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<Research> M Stanley Expects "K-shaped" Sales Performance in CN Home Sector to Continue; CHINA RES LAND (01109.HK) Remains Top Pick
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Morgan Stanley said in a research report that in May, secondary home prices and listing volumes across Chinese cities continued to diverge. The bank expects this "K-shaped" sales performance to persist, leading to softer overall home prices on a MoM basis, while certain tier-one cities may see mild increases. M Stanley noted that the MoM decline in secondary home listing prices slightly widened in May. The bank expects further listing price cuts in the coming months to exert pressure on transaction prices. However, tier-one cities were broadly flat at -0.1%, which it believes was due to relatively strong secondary home sales, partly supported by policy easing. The bank also expects secondary homes to further gain market share, supported by more competitive pricing and increased supply of lower-priced units, which is driving overall housing sales performance. The bank stated that given limited willingness to increase leverage and a cautious earnings outlook, as policy effects and pent-up demand fade, secondary home transaction volumes may slow further in June and could turn YoY negative in 3Q26. Meanwhile, primary home sales may continue to decline YoY due to reduced sellable resources from developers. The bank expects overall home prices in China in 202627 to show a mild MoM downward trend, although certain tier-one cities may record slight increases supported by inventory reduction. M Stanley maintains that the risk-reward profile of the CN Home sector remains skewed to the downside. It advises investors to closely monitor transaction volumes, home prices, secondary home listing volumes, transaction mix and rental levels from June to August. Its sector top pick remains CHINA RES LAND (01109.HK), followed by C&D INTL GROUP (01908.HK), as it believes both companies offer solid EPS outlooks, attractive dividend yields and potential for mid-term valuation re-rating. (sl/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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