德银中国房地产行业深入研究人口统计学健康需求提前2018010848页

DeutscheBankMarketsResearchIndustryChinaPropertyFITTDate8January2018AsiaChinaPropertyPropertyF.I.T.T.forinvestorsAdeep-diveintodemographics;healthydemandaheadOurreviewofdemographicsidentifieskeydemanddrivers,supportingabullishsectorviewCanChina’spropertymarketsustaintheunprecedentedlevelsofdemandthatledtoannualsalesof1.6bnsqmin2017?Whilemanyinvestorsareskeptical,weexpectongoinghealthydemand(1.5-1.6bnsqm)inthemediumtermafteranalyzingoveralldemographicsandadatasetof205prefecturecities(including173T3/4cities).Thefindingsinthisreportsupportourabove-consensusestimatesandgiveusgreaterconfidenceinourtop-picks:Vanke,CountryGarden,FutureLand,AoyuanandKWG.JeffreyGao,CFAResearchAnalyst(+852)[e-mail],CFAResearchAnalyst(+852)[e-mail],CFAResearchAnalyst(+852)[e-mail]iate(+852)[e-mail]________________________________________________________________________________________________________________________________DeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.THECONTENTMAYNOTBEDISTRIBUTEDINTHEPEOPLE’SREPUBLICOFCHINA(“THEPRC”)(EXCEPTINCOMPLIANCEWITHTHEAPPLICABLELAWSANDREGULATIONSOFPRC),EXCLUDINGSPECIALADMINISTRATIVEREGIONSOFHONGKONGANDMACAU.Distributedon:07/01/201822:00:00GMT7T2se3r0Ot6kwoPaDeutscheBankMarketsResearchAsiaChinaPropertyPropertyIndustryChinaPropertyFITTDate8January2018FITTResearchAdeep-diveintodemographics;healthydemandahead_________________________________________________________________________________________________________________________________DeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.THECONTENTMAYNOTBEDISTRIBUTEDINTHEPEOPLE’SREPUBLICOFCHINA(“THEPRC”)(EXCEPTINCOMPLIANCEWITHTHEAPPLICABLELAWSANDREGULATIONSOFPRC),EXCLUDINGSPECIALADMINISTRATIVEREGIONSOFHONGKONGANDMACAU.JeffreyGao,CFAResearchAnalyst(+852)[e-mail],CFAResearchAnalyst(+852)[e-mail],CFAResearchAnalyst(+852)[e-mail]iate(+852)[e-mail]tryGardenHoldings(2007.HK),HKD15.52BuyChinaVanke(2202.HK),HKD34.50BuyFutureLandDevelopmentHol(1030.HK),HKD5.38BuyAoyuan(3883.HK),HKD5.24BuyKWG(1813.HK),HKD10.90BuySource:DeutscheBankCanChina’spropertymarketsustaintheunprecedentedlevelsofdemandthatledtoannualsalesof1.6bnsqmin2017?Whilemanyinvestorsareskeptical,weexpectongoinghealthydemand(1.5-1.6bnsqm)inthemediumtermafteranalyzingoveralldemographicsandadatasetof205prefecturecities(including173T3/4cities).Thefindingsinthisreportsupportourabove-consensusestimatesandgiveusgreaterconfidenceinourtop-picks:Vanke,CountryGarden,FutureLand,AoyuanandKWG.KeydemanddriversOurdeep-diveintodemographicssuggeststhatthekeydriversofdemandoverthenextseveralyearswillbe:Furthergrowthinthepopulationwhichwon’tpeakuntil2030F(at1.45bn);Arisingurbanizationratewhichshouldreach70%by2030F,translatingintoanannualincreaseof18-20mnintheurbanpopulation(includingnaturalgrowth);Astablepopulationinthe25-39age-group(identifiedaskeypropertybuyers)until2023F;Strongupgradedemandforlargerlivingspaceandbetterlivingconditions(48%ofurbanhouseholdsliveinhousesbuiltbeforeyear2000);Furtherdeclinesintheaveragehouseholdsizefromthecurrent3.1peopletotheinternationallevelof2.4-2.6.Divergentdriversbetweendifferentcitytiers,butdemandstillhealthyinT3/4Wehaveidentifieddifferentdriversofdemandaccordingtocitytier.Ofnote,andunlikemanyinthemarket,webelievedemandinT3/4citiesisstillsupportedbystructuraldrivers,andwillbethekeyfieldforlargedeveloperstogainmarketshareinthemedium-term.InT1/2citiesthekeydriversofdemandarelikelytobe:1)continuingpopulationinflow;2)strongupgradedemandfromwealtheffectsandalargepercentageofthepopulationintheworkforce;3)adecreaseinhouseholdsizeinT2citieswithmoreone-generationhouseholds(currentlythereare2.8persons/householdinT2cities,vs.2.4personsinT1cities).InT3/4cities,potentialdemandcomesfrom:1)populationgrowthduetorelativelyhighbirthandfertilityrates(higherthaninT1&2cities),morethanoffsettingthemigrationtoT1/T2cities;2)largeheadroomforfurtherurbanization(57%and48%inT3andT4citiescurrently,vs.89%inT1and73%inT2cities);3)spilloverdemandfromT1/T2citiesduetohighpricesandtherapidexpansionoftherailwaynetwork.Wefavorhigh-growthnationalplayersandstrongregionalnamesHigh-growthnationalplayersandstrongregionalleaderswithrichsale