This article is based on public information, only for the purpose of information exchange, and does not constitute any investment proposal.
There is a joke about bottom hunting
An old lady squatted in front of the fishmonger’s pool, looking at the fish and squatting all afternoon. The fishmonger asked curiously, “do you want to buy it or not after watching it all afternoon?” The old lady said, “buy it.” The fishmonger said, “what are you looking at?” The old lady pointed to the sign beside her and said, “live fish costs 6 yuan a Jin, dead fish costs 2 yuan a Jin.” The old lady pointed to the fish again and said, “I’m waiting for you to get out of breath.”
In the next big drama of the real estate industry, we will probably see that Vanke (sz:000001) plays the role of the old lady who is prepared to copy the bottom.
Ice and fire
This narrative starts in 2015.
After 2015, the prosperity of China’s real estate industry hardly needs to be proved by numbers: the rapid growth of consumer purchasing power and limited supply of housing sources have become the best promotion policies for selling houses. In real life, in many cities, it is difficult to find a new house in the new house market, and the situation of second light can be found everywhere.
Six years of high real estate business cycle
High business cycle naturally brings good performance. In five years, Vanke’s net profit has doubled successfully, from 28.3 billion to 59.3 billion, almost doubling. Even if it is placed in the whole a share, few companies can compare.
Wan Ke net profit doubled successfully source choice
However, such excellent performance did not appear in the stock price. In the past five years, the Shanghai Shenzhen 300 has almost doubled, while the real estate industry index is still basically on the spot.
Comparison between real estate index and CSI 300
Even Vanke, the industry’s largest brother, has been able to keep up with 300% of the stock price in Shanghai and Shenzhen in the past few years. After Vanke’s stock price reached a high in january2018, it never returned to its high, and the stock price fell nearly 35% from the high.
Choice of the stock price performance of vankorstra
In fact, contrary to what many real estate developers have said, in the past few years, the market has made no “mistakes” in pricing real estate stocks. On the contrary, looking back over the past eight years, Mr. market’s pricing of real estate stocks has been almost as accurate as ever.
This includes two kinds of logic, procyclical and countercyclical. Let’s start with the former.
Periodic rocket released
From a cyclical perspective, the performance of real estate stocks in the past eight years can be divided into two stages
During the four-year period of 2014-2017, the market value stagnated for a long time after the cycle of 2018-2021 reached its peak.
Take the boom transition as an example. With the development of the supply side reform, the real estate industry has switched rapidly from the recession in 2014 to the high boom in 2017, which makes the leading companies who bet on the real estate cycle warm up and make a lot of money at the bottom of the industry
Whether it is the country garden that is arranged in the period of line 3 and 4, or the fusion creation of high harvest of the high point of the bottom jiacangwu, the change of market value of the low point and high point can be 10 times, thus a group of popular real estate V slogans such as 8848 are also born:
In the cycle rocket, no matter how high the stock price rises, everything is just the beginning.
The market logic of bullish real estate stocks is very simple and crude. As the cycle goes up, if you are optimistic about the leader with the richest soil reserves, tuyere will reward the bravest person:
For example, compared with Vanke who insists on not being the king of land and covering the market, sunhongbin’s financial creation around 2014, a large amount of betting on the real estate upward cycle will inevitably come. By carrying huge liabilities, the land reserve will be directly raised to a point where other players can not look forward to it:
By calculating land reserve alone, the value of goods in 2017 increased by 1.4 trillion, with total land reserve close to 3trillion, land reserve cost of 4700 yuan, and most of these land reserves are in Tier 1 and tier 2 cities.
With the doubling of soil reserves, rongchuang’s sales scale has successfully leaped to the top three in the country, and the power of adding positions at the bottom of the cycle can be seen.
A new era of low return on capital
However, by the end of 2017, the wonderful music of the periodic dance has come to an abrupt end:
With the peak of the real estate business cycle, a series of counter cyclical regulatory policies make it more difficult for this lever to get land.
