招商蛇口20241111

Summary of the Conference Call on China Merchants Shekou (招商蛇口) Company Overview - The conference call focuses on China Merchants Shekou, a leading real estate company in China, particularly in core first and second-tier cities. Key Points and Arguments Industry and Market Trends - The real estate sector has stabilized after an overcorrection since October, with expectations of continued recovery in the beta market for real estate [2][3] - The National People's Congress meeting on November 8 did not specify amounts for land and existing housing storage, but the Ministry of Finance is developing policy details for storage funds, indicating a gradual policy rollout [2][3] - The overall direction for the real estate sector is confirmed, with increasing policy support expected to be released from the end of this year into next year [2][7] Company Strategy and Performance - China Merchants Shekou has focused on core cities, with land reserves concentrated in 6+10 cities, accounting for 88% of its investment [2][4] - In the first nine months of the year, all land acquisitions were in core first and second-tier cities, which are likely to see price stabilization first [2][4] - The company has utilized new financing tools such as stock buybacks and increased loans, providing it with a valuation premium [4] Sales and Financial Outlook - Sales data for October, November, and December are expected to be positive, supporting the effectiveness of policies rather than disproving them [5] - Signs of price stabilization are emerging, including a decrease in second-hand housing listings and stable housing prices, which may positively influence buyer sentiment for new homes [5] - China Merchants Shekou's sales performance remains among the top five in the industry, with October sales growth exceeding the average of the top 100 real estate companies [6] Valuation and Future Expectations - The company has recognized substantial impairments totaling 10.7 billion yuan over three years, which is 20% of total profits, laying a solid foundation for future profit recovery [6] - The current book valuation is over one times the price-to-book ratio (Pb), which appears high but is misleading due to significant undervaluation of land reserves in Shenzhen [8] - After re-evaluating unsold inventory, the actual net asset value per share is estimated to increase by approximately 0.25 yuan, suggesting a more realistic valuation of around 0.75 times the price-to-book ratio [8] Overall Market Sentiment - The expectation is for a gradual release of real estate policies from small to large, with a confirmed direction towards recovery [7] - Despite potential short-term corrections due to mismatches in market expectations, the overall trend remains positive, leading to a bullish outlook for the real estate sector in the coming months and into next year [7][9] - Leading real estate companies like China Merchants Shekou are expected to benefit from new policy tools and the recovery of fundamentals in core cities, indicating a higher potential for valuation recovery [9] Additional Important Insights - The company’s significant land reserves in prime locations are a critical asset that may not be fully reflected in current valuations, suggesting potential upside as market conditions improve [8] - The focus on core cities and strategic land acquisitions positions China Merchants Shekou favorably for future growth and recovery in the real estate market [4][6]