CHINAPROPERTYINVENTORYSITUATIONSCONTINUETOIMPROVE1223

1、top picksbuybuybuybuybuybuybuybuybuybuybuybuybuybuysellselldeutsche bankmarkets researchasiachinapropertypropertyindustrychina propertydate21 december 2012industry updatetony tsangjason ching, cfainventory situations continue toimprovedemand/supply dynamics continues to improve for key citiesfor the

2、 23 key cities we monitor, the average number of months required toclear the available-for-sale supply (which includes completed but unsoldinventory and unsold properties under construction with pre-sale permits) hascontinued to decrease from a peak of 21.5 months in february 2012 to 10.4months in n

3、ovember 2012, and is reaching the eight-month level from 2009and 2010 (when new supply in the commodity residential market was tight andled to faster property price increases).all 23 cities we monitor have inventory periods lower than 2008/historicalaveragemost recently, the number of months to clea

4、r inventory is well below theaverage level of 2008; it also is down from june 2012 and the 11.6-monthhistorical mean since 2007. in november, none of the cities took longer toclear available-for-sale inventory than the 2008 level (in june 2012, there werethree such cities in total), while six cities

5、 have less inventory than theirrespective 2009/2010 levels (beijing, tianjin, chengdu, xiamen, changchunand nanchong), indicating continued improvement from other cities since juneresearch analyst research analyst(+852) 2203 6256 (+852) 2203 alex tamresearch associate(+852) 2203 coli (0688.hk),hkd23

6、.25china ovs grand oceans(0081.hk),hkd9.34china resources land(1109.hk),hkd21.00guangzhou r&f prop(2777.hk),hkd12.78greentown china (3900.hk),hkd12.80companies featuredcoli (0688.hk),hkd23.252012.falling land sales + falling new starts = falling new supply in 2013in our view, new construction st

7、arts is a leading indicator of new supply in thecommodity residential market for the next 9-12 months, while land sales are aleading indicator of a new supply in the commodity residential market for thenext 12-24 months. with falling land sales in 2011-12 and falling new starts in2012, new supply in

8、 2013 is set for a yoy decline. as a reference, in 11m12,new gfa start of commodity property fell 7.2% yoy to 1,624msqm, of whichresidential fell 11.1% yoy to 1,199msqm. in addition, land sales value in thetop 300 cities fell 23% yoy, while land sales volume fell 27% yoy.sector fundamentals best sin

9、ce 2010in 2h09-10, new supply in the commodity residential market fell due to tightfinancing for chinese developers. we expect this falling supply scenario tohappen again in 2013 as a result of 1) lower inventory levels; 2) falling newchina ovs grand oceans(0081.hk),hkd9.34china resources land(1109.

10、hk),hkd21.00guangzhou r&f prop (2777.hk),hkd12.78country garden holdings(2007.hk),hkd3.72kwg property (1813.hk),hkd5.46c c land (1224.hk),hkd2.42minmetals land limited(0230.hk),hkd1.17central china real estate(0832.hk),hkd2.22sunac (1918.hk),hkd5.43sino ocean (3377.hk),hkd5.35yanlord land (ynlg.

11、si),sgd1.48buyconstruction starts in 2012; and 3) continually declining land sales (in top 300cities) in 2011 and 2012. with the likely fall in new supply, we expect pricingpower to return for developers and property prices to rise by 5-10% in 2013. inthis scenario, we believe overlooked quality mid

12、- and small-cap developersshould see stronger valuation re-ratings ahead.more favourable supply picture in 2013; adding more betaour mid- and small-cap top picks are r&f, greentown, c c land, kaisa, sunac,minmetals land and central china real estates. for big caps, our top picks forgrowth are co

13、li, cr land and cogo. we recommend selling sino ocean andyanlord. we derive our target prices from nav and dcf. key risks: widespreadfinancial distress; sharp deterioration in economy._deutsche bank ag/hong kongdeutsche bank does and seeks to do business with companies covered in its research report

