply this year. There is a rebound demand, and real estate stock valuations have fallen to a historically low level. The second reason is a shift in market style. Recently, companies such as lithium batteries and photovoltaics experienced a correction, and some capital was switched to consumer and real estate sectors, which had a large decline in the previous period. The third reason is that news about a leading real estate company in the Hong Kong stock market easing financial constraints has spurred the market to expand the real estate sector.

@港美股估值建模：What are the sudden favorable factors that have caused the real estate development sector and property management sector to “riots” today? This is mainly because the country has adjusted the land auction policy and reduced land acquisition costs for real estate developers. The real estate development industry is expected to usher in a turning point in profit, thereby restoring valuations.

Is the inflection point of real estate stock investment coming?

@28037576 ：In the short to medium term, real estate valuation is likely to be repaired. The price-earnings ratio is expected to remain between 5-8 times, which is comparable to the banking industry. The industry's excess earnings are not obvious. Leading real estate companies also know very well where the ceiling of the industry is. There are probably still 5-10 years of opportunities to operate smoothly and seek transformation during the transition.

@市值观察：Has the real estate sector reversed? The answer is none at the moment. On the one hand, high-level policies have not been relaxed, and they insist on “housing without speculation”. For example, a large number of real estate agency companies have gone out of business in Shenzhen. On the other hand, institutions' enthusiasm for the real estate sector has weakened. Of course, the real estate sector is not devoid of investment value. After this period of decline, the valuations of some leading stocks have become very low. Moreover, the real estate sector has many dividends, and it is also an asset allocation channel for shareholders who prefer to take higher dividends.

@八倍哥：Now the real estate market has only returned to rationality and has entered orderly development. This is much better than the unexpected sharp rise and fall before. Looking at the industry at present, the Red Sea has entered a long cycle, but the Red Sea is also an ocean. The volume of real estate was 17 trillion dollars last year. This must be a big industry in the country. In fact, in addition to the incremental market, the stock market still has 10 trillion dollars, and it will get higher and higher. The two add up to 30 trillion dollars. This is a huge market, depending on whether housing enterprises are able to eat it.

Where are the future investment opportunities in real estate stocks?

@28265196 ：Recently, Guan Qingyou, director of the Financial Research Institute, mentioned that real estate has moved from a financial model to a manufacturing model, and the trend in the real estate industry must be “leading”. During the conversation, Yao Yang, director of Peking University's National Development Institute, also said that China can accommodate enough real estate developers.

@Queen女王 :The root cause of the current undervaluation of real estate stocks is the destruction of forward value. The main reason is deleveraging and rising land costs after 2018. Deleveraging will basically end at the end of 2021. If land prices fall 15%, leading housing companies' valuations can reach 30%-50% by restoration. The factors driving the decline in land prices are increasing land supply. We believe that under the pressure of declining real estate investment and rising housing prices, land supply is expected to turn around in the second half of the year, which will bring industry opportunities. At the individual stock level, housing enterprises with comprehensive development capabilities have an advantage.

@29638625 ：Only one type of company can survive in the future. The capital chain is fine, financing costs are low, and the brand reputation is good enough. Examples include Poly and Vanke. The financing cost of both companies is less than 5%, the financing cost of Poly is 4.77%, and the financing cost of Vanke is also less than 6%. If real estate still has investment opportunities in the future, it must be a giant becoming a supergiant, and there is almost no chance that it will grow on a small scale.
$CHINA VANKE (02202.HK)$ $EVERGRANDE (03333.HK)$ $COUNTRY GARDEN (02007.HK)$ $Poly Developments and Holdings Group (600048.SH)$

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