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<Research> Daiwa: CN Home Not in Full Recovery; Top Picks CHINA RES LAND (01109.HK) and CHINA OVERSEAS (00688.HK)
Recommend 9 Positive 7 Negative 5 |
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Daiwa published a research report stating that since April, CN Home sector stocks have rebounded by more than 20% from their trough, mainly driven by claims that Tier-1 cities (especially Shanghai) have bottomed out. However, the broker is not convinced that the recovery represents a structural shift, as both developers and homebuyers currently lack confidence. The broker explained that property sales in April beat expectations, particularly during the traditional slack season. Primary and secondary residential sales rose 2.4% YoY and 5.0% YoY, respectively. The recovery was especially evident in Tier-1 cities, where primary and secondary sales surged 20% YoY and 14% YoY, with strong momentum extending into the Labour Day holiday. Meanwhile, secondary home prices have also shown signs of stabilizing. However, Daiwa noted that the improvement in the secondary market was mainly driven by older, small-sized and substandard apartments with low prices and high rental yields. Sales of commodity housing priced above RMB5 million remain far from recovery, falling 25% YoY. In addition, developers swiftly seized the improved market sentiment, with new home pre-sale permits in Shanghai surging 70.8% YoY in April. Yet few projects have withdrawn discounts, indicating a lack of confidence among both developers and buyers a prerequisite for a structural and sustainable recovery. Daiwa believes that if the sales momentum in Tier-1 cities continues, sector share prices may rise further in the short to medium term, though correction risks are real. The broker prefers state-owned developers with genuine exposure to Tier-1 cities over private developers, as the latter would face downgrade risks once momentum fades. Its top picks are CHINA RES LAND (01109.HK) and CHINA OVERSEAS (00688.HK), both rated Buy. (ad/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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