14、s. thus, investors shouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report. investors shouldconsider this report as only a single factor in making their investment decision. disclosures and analystcertifications are located in appendix 1. mica(p)

15、 072/04/2012.1)2)3)1)2)3)21 december 2012propertychina propertywe expect a more favourablesupply picture in 2013we expect a more favourable supply situation in 2013 and thereturn of pricing power to listed developersin 2h09-10, new supply in the commodity residential market fell due to tight financi

16、ngfor chinese developers. we believe this decline in supply scenario will happen again in2013 as a result of the following.declines in new construction starts in 2012: according to the nbs, new startsin the commodity residential market have fallen by 13% yoy in 10m12.falling inventory situations: ac

17、cording to our analysis, the number of monthsto clear the available-for-sale properties fell to 10.7 in october 2012, nearingthe eight-month level from 2009 and 2010.land sales in the top 300 cities have dropped 29% yoy in value and 31% yoyin volume.with the likely fall in new supply, we expect pric

18、ing power to return for developers, andproperty prices should rise by 5-10% in 2013. in this falling-supply, rebounding-pricesscenario, we believe developers that focus more on prime city-centre areas vs.suburban areas and developers that have good growth in saleable resources willoutperform in 2013

19、.on our analysis, developers that meet both of the above criteria include coli, cogo,cr land, sunac, r&f, c c land, central china, and kwg.falls in land sales and new construction starts should lead tofalling new supply in 2013new starts of commodity residential properties -7.2% yoy in 11m12acco

20、rding to the latest published china housing statistics by the national bureau ofstatistics (nbs), for the first 11 months of 2012:gfa starts of commodity property -7.2% yoy to 1,624msqm, of whichresidential -11.1% yoy to 1,199msqm, office +11.3% yoy to 54.1msqm, andretail +6.3% yoy to 202msqmgfa und

21、er construction of commodity property +13.3% yoy to 5,567msqm, ofwhich residential +10.9% yoy to 4,167msqm, office +21.7% yoy to 189msqm,and retail +16.8% yoy to 638msqmgfa completed for commodity property +14.1% yoy to 677msqm, of whichresidential +13.7% yoy to 543msqm, office -4.4% yoy to 13.5msqm

22、, and retail+14.4% yoy to 70msqmpage 2deutsche bank ag/hong kongmay-09nov-07nov-11aug-08aug-08may-09mar-07mar-11nov-07nov-11mar-07mar-11aug-12apr-12aug-12apr-08sep-09feb-06feb-10apr-08dec-08dec-08sep-09feb-06feb-10apr-12jul-07oct-10oct-06oct-06oct-10jun-06jun-06jun-10jun-10jul-07jul-11jul-114)5)6)yo

23、yyoy21 december 2012propertychina propertyfai of commodity property +16.7% yoy to rmb6,477bn, of which residential+11.9% yoy to rmb4,461bn, office +32.7% yoy to rmb302bn, and retail+27.3% yoy to rmb842bnsales value of commodity property +9.1% yoy to rmb5,353bn, among whichresidential +10.4% yoy to r

24、mb4,478bn, office +4.1% yoy to rmb224bn, whileretail +4.2% yoy to rmb556bn. gfa sold of commodity property +2.4% yoyto 917msqm, among which residential +2.3 % yoy to 815msqm, office +11.6%yoy to 18.2msqm, while retail +1.7% yoy to 62msqmcommodity property asp +6.6% yoy to rmb5,837psm, residential pr

25、opertyasp +7.8% yoy to rmb5,495psm, office property asp -6.7% yoy tormb12,295psm, while retail property asp +2.5% yoy to rmb8,996psmthe 11m12 commodity property sales value continues to improve (with yoy growthaccelerated to 9.1%), being the fourth consecutive month since january 2012 that theyoy fi

