Land Market Recovery: A Dispute Over The Subtle Changes In The Ranking Of Head Housing Companies

Soil storage, cost and conversion rate will affect the ranking of housing prices this year. Housing companies are still actively taking the risk of shrinking.

In April 1st, the new town added 3 billion 200 million yuan to Suzhou's two land. On the same day, the new town also took part in the auction of 27 thousand square meters of Tianjin homestead. Just the day before, at the new town performance online conference, Wang Xiaosong, the chairman of the company, told the public that the new town would not shrink, but it would not rush for the sake of ranking. He pointed out that as long as the ranking of new towns in the industry around tenth.

Wang Xiaosong's remarks were based on the fact that although the annual sales of new towns in the first two years were eighth of the industry, in the first quarter of this year, new towns fell the top ten and ranked thirteenth in the third party's list.

Longhu's sales scale also declined significantly in the first quarter, and the decline in sales growth of the head housing enterprises is a big probability event. Industry reshuffle continues, and the competition for land market is also obvious. In April 3rd, 8 plots of land were sold in the main urban area of Hangzhou, with a total selling area of 234 mu, with a total construction area of 306 thousand square meters, with a total starting price of 5 billion 400 million yuan, and the total final transaction price was over 6 billion 400 million yuan. Rong, Jian FA and so on have been seized, and foreign housing companies have maintained optimism about Hangzhou's market prospects.

Behind the market is warming up, sales of commercial housing warming. The data show that as of the end of March, commercial housing transactions in Shenzhen, Chengdu, Fuzhou, Hangzhou, Huaian, Yangzhou, Jiaxing, Shantou and other cities continued to rise, with turnover exceeding the average level in the fourth quarter of 2019.

The Policy Institute's report shows that the decline of the market size in 2020 has led to some changes in the investment strategy of some enterprises, especially the strategic adjustment of the proportion of interests to match the realization of the future business strategy.

One background is the arrival of a new round of global monetary easing in order to hedge against the economic downturn caused by the epidemic.

Soil storage, cost and conversion rate will affect the ranking of housing prices this year. Housing companies are still actively taking the risk of shrinking. Gan Jun photo

Head housing companies pay more attention to efficiency

In response to changes in the economic environment, most of the housing enterprises put forward a conservative sales target, sales growth rate remained at around 70%.

Looking back at the property market in the past few years, the property market began to enter the upward cycle in the second half of 2015, and the property market in 2016-2017 years and second tier cities went up all the way. After 2018, the three or four cities began to move up. At the same time, we can see that the 100% Housing enterprises sales volume profit ratio decreased from 85% in 2016 and 80% in 2018 to 75% in 2019, and three consecutive years of continuous decline.

The rise of the market cycle and the decline in the amount of equity have led to a sharp rise in the "full caliber" sales volume of the housing enterprises. Meanwhile, the housing enterprises can also get a good dividend scale in such a market cycle. Housing enterprises expand rapidly through "cooperative development", "small stock trader" and "agent construction".

Zhang Hongwei, chief strategist of the same group, believes that housing companies will invest in the land in 2020. Some high quality plots will inevitably increase in the proportion of rights and interests and control the space of "cooperative development" so as to enhance profit margins. From the current market characteristics and the overall performance of enterprise strategy, most of the brand Housing enterprises are returning to the second tier cities with relatively good fundamentals in the market. Therefore, the investment rights and interests of high-quality plots in a second tier city will surely increase.

"If from 2020 full year expectations, the volume of transactions in the real estate and Housing enterprises will fall by 10% simultaneously, then for housing companies, the only thing that can be done is to maintain the scale as far as possible, while in the next 2020-2022 years, a steady upward cycle in the future market will increase revenue, that is, increase profits. For example, the housing companies represented by Vanke and new town began to pay more attention to efficiency, that is, profits. The relatively radical Housing enterprises represented by Zhongliang also began to practice internal strength, and the growth rate began to slow down. Zhang Hongwei said.

? ? Head housing companies have different views on future market cycle trend expectations and corporate scale demands, which will also lead to changes in equity. For example, in the market downlink cycle, the proportion of interests can be reduced moderately, on the one hand, it can disperse more market risks. On the other hand, through reducing the proportion of interests, we can continue to maintain large-scale expansion, and the market position can still be increased. Long, from the perspective of total revenue, it will also maintain aggregate growth.

