Jefferies Research believes Government relaxation, especially after the recent lowering of down-payments, is drawing some interest back into the China property sector.
Sales performance seems encouraging, with sell-through rates for new projects maintaining as high as 65%, or similar to the 1H15 level. However, the outcome is a mixed bag. Good performance was only seen in around 10 cities (including four tier-1 cities and selective tier-2 cities), which accounted for around 30% of national transaction value. Sales in tier-3 cities and a majority of the tier-2 cities remained flattish or declined, primarily due to a weak economy and housing demand.
Given market polarization and the return of competitive land bidding, the research house prefers developers with solid growth prospect including COLI (00688), CR Land (01109) and Shenzhen Invest (00604).
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