26、gure is in positive territory. for sales volume, 11m12 yoy growth was alsopositive, the first time since december 2011. also, for the extrapolated monthlyresidential sales value and sales volume in november, we are seeing 43% yoy and 32%yoy growth, respectively (october: +35% yoy/+25% yoy), also sho

27、wing acceleration.the 11m12 residential asp yoy growth (+8.7% yoy) increased from 10m12 yoygrowth of 8.3%. overall, november 2012 sales growth recovered from the octoberweak spot, with monthly commodity property sales value and volume surpassing thatof september 2012, the highest monthly value recor

28、ded so far this year. monthly salesdatas yoy growth had also improved notably across all categories of commodityproperties, mainly due to a low base effect from november 2011, when sales hadweakened towards the year-end.growth in new construction starts continue to be negativemost importantly, given

29、 the tight financing environment for a majority of chinesedevelopers since 2011, many developers have slowed their construction pace and/orcancelled original expansion plans. this has led to a meaningful slowdown in the newconstruction starts in the commodity residential market, and the yoy growth i

30、n the newconstruction starts has been negative in 2012.with this negative growth, we expect the new supply in the commodity residentialmarket to fall in 2013, which should provide a more constructive environment fordevelopers with good growth in saleable resources in 2013.figure 1: commodity prop gf

31、a completedfigure 2: commodity residential prop gfa completed1,000900800700600500400300200100-50%40%30%20%10%0%-10%800700600500400300200100-60%50%40%30%20%10%0%-10%ytd commodity gfa completed (msm)source: soufun, deutsche bankdeutsche bank ag/hong kongytd residential gfa completed (msm)source: soufu

32、n, deutsche bankpage 3may-09nov-07nov-11aug-12aug-08aug-08may-09mar-07mar-11nov-07nov-11mar-07mar-11may-09nov-07nov-11aug-08aug-12aug-08may-09mar-07mar-11nov-07nov-11mar-07mar-11aug-12apr-08apr-12sep-09feb-06feb-10jul-11dec-08apr-08 dec-08sep-09feb-06feb-10apr-12jul-07oct-06oct-10oct-06oct-10jun-06j

33、un-06jun-10jun-10jul-07jul-11aug-12apr-08apr-12sep-09feb-10jul-11feb-06dec-08apr-08 dec-08sep-09feb-10feb-06apr-12jul-07oct-06oct-10oct-06oct-10jun-10jun-06jun-06jun-10jul-07jul-11yoyyoy21 december 2012propertychina propertyfigure 3: commodity prop gfa startedfigure 4: commodity residential prop gfa

34、 started2,0001,8001,6001,4001,2001,000800600400200-ytd commodity gfa started (msm)source: soufun, deutsche bankfigure 5: commodity prop fai7,0006,0005,0004,0003,0002,0001,000-ytd commodity fai (rmbbn)source: soufun, deutsche bankyoy80%70%60%50%40%30%20%10%0%-10%-20%-30%40%35%30%25%20%15%10%5%0%1,600

35、1,4001,2001,000800600400200-ytd residential gfa started (msm)source: soufun, deutsche bankfigure 6: commodity residential prop fai5,0004,5004,0003,5003,0002,5002,0001,5001,000500-ytd residential fai (rmbbn)source: soufun, deutsche bankyoy80%70%60%50%40%30%20%10%0%-10%-20%-30%45%40%35%30%25%20%15%10%

36、5%0%11m12 land sales down 23% yoy for top 300 citiesin our view, new construction starts are a leading indicator of new supply in thecommodity residential market in the next 9-12 months, while land sales are a leadingindicator of new supply in the commodity residential market in the next 12-24 month

37、s.according to the latest statistics from soufun, in the first 10 months of 2012, residentialland sales value in the top 300 cities was down 23% yoy, while land sales volume wasdown 27% yoy. as a reference, for full-year 2011, residential land sales value for thetop 300 cities was already down 17% y

