Where Will The Real Estate Stocks Go If The Listed Real Estate Enterprises Do Not Buy The Repo Market?

When the heat of the stock market is rising, investors in real estate stocks are a group of people who are lonely in the capital market. A "drink medicine" market, real estate shares did not share any joy, "falling" stock prices, let their pessimism spread.

The current real estate stock market is not optimistic. Many real estate companies' stock prices are in the lowest range. Even if the fundamentals are sound and the performance is brilliant, they are still not reflected in the stock price.

According to the data of Kerry securities, in January 2021, the Hang Seng Index rose by 3.9%, the leading index of clarinet's real estate shares fell by 3.5%, the Hang Seng mainland real estate index fell by 1.2%, and the real estate (Shenwan) sector fell by 6.8%.

"My heart is broken." A real estate analyst, who did not want to be named, told the 21st century economic report that the recent performance of the real estate stocks he covered was not satisfactory. To make matters worse, on the macro news level, the real estate stocks were all affected by bad luck.

This situation makes the real estate enterprises which generally do not attach great importance to market value management are unable to sit still. They have started to buy back operation, but the effect is not obvious. Investors and analysts, despite their expectations, also understand that the "lying on the ground" real estate stocks will not fight back, and more likely, they will collapse for a long time. The real estate industry has come to the time of reconstructing the development logic and re examining the valuation.

The real estate industry has come to the time of reconstructing the development logic and re examining the valuation. IC photo

Intensive repurchase to protect stock price

Starting from the data, the current valuation level of real estate stocks is in the lowest range in history.

According to agency statistics, seven of the 28 first-class industries in Shenwan will fall in 2020, of which the real estate index will drop by nearly 11%. Take the top ten real estate enterprises in the industry as an example. In the past year, the market value of real estate enterprises has decreased by about 363.1 billion yuan.

The performance of real estate stocks was sluggish, and transactions were increasingly inactive. According to the data of Kerry securities, in January 2021, the turnover ratio of Hang Seng real estate construction industry index to the total turnover of Hang Seng comprehensive industry decreased significantly. The weekly average value of January was 6.1%, lower than the historical average of 12.2% since 2018, and lower than the weekly average of 7.9% in December 2020.

In terms of individual stocks, Vanke A, China Overseas Development and China Resources Land did not perform well. On February 3, 2021, Vanke reported 27.92 yuan / share, with a total market value of 324.367 billion yuan; China overseas development closed at HK $17.78/share, with a total market value of HK $194614 billion; China Resources Land, with a total market value of HK $219.989 billion, closed at HK $27.92/share.

Vanke A was a real estate enterprise with a market value of 400 billion yuan, and the highest point of China's overseas development also exceeded 300 billion Hong Kong dollars. Nowadays, none of these real estate enterprises with good fundamentals have been able to achieve corresponding performance in the stock price, let alone other small and medium-sized real estate enterprises whose scale and profitability are not excellent.

With the valuation of real estate stocks sliding into a low level, some real estate enterprises open the buyback operation to "protect the stock price".

On January 25, China Overseas Development announced that the Company repurchased 88000 shares on the Hong Kong Stock Exchange on January 25, 2021 at a cost of HK $16.0573 million; according to the statistics of public data, the cumulative number of shares repurchased by China Shipping in the past three months was 10.27 million, accounting for 0.09% of the company's issued share capital.

On February 2, China Olympic Park also announced that the company bought back 760000 shares at the price of HK $6.99 and HK $6.93 per share, with a total payment of about HK $5.29 million. On February 3, China Olympic Park announced the repurchase operation again.

China Olympic Park 3 daily closed at HK $7.07 per share, up slightly by 1.87%; although it was repurchased for two consecutive days, it still fell a lot compared with the highest share price of more than HK $12 / share in one year.

In addition to the above-mentioned real estate enterprises, some real estate enterprises also maintain their stock prices through repurchase operation after issuing annual earnings warning. On January 25, 2021, China Jinmao announced that it is expected that the net profit attributable to the parent company in 2020 will decrease by about 40% to 50% year-on-year.

After the major bad news, China Jinmao stock repurchase operation for several consecutive days, but the stock price still fell. As of February 3, the total market value of China Jinmao was HK $41.015 billion. From January 21 to January 28, 2021, the stock price of China Jinmao fell for six consecutive days, with a cumulative decline of about 30%.

Fat real estate business elephants

From the macro news point of view, the real estate stocks in the near future did not have any factors to stimulate the stock price to rise. Whether it is the "three red lines", "new regulations on housing loans" or "regulation and control of the first tier cities", all indicate that the regulation and control of the real estate market is becoming more and more strict.

On December 31, 2020, the people's Bank of China and the China Banking and Insurance Regulatory Commission jointly issued the notice on establishing the concentration ratio of real estate loans of banking financial institutions. The notice sets upper limits on the proportions of real estate loans and personal housing loans of banks at all levels. Among them, banking institutions that do not meet the regulatory requirements shall complete business adjustment within 2 or 4 years.

After the new regulation was settled, some banks' mortgage business has changed, such as slowing down loans and increasing interest rates.

In addition, since the middle and late January, Shenzhen, Shanghai, Hangzhou and other cities have frequently introduced regulatory policies to curb the "housing rush", "patching" and speculation by means of strengthening purchase restrictions, tightening housing loans, and guaranteeing the just demand, so as to promote the rational return of the real estate market.

A Hong Kong stock analyst analyzed the 21st century economic report reporter that the recent policy tightening has led to a significant drop in real estate stocks. The previous "three red lines" and the subsequent tightening of housing loans have a long-term emotional suppression on real estate, which is the main reason.

Macro tightening at the same time, part of the "thunder" also affected the mood of the market. The typical case is Huaxia happiness. On the evening of February 1, Huaxia happiness announced that the amount of principal and interest involved in overdue debts was 5.255 billion yuan, but the company's available funds were only 800 million yuan.

This once "100 billion real estate enterprises", is in the ups and downs.

Not only Huaxia happiness, but also the performance of Taihe and Fusheng, which had been in default before, as well as Jinmao, a state-owned enterprise that has always been stable, has also experienced a big decline. All these are micro factors that impact the real estate stock price.

The above-mentioned Hong Kong stock analysts continued that the explosion of these enterprises will aggravate the market's worries, and whether other companies will have similar problems. Therefore, the mood of the whole real estate is still very bad, which has a relatively large negative impact on the valuation.

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