Long-Term Contrarians See Value in Chinese Property Plays
As developers and buyers of real estate prepare for a possible sharp decline in China's property values, some stock investors are reaching for their wallets. They plan to stash their cash in property shares and wait out the turbulence.
Real-estate investor Peter Churchouse is just such a long-term contrarian. The Hong Kong-based investor thinks China's property market is heading for a fall, but he's bullish on the shares now because he thinks their prices already reflect skittishness about the underlying market. If the shares are down in anticipation of a drop in property values, he reasons, they'll go up in advance of a rebound a few years hence.
The shares already trade at hefty discounts to net asset value (assets minus debt), an important stock valuation measure that real-estate analysts look at more closely than price-to-earnings multiples. Shares of New World China Land, for example, trade in Hong Kong at a whopping 75% discount to NAV.
John Saunders , a property analyst at CLSA Asia-Pacific Markets, cautions that New World China's discount could indicate investors aren't comfortable with the NAV figures. But other Chinese property companies also trade at enticing, albeit less steep, discounts. China Overseas Land & Investment trades 41% below NAV, while Beijing Capital Land and Shanghai Forte Land have discounts of 33% and 27%, respectively. One investor at a major U.S. bank suggests that if these shares doubled, then their NAV discounts would be in line with real-estate markets outside China.
Comparisons with the sector at large, which includes some 150 real-estate companies listed on Chinese exchanges, aren't available because most stock analysts cover only a smattering of Hong Kong-listed concerns.
Investment opportunity lies mainly in a handful of China-based companies listed in Hong Kong, known as H shares, including Beijing North Star and China Overseas Land, as well as Shanghai Forte Land and Beijing Capital Land. In addition to the H shares, Hong Kong-based companies that operate almost exclusively in China, such as New World China Land and Henderson China Holdings, might also merit watching.
But is China's property market really headed for a fall?
Some analysts, like Mr. Saunders, say China's burgeoning middle class will keep demand strong. One U.S. investor expects high growth will continue for at least another decade, if not two -- even though raising capital has become harder, as the Chinese government has sought to cool the construction frenzy by making it harder for residential developers to secure bank loans.
"In terms of demand for new houses, China is going through what the U.S. did during the post-World War II baby boom," the investor says, arguing that stock prices are down because of overbuilding in certain markets, such as Shanghai, and because of a few examples of missteps and inexperience -- management teams are young and still proving themselves. Nevertheless, he says, Chinese want new houses, and even properties built two years ago can now seem outdated if they don't sport the latest designs.
Though not contrarians in the matter, both men find the China-property play compelling, as the demand they see bolsters an optimistic view that share prices will rise.
On the other side of the demand argument, David Zhang, an analyst at Shanghai-based hedge fund Dynasty Asset Management, expects a decline in property values, probably in 2006. He and other investors note that rising property prices haven't translated into higher rents. Indeed, rents have fallen, reducing yields for developers. The reason, Mr. Zhang says, is that in residential property, prices are rising faster than personal income.
While present stock valuations might seem alluring, Mr. Zhang says, his fund intends to wait before adding more shares, in hopes prices will drop further amid a correction in the underlying market. "As a hedge fund," he says, "we see near-term risk and wait for the future."
Last year, Dynasty sold off its Shanghai Forte Land shares, even though Mr. Zhang says he likes the company's long-term prospects. The fund still holds a Henderson China position of about $10 million, or 5% of its $200 million portfolio.
China's real-estate sector is undergoing some changes that may help some companies weather a downturn if it occurs. One trend involves a shift away from Shanghai and Beijing, which has experienced a pre-2008 Olympics boom. China Overseas Land, for instance, recently didn't exercise an option it held to develop a mixed-use site near Shanghai's popular Xintiandi area. Instead, the company plowed 945 million yuan ($114.2 million) into an infrastructure project in Nanjing called Changjiang Second Bridge.
Companies with relatively strong balance sheets are exploring possible joint ventures with property concerns that have built up good land reserves but lack capital. Shanghai Forte Land, Mr. Saunders says, is doing just that, to diversify its land bank beyond Shanghai. The company's net debt-to-equity ratio is low by China real-estate standards, at about 49%. By comparison, Beijing Capital Land is shouldering a 62% ratio, while for China Vanke, a huge developer listed in Shenzhen, the figure is 61%.