38、oy (tier-1 cities down 39% yoy), while landsales volume was down 6% yoy (tier-1 cities down 7% yoy). the further declines inland sales in 11m12 after the decline in 2011 reaffirm our view that new supply in thecommodity residential market in 2013 should fall and suggest that yoy growth in newconstru

39、ction starts might not recover that quickly.among the different cities, land sales value for the tier-1 cities was down 27% yoy,while land sales volume was down 41% yoy in 11m12 highlighting that averagetransacted land prices have shown some increases yoy (due to change in location mixand organic ch

40、anges in land prices). meanwhile, land sales value in tier-2 cities wasdown 11% in 11m12, while land sales volume was down 3% yoy highlighting thataverage transacted land prices have shown yoy increases.page 4deutsche bank ag/hong kong-21 december 2012propertychina propertyrecently, jrj.com reported

41、 that land premiums statistics indicate that sme developersare not active in the recent land buying spree. in addition, according to data from theministry of land and resources, residential land transaction prices in 3q12 increased1.03% yoy while they were down 0.74% qoq. it showed that the trend in

42、 land priceincreases had softened and some random cases of high transaction prices for landsales cannot represent the recovery of property market.as such, we believe that the stronger listed developers, with stronger financingcapabilities, should be able to buy land at reasonable prices and capture

43、higher marketshare in the long term.figure 7: land sales revenue, gfa, floor price and % over launched price 2011ytd vs 2012ytdland sales (rmbbn)gfa sold (msqm)floor price (rmb psm)% of price sold over launched(ppt)2011ytd 2012ytdyoy2011ytd2012ytdyoy2011ytd 2012ytdyoy2011ytd2012ytdyoybeijingshanghai

44、guangzhoushenzhentianjinchongqingchengduhangzhounanjingsuzhoudalianshenyangqingdaoxianchangshawuhan300 citiestier-1 citieskey tier-2 cities37.366.216.612.045.452.726.343.327.349.339.438.823.015.810.336.01,26113240834.944.552.438.934.926.822.924.333.315.316.921.051.396897364-6%-33%-33%-48%

45、-43%-1%48%-20%-2%-54%-38%-14%-34%7%104%43%-23%-27%-11%7.721.733.317.410.68.916.523.224.719.09763221.311.038.713.611.922.913.017.715.124.671119207-31%-43%-35%-61%-49%16%39%-28%-25%-17%-49%-7%-28%74%55%30%-27%-41%-3%4,8694,0343,3813,6182,0981,5851,5124,0813,07

46、32,9961,7001,5741,2671,5501,0611,8971,2913,9762,0336,5874,7623,4474,8002,3671,3541,6134,5424,0231,6822,0441,4531,1739511,3942,0871,3634,8992,05735%18%2%33%13%-15%7%11%31%-44%20%-8%-7%-39%31%10%6%23%1%12%16%2%0%11%13%14%30%4%30%0%11%18%17%21%0%15%8%14%15%9%9%0%4%4%18%9%5%6%0%3%2%2%6%1%7%8%5%22%-47%38

47、6%-67%-73%30%-70%33%-80%-14%-77%-89%-87%-69%251%-52%7%-65%source: soufun, deutsche banknumber of months to clear available-for-sale supply furtherdecreased to 10.4 months in novemberfor the 23 key cities we monitor, the average number of months to clear the available-for-sale supply (which includes

48、not only completed but unsold inventory and propertiesunder construction with a pre-sale permit but not yet sold) has continued to decreasefrom a peak of 21.5 months in february 2012 to 10.4 months in november 2012, and isgetting closer to the eight-month level from 2009 and 2010 (when new supply in

49、 thecommodity residential market was tight and led to faster property price increases).most recently, the number of months required to clear inventory is well below theaverage level in 2008, is down from june 2012 and the 11.6-month historical meansince 2007. in november, none of the cities required

