Developers’ Jun sales likely rose 47% mom
? Developers’ Jun 2022 sales likely jumped by 47% mom, much stronger than
their c.10% guidance at our conference in mid-Jun.
? SOE developers’ sales were particularly strong (60-135% growth), while
private quality developers (e.g. Longfor) also outperformed their peers.
? We expect developers’ sales in 2H22F to recover on 1) strong policy support,
2) more project launches, and 3) lower base in 2H21.
? Maintain OW on strong policy support and low valuation. We like CR Land
and COLI among SOEs, and Longfor, CG and CIFI among non-SOEs.
Jun 22 sales likely rebounded 47% mom, beating guidance
According to China Real Estate Information Corporation (CRIC), one of the largest real
estate brokers in China, Jun’s contracted sales of the 17 Chinese developers we cover
likely surged 47% mom, well above the c.10% growth guidance they provided at our
conference in mid-June, driven by the relaxation of lockdown measures in China and strong
supportive policies from regulators in the past 2-3 months. State-owned developers
(SOEs), such as CR Land, COLI, and Greentown, and quality private developers, such as
Longfor and Vanke, likely outperformed peers, with mom sales growth of 35-135%, vs.
other private developers’ average mom sales growth of c.20%. YoY, these developers,
except CR Land (+3% yoy), registered yoy sales declines of about 46%. Again, SOE and
quality private developers fared better, with average declines of 30-40% yoy, vs. other
developers’ sales down by 40-80% yoy.
1H22F sales weaker than expected with only a 30% run-rate
The Jun sales numbers imply that 1H22F sales for the 17 developers dropped 49% yoy,
with an average run rate of 30%, lower than the average run rate of 40-45%. CR Land,
COLI, Greentown, Longfor and Vanke performed better with 27-41% yoy declines. Even
with a strong sales recovery in 2H22F, we now expect developers’ FY22F sales to contract
by 25-30%, below our previous forecast of about a 20% decline.
Strong sales recovery expected in 2H22F
Overall, we expect sales recovery to sustain in 2H22F on 1) implementation of supportive
measures announced earlier, 2) more project launches from developers, and 3) a lower
base in 2H21. Meanwhile, given the importance of the property market to China’s overall
economy, we expect regulators to introduce even more aggressive policies in support of
the sector. We estimate 2H22F sales to increase by 10% yoy.
Reiterate Overweight; top Adds: CR Land, COLI, Longfor, CG, CIFI
We stay sector Overweight on strong supportive policies ahead, which could lead to sales
recovery in 2H22F, and the sector’s attractive valuation (0.5x FY P/BV). Among non-SOEs,
we like Longfor, CIFI, and Country Garden (CG), and prefer CR Land and COLI among the
SOEs. Key downside risks are unexpected further outbreaks of Covid-19 and more
developers unexpectedly unable to repay their debts. A rerating catalyst is faster-thanexpected sales recovery in 2H22F.