Date: 3 October 2024
Broker: MIB Securities (Hong Kong) Ltd

Overview of Yuexiu Property (123 HK)

Yuexiu Property is identified as one of the property developers with high exposure to Tier-1 cities, making it a key beneficiary of the recent government measures aimed at reviving the property market. The company’s strategic focus on these urban centers positions it well to capitalize on the market recovery driven by easing measures.

Government Easing Measures in Tier-1 Cities

As of 30 September 2024, several Tier-1 cities such as Shanghai, Guangzhou, Shenzhen, and Beijing introduced easing measures to stimulate the housing market. These measures included:

1. Loosening of Home Purchase Restrictions: Full removal of restrictions in Guangzhou, with partial easing in cities like Shanghai, Shenzhen, and Beijing.
2. Lowering of Down Payment Ratios: Down payments for first and second homes were reduced, although the down payment for second homes remained higher than the national level.
3. Reduction of Value-Added Tax (VAT): Secondary homes with over two years of ownership in Shanghai and Shenzhen are now exempt from VAT (5%).
4. Removal of Home-Selling Restrictions: In Shenzhen, restrictions on selling homes were completely removed, providing more flexibility to homeowners and boosting transaction volumes.

Impact on Yuexiu Property (123 HK)

Yuexiu Property’s focus on Tier-1 cities, particularly Guangzhou, aligns with the recent easing measures that are expected to improve sentiment in the housing market. The full removal of home purchase restrictions in Guangzhou is particularly advantageous for Yuexiu Property, allowing it to potentially capture increased demand in one of its core markets. The reduced down payments and tax exemptions further support this positive outlook.

Strong Position in the Property Sector

The property sector has experienced a rally since mid-September 2024, with the SSE Property Index rising by 34.3% from its low on 18 September 2024. The government’s supportive measures have been a key driver of this rebound, and Yuexiu Property’s high exposure to Tier-1 cities, which are benefiting the most from the easing policies, enhances its prospects for growth.

Focus on Tier-1 Cities

Yuexiu Property’s strategy of focusing on Tier-1 cities is expected to yield significant benefits. These urban centers are prime real estate markets, and the loosening of restrictions in these areas is likely to lead to increased transactions and higher demand for housing. Yuexiu’s positioning in these markets ensures that it is well-placed to capture the opportunities arising from the government’s efforts to stabilize the housing market.

Conclusion

Yuexiu Property stands to gain from the recent government measures aimed at supporting the property market in Tier-1 cities. With a strong focus on urban centers like Guangzhou, the company is well-positioned to benefit from the loosening of restrictions, reduced down payments, and favorable tax policies that are expected to drive demand in the coming months.