【出版时间及名称】：GS-Real Estate：Short-term pain，long-term gain：prefer Evergrande，VankeA-100624
      【作者】：GS
      【文件格式】：pdf
      【页数】：23
      【目录或简介】：
Buy Evergrande and Vanke (A) for long-term gains
The stock price performance of our on-/off-shore coverage universe has
stabilized and is largely in line with the respective indices over the past one
month (post our previous sector report Short-term pain, long-term gain; add
Evergrande, Vanke A to C-Buy, dated May 19, 2010). In this report, we reiterate
our preference for stocks that are currently trading below/close to our bearcase
valuations, which we believe provide a compelling entry level given the
attractive long-term growth potential in the sector. Our top picks are
Evergrande (3333.HK) and Vanke A (000002.SZ), both on Conviction Buy List.
Near-term weakness may persist, but more due to sentiment
Although the physical market may stay weak for a couple of quarters to digest
the impact of the government’s recent tightening measures, we believe it has
more to do with low sentiment than a fundamental change. In our view, the
government’s restriction on multiple property purchases may lead to a shortterm
industry trough, but long-term growth remains intact. In fact, we believe
these policies would help strengthen the sector’s long-term growth outlook.
Further homeownership penetration is the key driver, in our view
We estimate the total commercialized properties constructed (mostly after the
housing reforms in 1998) accounted for 22% of total urban households, as of
end-2009. We believe further penetration of commercialized homeownership is a
key growth driver for the Chinese housing market over the next five years. We
estimate affordability in China is at a comfortable level currently given that the
home price to income ratio of the top 40% urban population stands at only 4.8X
(vs. 8.0X if we use median income level). Even for metropolitan cities such as
Shanghai, this ratio is 6.7X, which is well below 8.9X, 11.8X, and 15X historical
peak levels for Japan, HK and Singapore, respectively.
China should adopt a more balanced growth approach, in our view, with a
focus on its Central and Western regions, to drive further penetration of
commercialized homeownership and thus achieve the 50% urbanization target
by 2015. We estimate commercialized homeownership by 2015 in urban areas
will reach 46%, implying 12% property sales volume CAGR over 2010E-2015E.
In our view, developers, which are able to gain good exposure in these regions
over the next 5 years, would benefit the most from significant volume growth.