First of all, in the business cycle, due to the bidding land price and business heat, the land price of major cities soared. On the contrary, due to the restrictions on house prices and various regulatory policies, the rise of house prices in major cities began to keep pace with the progress. For real estate companies, the most important house price and land price started to decline unexpectedly, and the gross profit rate of the industry began to decline.
This trend began to damage the income statements of real estate companies
There is a common development cycle in real estate companies. The high price of land from 2017 to 2018 will gradually reduce the project profit margin in 2020.
Choice of the gross profit margin of Vanke’s sales
Secondly, with the decrease of gross profit rate, if we want to make the same amount of money, many real estate companies can only acquire peers or continue to take land by increasing leverage ratio. Of course, it is difficult to create these masters of Finance and technology. The off balance sheet and fund pool business of major real estate companies have already broken through the sky.
Soon, the counter cyclical adjustment of the invisible hand of policy was late, but it came to:
In just three years, the two centralized policies on the regulation of mortgage and real estate loans issued by financial institutions, the three red line policies on the regulation of interest bearing debt of real estate companies, and a series of regulatory policies began to be introduced intensively. The precise policy regulation hit the leverage ratio of real estate companies, and the high debt strategy began to fail gradually. In the future, if you want to participate in land acquisition, the leverage should be reduced first.
Looking back at the logic of four years ago, the cycle logic of optimistic about the real estate industry four years ago began to deteriorate, and the future rate of return of the real estate industry is constantly being compressed
On the one hand, after three years of adjustment, under the power of price limit policy, the future visible profit margin of the real estate industry began to decline year by year; On the other hand, under the power of three red lines and two concentration policies, the ability of real estate companies to expand their debt cycle is also completely locked.
For the real estate industry, the door to a long-term decline in the rate of return on capital is slowly opening.
In the words of Wan Ke leader Yu Liang, the real estate industry has skipped the stage of land dividend and financial dividend and entered the management dividend stage.
However, discerning people can clearly see the helpless tone behind this sentence: how can the bonus brought by the management of Ku ha ha be regarded as a bonus?
Choose a cup of poison
The last straw to overwhelm the share price of real estate stocks is the centralized land supply policy introduced in February this year. Originally, in the imagination of investors, through the centralized land supply policy, the leading real estate industry could have recovered a little
If a company can not choose all at the same time, small and medium-sized real estate companies will be subject to the difficulties of time and fund-raising, and it is difficult to attack multiple lines, so that the real estate leaders can take the land more calmly. After the competition intensity has dropped sharply, the land price can be successfully reduced, and the profitability of Vanke and other existing vegetables can be gasped.
Under the beautiful imagination, the real estate stock hears the wind and moves, many real estate companies rise the next day.
However, after the implementation of centralized land supply, the data of grass-roots research makes the real estate researchers look even worse: the trend of land grabbing is even more popular than before the implementation of centralized land supply.
The reason behind this is very simple. Under the background of the shortage of land market, the year-on-year growth rate of sales is close to 40%, and the overall decline of land supply, the role of the policy is very limited. After the centralized land supply policy, the land grabbing real estate companies are facing great uncertainty and anxiety, which directly makes more real estate companies worry that they can’t get more land, The degree of the fire in the auction surprised real estate companies such as Vanke.
Screenshot of the source network of prisoner’s dilemma
The game here becomes the prisoner’s dilemma of choosing a cup of poison:
Participating in the bidding, the profit margin will be too low to bear, and the project will be losing money; If we don’t participate in the bidding, the land reserves are insufficient, the sales scale is affected, and if we cook without rice, we still have to make a loss.
Waiting for death, is death a big deal? Many real estate companies naturally choose to sacrifice shareholders to keep their scale. They prefer to bear a profit margin of 1% or even loss, but also add to the scale.
As a result, the competition intensity of the whole industry has reached a new level, and the logic of real estate stocks has become extremely ugly
Obviously, for some time in the future, the policy of real estate price limit and three red lines will not be relaxed, and the profit margin and leverage ratio of real estate companies will only become more and more ugly;
The prisoner’s dilemma caused by the centralized land supply further stimulates the real estate companies to have the courage to make losses in exchange for the scale of the chronic suicide strategy, and the fierce competition in the whole industry will only further intensify.