地产市场变幻莫测 价值投资或逢其时
在中国大陆房地产市场的开发商和购房者都在准备应对房价可能大幅下跌的前景时，一些地产类股投资者却准备往外掏钱。他们计划更多买进这类股票，然后坐等地产市场的风云变幻尘埃落定。
房地产类股投资家卓百德(Peter Churchouse)就是这样一位长线反向操作者。这位在香港从事投资业务的人士认为，大陆的地产市场正在回落，但他现在对地产类股却比较看好，因为他认为，这类股票的价格已经消化了对市场基本面的谨慎预期。他推断，如果该类股在房地产价值将下跌的预期下走低，那么，它们也会在市场复苏之前数年开始回升。
房地产类股股价目前比它们的□资产价值（简称NAV，即资产减去负债）低出很多。跟踪房地产类股的分析师更多地运用□资产价值这一重要指标来衡量估价水平，而不是本益比。比如，新世界中国(New World China Land)在香港市场的股价较其NAV低75%之多。
里昂证券(CLSA)亚太市场部地产分析师桑德斯(John Saunders)提醒说，新世界中国股价的大幅折让或许表明，投资者对其NAV值感到不放心。不过大陆其他地产股的折让程度虽然没这么严重，但也很有诱惑力。中国海外发展(China Overseas Land & Investment)的折让率是41%，首创置业(Beijing Capital Land)和上海复地(Shanghai Forte Land)分别是33%和27%。美国一家大型银行的投资者认为，如果大陆地产类股的价格上涨一倍，那么它们的NAV折让率将与中国大陆以外房地产市场的总体水平等同。
要了解整个大陆房地产类股股价的总体折让水平很困难，因为中国大陆有大约150家房地产上市公司，而多数房地产分析师只对其中在香港上市的少数地产企业发表评级意见。
地产股的投资机会主要也就存在于一些地产类H股，即在港上市的大陆企业。这其中包括北京北辰实业(Beijing North Star)、中国海外发展，还有首创置业和上海复地。另外，一些业务几乎全部在大陆的香港地产企业如新世界中国和恒基中国(Henderson China Holdings)等也值得关注。
但问题是，大陆房地产市场是否真的开始回落了呢？
有些分析师如桑德斯等认为，中国正在发展壮大的中产阶级将使房地产市场的需求保持强劲。一位美国投资家预计，如果说中国房地产市场的快速增长难以再维持20年的话，至少也能再持续10年，即使融资工作由于政府抑制基本建设增长过快的措施而变得比较困难。
这位投资家说，在对新住房的需求方面，中国现在正在经历美国在“二战”战后婴儿潮时期所经历的情形。这位人士指出，房地产类股下跌是因为某些地区存在楼盘过多的情况，比如上海；还因为一些失误和缺乏经验的例子，有些管理团队还非常年轻，正在锻炼提高。不过他说，中国需要新房子，而且即使是两年前刚建好的房子如果用的不是最新设计，那么现在或许已显得过时了。
虽然上面这两位人士并非反向操作者，但他们都感觉中国的地产股很有吸引力，因为他们预计的需求前景势必引出股价将上升的乐观预期。
但对于需求，持相反观点的也不乏其人。比如上海戴盛(Dynasty)资产管理公司分析师张平(David Zhang)就预计大陆房地产价格将下降，时间可能会是在2006年。他和其他投资人士认为，房价上涨并没有相应地带来经济收益的上涨。的确如此，经济收益下降减少了开发商的收益率。张平说出现这一现象的原因是在住房市场上，房价的上涨幅度超过了人们收入增长的速度。
张平表示，地产股目前的估价水平或许很有诱惑力，但他所在的基金打算先观望一段时间再决定是否增持，他们预计股价在市场基本面调整期间会进一步下降。张平说，作为一家对冲基金，我们著眼短期风险，等待未来收益。
去年，戴盛悉数卖出所持上海复地的股票，虽然张平表示说他看好这家公司的长期前景。该基金仍持有价值约1,000万美元的恒基中国股票，这在其价值2亿美元的投资组合中所占比重为5%。
中国房地产业正在发生一些变化，这些变化将有助于一些企业抵御可能发生的行业滑坡。正在出现的趋势之一是开发热点从上海转向北京，目前，这里正呈现出2008年奥运会前的一派热火朝天景象。如中国海外发展近期就未行使在上海繁华之地新天地一带开发多功能楼盘的选择权，而是来到位于上海、北京之间的南京，斥资人民币9.45亿元(合1.142亿美元)参与长江二桥的基础建设项目。
一些资产负债状况相对较好的企业正在尝试与有大量土地储备但缺乏资本的公司组建合资企业。 桑德斯说，上海复地就是如此，它希望增加在上海以外地区的土地储备。该公司的净资产负债率为49%，按中国房地产行业的普遍标准来衡量属于偏低水平。相比而言，首创置业是62%，在深圳交易所上市的万科(China Vanke)为61%。