50、 more months to clear available-for-sale inventory than the 2008 level (in june 2012, there were three such cities in total),indicating further improvement from other cities since june 2012.deutsche bank ag/hong kongpage 52021 december 2012propertychina propertyfigure 8: china property number of mon

51、ths to clear available-for-sale properties (properties under construction withpre-sale permit but not yet sold + completed but unsold inventory), by citycitysellablegfamonthly gfa sold (ksqm)average number of months to clear available for salebeijingshanghaishenzhenguangzhoutianjinchongqing(ksqm)10,

52、03810,2583,0684,23020,20011,959sep-121,2271,1612477488341,806oct-121,0631,2933307558041,850nov-121,4041,7724167349312,2903-m avg1,2321,4093317458561,9822007nanana200822.99.520.06.6na13.0200911.75.08.35.0na6.8201012.57.610.28.7na5.4201117.413.09.910.026.49.6nov-5.723.66.0 2008le

53、vel? 2009level?yesyesyes 2010level?yeshangzhounanjingwuhanchengdusuzhoudalianxiamenchangshaningbofuzhouqingdaonanchangchangchunnantongyangzhouhuizhounanchong4,4685,54324,3746,2885,7222,7122,9949,1164,0312,02812,5331,8168,2812,1281,4782,0683,7553797111,1438169813014758652542501,0493508011011303122062

54、616821,2695385563104019722172488653946292171472642814347401,2571,1236242803871,1103772741,1662697691661332722143587111,2238267202974219822832571,02733873316113728323nananananananananananananana16.413.627.2nanananananana20.325.1nanananana8.05.818.8na6.5na9.3na6.26.09.95.4na5.2nanana10.77.51

55、4.7nana23.913.921.315.78.011.512.35.518.112.69.812.06.614.412.57.814.37.912.25.411.316.1yesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesyesaverage7.813.010.4source: soufun, deutsche bankfigure 9: average m

56、onths to clear inventory for 23 major citiesaverage months to clear inventory18161412108642020072008200920102011nov-12page 6deutsche bank ag/hong kongmonthsmonthsmonthsjan-07apr-07jul-07oct-07jan-08apr-08jul-08oct-08jan-09apr-09jul-09oct-09jan-10apr-10jul-10oct-10jan-11apr-11jul-11oct-11jan-12apr-12

57、jul-12oct-12monthsmonthsmonthsjan-07apr-07jul-07oct-07jan-08apr-08jul-08oct-08jan-09apr-09jul-09oct-09jan-10apr-10jul-10oct-10jan-11apr-11jul-11oct-11jan-12apr-12jul-12oct-12jan-09mar-09may-09jul-09sep-09nov-09jan-10mar-10may-10jul-10sep-10nov-10jan-11mar-11may-11jul-11sep-11nov-11jan-12mar-12may-12

58、jul-12sep-12nov-12jan-07apr-07jul-07oct-07jan-08apr-08jul-08oct-08jan-09apr-09jul-09oct-09jan-10apr-10jul-10oct-10jan-11apr-11jul-11oct-11jan-12apr-12jul-12oct-1221 december 2012propertychina propertyfigure 10: months to clear inventory 23 city average2520figure 11: months to clear inventory bj/sh/s

59、z/gz/cq302520151510105050overall avghistorical avg+1sd-1sdbeijingshanghaishenzhenguangzhouchongqingsource: soufun, deutsche bankfigure 12: months to clear inventory hz/nj/wh/sz/dl50454035302520151050source: soufun, deutsche bankfigure 13: months to clear inventory cs/nb/fz/qd/nc4035302520151050hangz

60、hounanjingwuhansuzhoudalianchangshaningbofuzhouqingdaonanchangsource: soufun, deutsche banksource: soufun, deutsche bankcompleted but unsold inventory period at 5.5 months for majorlisted developers as at 30 june 2012the above-discussed available-for-sale supply analysis measures supply as including alarge proportion of prope