With the logic destruction, Vanke at this time, the forward-looking P / E ratio is only about 6 times, and the market net rate is closer to the net breaking. In the historical valuation system, the last Wanke valuation was so low, or at the bottom of the 2014 boom.
Vanke Pb band, has entered the bottom section
In 2021, the market value of Vanke has fallen by nearly 30% from the high point, and the valuation is close to the bottom of the industry. This has really happened in our eyes.
However, the logic chain leading to the decline is extremely clear and calm
After the valuation of real estate stocks peaked and the industry peaked, the ruthless internal competition logic is pulling down the bottom line of the whole industry. Since the return on capital has gradually declined, why can’t it be negative?
Waiting for the real estate industry will be a long process of clearing out: it is very simple that before some players lose all the capital, the real estate logic of this fierce bidding will continue, and Vanke’s valuation will always be suppressed. Logically speaking, Vanke’s valuation is entering the bottom of the cycle.
Wait for the fish to die?
Although it seems to be the darkest moment in the real estate industry, nothing new is happening in the sunshine. For the real estate industry, cycle is a very old topic.
Simaqian quoted Fan Li in his biography of the colonization: “if there are some shortcomings, he knows the merits and the base.”. If you are high, you are inferior, and the lower is the opposite. If you are precious, you will be like dung, and you can take it as jade. ”
If we study the situation of surplus or shortage of commodities, we will understand the reason why prices rise or fall. If the price is extremely high, it will return to low; If prices are extremely low, they will return to high. When the goods are extremely expensive, they should be sold in time, which is regarded as dung; When the goods are extremely cheap, they should be bought in time and regarded as jewelry. ”
From the perspective of reverse thinking, if we look at Vanke, which is being abandoned by the market in the long run, we may have different perspectives:
First of all, from the perspective of the market, centralized land supply is the logic of a hundred meter race. The enterprises that do not get the land are short of land reserves, and the enterprises that get the land face losses, which is a logic of double losses;
However, from the market grassroots research, the short-term anxiety of land acquisition of real estate companies is unlikely to last too long. Once the supply increases, the heat of land acquisition will gradually die out; Secondly, whether it is bank lending or de marketing, it does not support the efficiency of suicidal land acquisition of these enterprises. From the marathon perspective, Vanke’s insistence makes sense.
Secondly, judging from the loan performance after the three red lines and two concentration, the ability of small and medium-sized real estate companies to increase their share through leverage is rapidly shrinking. In the past 10 years, real estate companies have made it impossible for the top ten real estate companies to expand their share growth logic through high leverage. At present, small and medium-sized real estate companies with limited loans are very likely to slowly withdraw from the market.
Further, these two logic are reflected in Vanke’s governance, which are the answers to questions that many investors have been questioning: since Vanke is relatively conservative in the future for a long time, why should we keep a large amount of cash on account and not make more dividends?
In Vanke’s eyes, the 1-2 point net profit situation in the industry mentioned above is difficult to continue for a long time. In the next 2-3 years or so, Vanke needs enough cash reserves to cope with the clearing of small and medium-sized enterprises.
From this point of view, the logic of Wanke’s bottom reading cycle is also gradually unfolding. Maybe in the next 1-2 years, Wanke’s merger drama for the bankrupt small real estate companies will be re staged. Before Taihe Zhuyu, Wanke has already made a light move to reorganize.
From the perspective of cycle bottom reading, we may understand the meaning of living and operating bonus in the annual meeting of Vanke:
Just in the past 1-2 years, all real estate players are in a hot mind, high-level land acquisition, the blue has seen the only ending in the next——
In this huge pool of the real estate industry, the gills of the fish in the pool are breathing hard one by one, and the graceful music of the boom cycle has come to an abrupt end. At this moment, the hunters are quietly waiting for the time when the fish is out of breath.
This article is based on public information, only for the purpose of information exchange, and does not constitute any investment proposal.