Real Estate Developers Vol. creeping up and inventory down again in the 3rd week of Mar

Mar 16-Mar 22 transaction volume and ASP

    On a wow basis, 20 out of 33 cities with data available saw volumesincrease, with a group median of +4% for the week ended Mar 22 (vs. +18%for the week ended Mar 15). On a yoy basis, 19 out of 33 cities with dataavailable saw volumes increase, with a group median of +8% (vs. +20%).Compared with the Feb 2015 weekly avg., 29 out of 33 cities with dataavailable saw vol. increase, with a group median of +62% (vs. +51%), andwith a median of +43% for the first 3 weeks avg. In relative terms, Tier 2outperformed Tier 1/3 cities and Pan-Bohai Rim & North Chinaoutperformed other regions. In terms of ASP, on a wow basis, 8 out of 13cities with data available saw prices increase, with a group median of +2%(vs. +3%). On a 3-month cumulative basis, 8 out of 13 cities with dataavailable saw prices decrease with a group median of -1.9% comparedwith the prior 3-month average.

    YTD performance

    As of Mar 22, 35 cities with data available saw average weekly volumes10% lower than full year 2014 avg. while 2%/ 45% higher than 1H14/Feb2015 average. 14 out of 26 cities with data available saw volumes increaseytd, with a median of +4% (vs. +3% yoy for the week ended Mar 15). Interms of ASP, 16 out of 22 cities with data available saw prices decreaseytd, with a group median of -5% yoy (vs. -5%).

    Inventory levels

    Total inventory for the 11 cities we track decreased 0.3% for the weekended Mar 22 (vs. -0.6% for the week ended Mar 15). Based on the 12-month rolling GFA sold, average inventory take-up time was flat at 16.8months. Among the 11 cities: 1) Inventory was stable in Beijing, Qingdao,Xiamen, Dongguan, Shenzhen, Hangzhou, Guangzhou and Suzhou; 2)inventory decreased in Nanjing, Shanghai and Fuzhou.

    Investment view

    Buy ideas: CG (on CL), Vanke-A (on CL), Wanda, E-House, Leju, KWG, Agile,

    Vanke (H), Poly Property (H), Longfor, CMP (B), OCT, Poly (A). Sell ideas:

    Greentown, SMC, Gemdale.

    Risks: Upside: Better than expected macro conditions/government easing.Downside: Anti-corruption and unexpected policy tightening.