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China saw marginal improvement in its new home sales since late August, thanks to additional government support for demand, home delivery guarantee policy and accelerated property launches, CICC said in a note.
High-frequency data showed that the year-on-year decline in new home sales in the first week of September narrowed to 23%, compared to around 30% in each month between June and August, and one-week sell-through rate reached 55%, improving from 47% in July and 44% in August, said the bank, adding that it takes time to tell if the improvement is sustainable.
Mainland property developers covered by CICC saw first-half core net profit slide 41% from a year earlier, leaving core net profit margin falling by 3.6 percentage points to 6.6%, and some developers’ leverage ratio due to shrinking balance sheet, it said.
Since September, new home sales have been in upswing, remarked CICC. In short run, investor risk appetite was expected to be boosted, according to the note.
The broker recommended China Resources Land, China Overseas, Greentown China, Yuexiu Property, Midea Real Estate, China Overseas Grand Oceans Group Ltd and C&D International Investment Group Ltd.