When the market cycle trend is expected to improve, the reduction of the proportion of interests will lead to the situation of "increasing profits without increasing profits", which is also the main reason for the future paying more attention to efficiency in Vanke and Xincheng. Longhu is a good master of "equity ratio" control, for example, Longhu has been controlling the proportion of investment rights to around 70%. According to Longhu's financial report, Longhu gained 91 new land in 2018, 73 billion yuan in terms of rights and interests, nearly 14 million square meters in equity and nearly 7 in equity. By the end of 2019, the total land reserve in Longhu amounted to 68 million 140 thousand square meters, with an area of 47 million 420 thousand square meters, with a proportion of 69.59%, which remained at about 70%.

The reason why Longhu has been kept at 70% is that Longhu has entered the TOP10 housing industry on the scale. At this stage, it is necessary to increase revenue and increase profits. It is the economies of scale rather than scale diseconomies. By contrast, some of the top 20 housing companies are also adjusting the ratio of land and storage rights, such as Xu Hui, Xuhui financial report data show that in 2019, Xu Hui added the proportion of land storage rights and interests is 65%, it is expected that Xu Hui's future land rights will be placed in 68%-70%. Sales rights will also increase in the next three years, 60% in 2020, 65% in 2021 and 70% in 2022. The proportion of Xuhui's rights and interests gradually increased from 60%. This shows that Xu Hui still has large-scale appeal on the one hand, but in the next 3 years, the demand for profits or benefits is getting higher and higher.

Small and medium enterprises are still expanding

Some small and medium-sized Housing enterprises are still expanding in scale.

In the recent land market, not only big housing enterprises are scramble for land, but also small and medium-sized Housing enterprises are entering the market. Prior to the March 27th, Shaoxing sold a piece of land. Before the filming, up to 22 developers signed up, including Greentown, Zhonghai, merchants, poly and so on. As a result, the floor price of Zhongan real estate was over 20 thousand yuan / square meter.

? ? ? Even in the current market downturn or a stable cycle, different views on future scale demands will also lead to changes in equity. For example, the proportion of investment rights and interests of some small and medium sized housing enterprises that are still continuing to scale up is expected to remain at a relatively low level, with smaller listed housing enterprises, such as silver city, and so on. The total sales volume of the "full caliber" will reach 100 billion scale in the next 3 years. It means that in the next 3 years, these enterprises will still have a common way to invest in cooperation, and the proportion of investment in the whole group will remain at 4 or even lower.

The industry concentration degree is increasing rapidly, and the profit margin is bigger than that of large housing enterprises. The small and medium scale housing enterprises only have to scale first, so as to reduce the risk of the merger and acquisition. At present, it has ushered in the "window period" of the scale of 2-3 years. It is not difficult to understand the consideration of capitalization of some housing companies, such as the recent Hongyang property and Shanghai Kun real estate submitting the prospectus to the HKEx respectively.

From the reported earnings data, the demand for listing on the real estate market is imminent. According to the prospectus, in 2019, the revenue of Shanghai Kun real estate was 7 billion 500 million yuan, focusing on the Yangtze River Delta and the Pearl River Delta region. There were 43 projects in the country. According to the 200 data of Kerri's housing price in 2019, the total sales of 27 billion 180 million of the total ranked 27 billion 180 million in the real estate market, and 15 billion 590 million in the 114th place.

Compared with the small and medium-sized Housing enterprises listed in Hong Kong in recent two years, the lack of projects is a weakness of the upper Kun estate. In 2018, the income of Shanghai Kun estate decreased by 42.7% compared with the same period last year, and increased by 10% again in 2019. This is the result of the main layout of the project in the Yangtze River Delta, especially in Shanghai. As of February 29, 2020, the total building area of the upper Kun estate should be more than 70% in the Yangtze River Delta economic zone. In 2017, 2018 and 2019, the property sales revenue was 100%, 100% and 60.8% respectively from the property projects in Shanghai.

Small and medium-sized Housing enterprises such as Kun real estate demand is relatively urgent. Since March, with the substantial increase in financing channels for housing enterprises and the improvement of funds, cities and towns have made positive efforts to ensure and provide services in land supply and transaction, including increasing the promotion of plots, adjusting and optimizing the development requirements of plots, and so on.