UBS中国房地产行业比上一个周期更健康201912148页

GlobalResearch2January2019ChinaPropertyUBSEvidenceLabinside:cycleishealthierthanpastcycles;assumecoveragewithpositiveviewHealthiersupplythaninpastdowncyclesWeassumecoverageoftheChinapropertysectorwithapositiveview.WebelievethisdowncycleishealthierthanthoseinH211and2014becauselandsupplyislowerthanduringthosecycles.Ourhousingsupplyanalysissuggeststhatevenif2019nationalsalesdeclined20%—themostinhistory—housinginventorywouldstillbe11%belowthelastpeakin2015.ThelatestUBSEvidenceLabChinaHousingSurveysuggeststherecentchangeinpurchaseintentionismainlyduetorisingmortgageratesandmacroconcernsinsteadofoversupply.WethinksectorvaluationscouldbepricinginadowncyclesimilartothoseinH211and2014.OurtoppicksareChinaOverseasLand&Investment(COLI),ChinaVanke(Vanke)andLoganProperty(Logan).Canlisteddevelopersweathertheslowingmarketin2019?Inshort,yes.First,becauseinventoriesarelowerthaninthepasttwodowncycles.Second,wethinkthereismoreroomfordeveloperstopreservecashflowbycuttingbackonlandacquisition—aslandcostsarealargercashoutflowitemthaninthepast.Third,developershavenowgonethroughmultipledowncyclesandthereforehaveexperienceinbalancesheetmanagement—assuggestedbytheirlowershort-termdebttocashratiosthaninpastdowncycles.Fourth,developershavebecomemoregeographicallydiversified,soconcentrationriskislower.OurtoppicksareCOLI,VankeandLoganAmidthesofteningpropertymarket,wepreferdeveloperswithhighassetturnover(customerdeposits/inventory),lowgearing,alowshort-termdebttocashratio,exposuretotier1-2cities,andhigherrecurringincomethatcansupportdividends.OurtoppicksareCOLI,VankeandLogan,ourleastpreferredareChinaEvergrande(Evergrande)andKWG.Valuation:ismarginriskbeingpricedin?Wehavestresstesteddevelopers’earnings,estimating2019grossmarginbasedoncurrentpre-saleaveragesellingprices(ASPs)andlandcosts.Ourestimatesimplydownsideofabout17%to2019consensusearningsestimates.ThisimpliestheMSCIChinaRealEstateIndexPEwouldrisefrom5.1xto6.2x,similartothe-1SDlevelof5.8x,suggestingmarginriskandearningscutsmayhavebeenpricedin.ChinapropertysectorcoverageuniverseandpreferencesCompanyCOLIVankeLoganLongforCRLandSunacCIFICGShimaoGZR&FKWGEvergrandeWgtTicker0688.HK2202.HK3380.HK0960.HK1109.HK1918.HK0884.HK2007.HK0813.HK2777.HK1813.HK3333.HKavgShareprice25.8526.009.0822.4529.5524.403.748.8919.4411.386.6522.90RatingBuyBuyBuyBuyBuyBuyBuyNeutralNeutralNeutralSellSellOldratingBuyBuyN/ABuyBuyN/AN/ANeutralBuyBuyN/ANeutralPT35.3034.9014.2026.7034.5032.504.509.2020.5011.205.3017.60%upside37%34%56%19%17%33%20%3%5%-2%-20%-23%15%OldPT31.7541.17N/A26.8940.00N/AN/A10.7928.6821.77N/A24.36%change11%-15%N/A-1%-14%N/AN/A-15%-29%-49%N/A-28%-13%19EPE5.95.84.47.37.24.03.23.84.72.53.75.75.519EP/BV0.91.41.51.31.21.30.81.10.80.40.51.61.219Eyield5.1%6.3%8.9%5.5%4.8%5.4%10.4%9.0%7.8%16.1%8.2%8.9%7.0%Abovepricesasof27December2018.Source:Datastream,UBSestimatesEquitiesChinaRealEstateJohnLam,[e-mail][e-mail][e-mail][phone]EdwinChen,[e-mail][e-mail][phone]LeastpreferredMostpreferredChinaProperty2January20192ContentsOURTHESISINPICTURES....................................................................4OURFUNDAMENTALSCORECARD......................................................7PIVOTALQUESTIONS...........................................................................9Q:WhereareweintheChinapropertycycle?.............................................9Q:Willdevelopers'leveragecausethemfinancialdistressinthecurrentslowdown?................................................................................................26WHAT'SPRICEDIN?..........................................................................30STOCKPICKS....................................................................................36CompanyPages..............................................................................42ChinaEvergrandeGroup...........................................................................43ChinaVanke-H........................................................................................55ChinaOverseasLand&Investment............................................................65ChinaResourcesLand................................................................................76CountryGarden.........................................................................................86LongforGroup...........................................................................................97ShimaoProperty...