Spark Global Limited reports:
Recently, the housing market projects continue to be low, and the sales slowdown, the main business gross margin under pressure. Insiders point out that in recent years, many housing projects are high land prices, and are affected by regulatory policies, so the gross profit margin declines. It is expected that the strength of the scale of the housing enterprises will consolidate the development of business, actively looking for the second growth point; And seek transformation will become the new development direction of the weaker real estate enterprises.
Gross margin decline
On July 20, OCT A disclosed the record of investor relations activities, showing that since this year, many places have started to try out the “two concentration” land supply policies, promoting the healthy, stable and sustainable development of the real estate industry. At present, the overall gross profit margin of the industry is in a downward trend, and it is expected that the gross profit margin of the company’s real estate business will decline to a certain extent. However, based on the mature integrated development model of the company, as well as the integration of various sectors and businesses of the cultural and tourism comprehensive project into an organic whole, the obvious synergistic and cluster effect has been generated, and the gross profit rate of real estate business will be stable in the future.
OCT A points out that the centralized land supply policy can guide the standardized and high-quality development of the real estate industry, and puts forward higher requirements on the risk prevention ability, financing ability and development and operation ability of real estate enterprises. Risk prevention has always been the company attaches great importance to the problem, the company has taken a series of measures, such as strict control of liabilities, to receive fixed investment, improve the net operating cash flow, etc..
From the disclosure of the first half of the performance of the housing enterprises, net profit growth is generally low. Take Poly Real Estate as an example, the company achieved operating income of about 90.9 billion yuan in the first half of the year, up 22.25% year on year. The net profit attributable to the shareholders of the listed company was about 10.298 billion yuan, up 1.72% year on year. During the reporting period, the company achieved a total contract amount of 285.185 billion yuan, a year-on-year increase of 27.01%.
Compared with the mainstream housing enterprises in recent years to disclose the gross profit rate data, Southwest Securities pointed out that the head of the housing enterprises gross profit rate is generally less than 30%, compared to the epidemic before the general decline of 5 to 10 percentage points. The gross profit margin of related housing enterprises is mainly related to the increase in the proportion of land price to housing price in recent years. In addition, the gross profit margin of some housing enterprises is affected by product structure and sales area.
Southwest Securities pointed out that in the “housing not speculation” in the background, new house prices continue to be limited, while the core city land demand exceeds supply, land prices continue to rise. Therefore, the decline in gross margin has become an important feature of the industry. From the carry-over period, the decline in gross margin may last 2-3 years. And the real estate enterprises concentrated layout of hot cities with more people and less land, the gross margin is difficult to improve.
Slowing Sales Growth
It is worth noting that from the disclosure of property sales data, recent sales growth generally slowed down, many property sales in June year-on-year decline.
The transaction area of new houses in key cities dropped 14.1% year on year and 14% month-on-month on July 16, according to CITIC Construction Investment Research. The drop in first-tier cities was 25.9 percent, second-tier cities 3.6 percent and third-tier cities 28.6 percent. 100 cities for the new land area of 663,900 square meters, the overall inventory declined, in July to push down the month-on-month. There is no new land supply in first-tier cities and second-tier cities, while the new land supply in third-tier cities is 663,900 square meters, with an average price of 1,837 yuan/square meter. As of July 16, the total number of push deals in July was 167, down 66% year on year and down 70% month-on-month. Among them, the volume of bidding in first-tier cities fell by 44%, that in second-tier cities by 71% and that in third-tier cities by 74%.
Yan Yuejin, research director of the think tank center of E-house Research Institute, told the China Securities Journal that the completion data of the last two years has been low, and the epidemic has affected the pace of construction of real estate companies, with the backlog of projects concentrated until 2021. With the acceleration of the pace of real estate enterprises, the control of construction period in various places has become stricter, and the completion index has continued to improve. Yan Yuejin pointed out that with the completion scale at a high level, the housing transaction volume is expected to increase in the future, and lead to a rise in consumer demand such as furniture decoration.
Speed up the shipping pace
Zhang bo, president of the research institute of residential room production, pointed out that 22 cities implemented the centralized supply of land, the first half of the centralized supply only once, the other two will be in the second half. In this context, in the second half of the year, real estate enterprises will speed up the pace of shipment, quickly withdraw funds to prepare for land, and some enterprises to slow down or increase promotion efforts.
Zhang Bo believes that the overall heat of some hot cities has dropped significantly compared with the second half of last year, and this trend will continue, but the market fragmentation is still obvious.
CITIC Construction Investment Securities pointed out that in the future for a period of time, with the strength of the scale of real estate enterprises will bear the decline in profit margins at the same time actively expand their own ability circle, in order to consolidate their own development business and find the second growth point of profit; For small and medium-sized private real estate enterprises with weak strength, they are faced with the dilemma of lack of land, and seeking transformation has become their new development direction. From the current situation, the expansion of asset management capacity circle (retail commercial real estate operation, property management services), transformation of medical beauty, power generation and construction are three clear directions. Real estate development plate is optimistic about stable operation, low leverage or significant improvement of the leading housing enterprises and commercial operation ability outstanding housing enterprises. In addition, the diversification of successful developers also deserve attention.
Reprint indicated source：Spark Global Limited information