What 2007 and 1Q08 figures tell us
What are the bad signals?
Growth in loans to developers and mortgage loans continue to shrink.
Loans to property developers continue on their downward trend. They
are only up by 2% q-q (to RMB1.8t) in 4Q07, much lower than the mean
level of 8% growth since 2005.
Sales consideration up only 5% y-y, lowest since Feb 2002
Sales consideration in 1Q08 rose by only 5% to RMB353b y-y,
representing the lowest y-y increase since February 2002.
New loans still hover at a low level
February and March figures were down 41% and 36% y-y to just
RMB243b and RMB283b, respectively.
Housing price growth continues to slow
NDRC and NBS figures showed that price growth had slowed markedly
since late 2007. The Pearl River Delta region has underperformed.
What are the good signals?
Financial leverage for the Chinese public remains low. Housing loans
represent a mere 19% of total saving deposits, which we used as a
proxy for household assets.
Demand seems strong and still exceeds supply
Property sold heavily outpaced supply in 2007, with the sold-tocompletion
level at an unprecedented high of 1.4x. The ratio rose further
to 1.5x in 1Q08.
We like a strong balance sheet + land bank + brand name
We prefer counters with strong financial health, diversified land banks in
second-tier cities, and a strong brand name nationwide. Our top pick
remains Shimao Property as it satisfies all of the above-mentioned
conditions (68% of its Shimao’s landbank is located in second-tier cities,
in terms of value), its gearing ratio stood at a mere 35% as of end-2008,
while management aims to keep it below 40%.

Contents
What are the bad signals? ............................................................................................. 3
1) Growth in loans to developers and mortgage loans continue to shrink 3
2) Sales consideration up only 5% y-y, the slowest since February 2002 4
3) New approved loans still hover at a low level 6
4) Housing price growth continues to slow 6
5) Price cuts are prevalent 9
6) Land price continues to rise relentlessly 9
What are the good signals? ......................................................................................... 11
1) Financial leverage for Chinese public remains low 11
2) Demand seems strong and still exceeds supply 11
3) Developers remain buoyant on outlook with strong investment 12
4) Bank debt makes up only 15% of funding source for developers 13
5) Deeply negative real after-tax saving rate makes property an attractive hedge 13
Wait until after 2Q08 14
Healthy gearing and diversified land bank is the key to success in a consolidating
market......................................................................................................................... 15
Financial statements – P&L, Balance sheet and Cash flow ........................................ 17

[此贴子已经被作者于2008-5-12 10:45:17编辑过]