External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Credit

<ul><li>LNGFORs dropped 20pts over the past 3 weeks, due mainly to the collateral damage of the sharp downturn of COGARDs.</li><li>As we discussed in our comments on 15 Aug’23, Longfor is facing a very different situation than what COGARD is.</li><li>We have been arguing that survivors of the sectors will be those 1) with manageable near-term maturities, especially offshore maturities; 2) a matured portfolio of investment properties (IPs) such that the unencumbered value of IPs can be monetized or collateralized to obtain operating loans, CMBS or issue CBICL-guaranteed bonds. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

LNGFORs dropped 20pts over the past 3 weeks, due mainly to the collateral damage of the sharp downturn of COGARDs.As we discussed in our comments on 15 Aug’23, Longfor is facing a very different situation than what COGARD is.We have been arguing that survivors of the sectors will be those 1) with manageable near-term maturities, especially offshore maturities; 2) a matured portfolio of investment properties (IPs) such that the unencumbered value of IPs can be monetized or collateralized to obtain operating loans, CMBS or issue CBICL-guaranteed bonds. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Thematic (Sector/Industry)

<ul><li>Last Friday, developer names saw mixed performance. In contrast to speculating on defaulted names previously, it is worth noting that stocks with sound fundamentals experienced an uptick.</li><li>We interpret this as an indication that the market is gradually absorbing the information regarding the potential unforeseen impacts of the implementation of financing-side policies – the project whitelist.</li><li>We think the policy intention is to prevent adding new names to the defaulted list and avoid banks to withdraw project funding only based on risk at developers’ group level regardless of project quality, which caused more construction halting. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Last Friday, developer names saw mixed performance. In contrast to speculating on defaulted names previously, it is worth noting that stocks with sound fundamentals experienced an uptick.We interpret this as an indication that the market is gradually absorbing the information regarding the potential unforeseen impacts of the implementation of financing-side policies – the project whitelist.We think the policy intention is to prevent adding new names to the defaulted list and avoid banks to withdraw project funding only based on risk at developers’ group level regardless of project quality, which caused more construction halting. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Property – Which Projects in Whitelist Are More Likely to Obtain Incremental Loans?

<ul>
<li>A series of policies on both the demand and financing side have been rolled out recently including purchase limit relaxation in Guangzhou, MOHURD’s financing coordination mechanism and PBOC/CBIRC’s loosening on operational property loans.</li>
<li>We believe the policy package should boost property sales after the CNY but only bring a ST positive effect on the sector’s stock performance given the core issues causing fundamental challenges remain unresolved: 1) residents’ purchasing power has not seen significant improvement, and 2) financial institutions’ unchanged risk assessment standards make it difficult for developers to obtain incremental financing.</li>
<li>Thus we think the key areas to watch are 1) macro economic recovery; and 2) whether regulators provide guidance on risk assessment standards for financial institutions or if there’s innovation in financing cooperation methods for developers. </li>
</ul>
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


A series of policies on both the demand and financing side have been rolled out recently including purchase limit relaxation in Guangzhou, MOHURD’s financing coordination mechanism and PBOC/CBIRC’s loosening on operational property loans.
We believe the policy package should boost property sales after the CNY but only bring a ST positive effect on the sector’s stock performance given the core issues causing fundamental challenges remain unresolved: 1) residents’ purchasing power has not seen significant improvement, and 2) financial institutions’ unchanged risk assessment standards make it difficult for developers to obtain incremental financing.
Thus we think the key areas to watch are 1) macro economic recovery; and 2) whether regulators provide guidance on risk assessment standards for financial institutions or if there’s innovation in financing cooperation methods for developers. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul><li>The inclusion of shopping mall into C-REITs would certainly give hope to unlock mall operators’ investment property value.</li><li>Powerlong and Seazen are the two major beneficiaries as their IP value/market cap is 14/3x which means huge upside after value unlocking.</li><li>CR Land/Longfor could also benefit but they have less community malls as described in the requirement.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The inclusion of shopping mall into C-REITs would certainly give hope to unlock mall operators’ investment property value.Powerlong and Seazen are the two major beneficiaries as their IP value/market cap is 14/3x which means huge upside after value unlocking.CR Land/Longfor could also benefit but they have less community malls as described in the requirement.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Property Sector – C-REITs’ scope extension to unlock mall operators’ IP value

Equity Bottom-Up

<ul><li>We think Longfor’s strategy shift into safety would continue to leave it lagging behind those SOE peers in 2023E.</li><li>On the DP side, the lack of effective land bank (only 22.5mn sqm excl. Yantai and sold but unbooked GFA) would put sales outlook under pressure especially in 2023E (guided -3% YoY).</li><li>Also management will not expand total debts for land acquisition which limits the sales upside in a recovery market. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We think Longfor’s strategy shift into safety would continue to leave it lagging behind those SOE peers in 2023E.On the DP side, the lack of effective land bank (only 22.5mn sqm excl. Yantai and sold but unbooked GFA) would put sales outlook under pressure especially in 2023E (guided -3% YoY).Also management will not expand total debts for land acquisition which limits the sales upside in a recovery market. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Longfor (960 HK) – Transition leaving growth muted

China

Longfor Properties Co. Ltd. operates in the property development, property investment and property management businesses in China.

Longfor Properties (960 HK)

Longfor: How Longfor is different?

We have been arguing that survivors of the sectors will be those 1) with manageable near-term maturities, especially offshore maturities; 2) a...

CMB International

China Property – Which Projects in Whitelist Are More Likely to Obtain Incremental Loans?

Last Friday, developer names saw mixed performance. In contrast to speculating on defaulted names previously, it is worth noting that stocks with...

CMB International

China Property Sector - 29 Jan 2024

The policy of operational property loans may favour developers with a higher proportion of investment properties like CR Land, Longfor, CMSK, and...

CMB International

China Property Sector – C-REITs’ scope extension to unlock mall operators’ IP value

The inclusion of shopping mall into C-REITs would certainly give hope to unlock mall operators’ investment property value.

CMB International

Longfor (960 HK) – Transition leaving growth muted

On the DP side, the lack of effective land bank (only 22.5mn sqm excl. Yantai and sold but unbooked GFA) would put sales outlook under pressure...

CMB International