(Economic Observation) China's real estate companies "reduced debt" sharply, will house prices fall?
China News Service, Beijing, September 3 (Reporter Pang Wuji) The semi-annual report of China's listed real estate companies is coming to an end. The sales of many real estate companies have fallen year-on-year, and real estate companies "reducing debt" have become the industry's key word.
Analysts believe that in the last four months of this year, real estate companies will accelerate their launch sales, increasing the possibility of parity or even lower prices.
Affected by the new crown pneumonia epidemic, the property market was temporarily suspended in the first half of the year, which also caused many real estate companies to decline in sales, revenue, and profits in the first half of the year.
Last year, Country Garden, the largest real estate company in terms of sales volume, achieved a total of 266.95 billion yuan (RMB, the same below) contracted sales in the first six months of this year, down 5.32% year-on-year.
During the same period, the company's operating income and net profit fell by 8.44% and 4.9% respectively.
Vanke's net profit attributable to shareholders of listed companies achieved positive growth in the first half of the year, but sales fell slightly by 4%.
Evergrande’s contracted sales in the first half of the year increased by 23.8% year-on-year; however, due to the implementation of the "25% off" promotion nationwide, Evergrande’s gross profit was 66.68 billion yuan, a year-on-year decrease of 13.7%.
Another benchmark real estate company Sunac China's sales in the first half of the year fell by 8.8% year-on-year.
In the real estate industry, the stronger ones tend to grow stronger, and the leading real estate companies have relatively stable operating conditions.
Wind data shows that among the 81 A-share listed real estate companies that have disclosed their semi-annual reports, less than 40% of their net profits have achieved year-on-year growth, and the performance of real estate companies has clearly differentiated.
According to the statistics of the Crane Real Estate Research Center, in the first half of the year, the full-caliber sales scale of the top 100 real estate companies decreased by 2.7% from the same period last year.
As of the end of June, nearly half of the companies’ cumulative sales were lower than the same period last year.
Yang Kan, chief researcher of real estate at Ping An Securities Research Institute, also pointed out that the net profit of A-share listed real estate companies in the first half of the year fell by 19.4% year-on-year, and the overall gross and net profit margins both fell year-on-year.
Sales fell in the first half of the year, which means that real estate companies need to further increase sales and collection efforts in the second half of the year.
At the same time, the regulatory authorities demand that the "sharp edge" of debt reduction is high, and real estate companies are eager to increase the level of sales, and there may be a wave of price reduction promotions.
Since the second half of the year, real estate financial policies have frequently tightened signals.
The real estate work symposium held on July 24 clearly put forward the “implementation of the real estate financial prudential management system”.
On August 16, Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission, pointed out in an article that the real estate bubble is the biggest "gray rhino" threatening financial security.
On August 20th, the Ministry of Housing and Urban-Rural Development and the People's Bank of China held a key housing enterprise symposium in Beijing to form key housing enterprise fund monitoring and financing management rules.
According to media reports, this financing management rule mainly involves the "three red lines": the asset-liability ratio of the real estate enterprise after excluding the advance payment shall not exceed 70%; the net debt ratio of the real estate enterprise shall not exceed 100%; "less than 1.
Once real estate companies "step on the line", they cannot increase or need to strictly control the scale of interest-bearing liabilities.
A report by the Ping An Securities Research Institute shows that according to the data from the interim report, among 121 A-share listed real estate companies, 9 have exceeded 3 red lines at the same time, 21 have exceeded 2 red lines, and only exceeded 1 red line. There are 35 companies.
Most of the real estate companies that have held interim performance meetings said they will focus on controlling the level of debt in the next phase.
For example, Xia Haijun, president of Evergrande, said that Evergrande had already proposed the strategic goal of "high growth, scale control, and debt reduction" at the beginning of this year.
He said that he is very confident that the future (financial) indicators can fully meet the requirements of the regulatory authorities.
Analysts believe that if this policy is implemented, it will help reduce the reliance of real estate companies on financial leverage, resolve financial risks in the real estate industry, and curb vicious competition in the land market.
However, for companies that have too much pressure to reduce debt, in the next four months, they will not rule out ways such as reducing land acquisitions and "cutting meat" to sell houses to accelerate the return of funds and reduce the level of debt.
The traditional real estate sales season "Golden Nine and Silver Ten" is coming soon, what is the trend of housing prices?
Xu Xiaole, chief market analyst at the Shell Research Institute, said that the new home market is affected by factors such as increased inventory and financial pressures from real estate companies. There may be a small market for lower prices to sell houses. The price is not only difficult to rise, but may drop slightly.
From the perspective of the second-hand housing market, the leading indicators of the short-term market show that market expectations are weak. The housing transaction time remains a long cycle of 100 days. It is difficult to open the chain of improved housing swaps. This year, the second-hand housing market will hardly see a significant improvement.
(Finish)