The prolonged and continuous decline has made it nearly impossible to find real estate companies with a market value of tens of billions in the A-share market.

On April 11th, the overall A-share market rose, while the real estate sector still closed slightly lower. According to Wind data, the real estate index (882011.WI) fell by 0.26% to 1849 points, with leading companies such as Vanke A, Poly Development, and Xincheng Holdings experiencing不同程度的下跌.

The continuous decline in stock prices has led to a continuous reduction in the market value of listed real estate companies, and Vanke, which has been troubled by debt issues recently, is no exception. As of the close on the 11th, Vanke A (000002.SZ) fell by 1.85%, with the latest stock price at 7.44 yuan per share, down 1.85%, setting a new low in nine years, with the latest market value of only 88.7 billion yuan. Even with the inclusion of H-shares, Vanke's current total market value is less than 140 billion yuan.

Advertisement

Vanke A is just a microcosm of the decline in stock prices and the evaporation of market value of listed real estate companies in the A-share market. Data shows that the once golden signboard of the real estate industry, "Zhaobao Wanjin," has now seen a significant reduction in market value, exiting the trillion-yuan market value camp. As of the close on April 11th, in the A-share market, there are no listed real estate companies with a total market value exceeding 100 billion yuan. The stock prices of many real estate companies have even approached the 1 yuan "warning line" for delisting at par value.

80% of Vanke's market value has evaporated.

"Will it fall further?" In the face of the continuous downward trend, the stock price of Vanke has sparked heated discussions among investors on online platforms.

Continuing the trend of the previous day, on April 11th, Vanke A fell by 1.85% again, closing at 7.44 yuan per share, setting a new low in nearly 9 years. Since the beginning of the year, Vanke A shares have accumulated a decline of more than 28%, with a price-to-book ratio of only 0.35 times.

At the beginning of 2024, Vanke A's stock price was still fluctuating around 10 yuan. After reaching a phase high of 10 yuan on March 12th, it began to accelerate its downward trend, breaking through 9 yuan on April 1st, closing at 8.98 yuan per share, with a market value slightly above 100 billion yuan. On April 3rd, Vanke A fell by 3.68% again, closing at 8.19 yuan per share, with a market value of 97.7 billion yuan, breaking through the 100 billion yuan mark for the first time in recent years. After the continuous decline in the past two days, Vanke A's latest market value is only about 88.7 billion yuan.

The decline in A-shares has not spared H-shares. Since January 2nd of this year, its H-share Vanke Enterprises (02202.HK) has been fluctuating down from a relatively high point of 6.7 Hong Kong dollars per share to 4.14 Hong Kong dollars per share on April 11th, with a year-to-date decline of 42.66%. According to the latest closing price, the current market value of the group's H-shares is only 49.4 billion Hong Kong dollars, equivalent to about 45.7 billion yuan in RMB.

According to the above data, as of the close on April 11th, the combined market value of Vanke A-shares and H-shares is about 134.4 billion yuan. Compared with the high point in 2018, the company's market value of nearly 700 billion yuan has now evaporated.In January 2018, Vanke A once reached a high of 31.92 yuan, with a corresponding market value of approximately 452.4 billion yuan, while the H-share was equivalent to about 378.6 billion yuan, with a total market value of about 83.1 billion yuan. This means that Vanke's current market value has shrunk by more than 80% compared to January 2018.

The myth of real estate companies' market value is no longer.

It's not just Vanke that has seen a continuous decline in stock prices and a sluggish real estate industry.

Coincidentally, Poly Development's stock price has also been falling continuously. From March 27 to the present, in the 10 trading days, Poly Development has closed lower for 9 trading days, with a range of decline reaching 15.86%. On April 10, Poly Development fell 4.24%, closing at 8.13 yuan per share, with a market value of 97.3 billion yuan, failing to hold the "threshold" of 100 billion.

In fact, the loss of market value for Vanke and Poly is just a microcosm of many listed real estate companies. The decline in stock prices and the shrinkage of market value have become the main theme of listed real estate companies in recent years.

Wind data shows that as of April 10, the real estate index (882011.WI) was only 1854 points, with a cumulative decline of 14.9% for the year, significantly underperforming the Shanghai Composite Index for the same period. Compared to the high of 6353 in June 2015, the index is now less than one-third.

With the continuous decline in stock prices, the once golden sign of the real estate industry, "Zhaobao Wanjin," has all broken through the 100 billion yuan threshold. Data shows that as of April 10, Poly Development, Vanke A, and China Merchants Shekou had the "top three" market values, with market values of 97.319 billion yuan, 90.4 billion yuan, and 76 billion yuan, respectively, while Gemdale Group's market value was 15.6 billion yuan.

According to Choice data, as of now, among the 123 real estate companies listed on the A-share market, the number of real estate companies with a total market value of over 100 billion yuan has returned to zero. Real estate companies with a market value of over 10 billion yuan have decreased from more than 70 in June 2015 to about 30 currently.

When can we get out of the trough?

For a considerable period of time, real estate companies are not only the main force of A-shares with a market value of 100 billion yuan. Among the large-cap companies in the Hong Kong stock market, mainland real estate companies also occupy several seats.Between 2018 and 2020, it was a golden era for the rapid expansion of market value for listed real estate companies. According to data from Choice, as of December 30, 2018, there were about 13 real estate companies with a market value of over 100 billion in the A-share and H-share markets, most of which were from the mainland or operated mainly in the mainland.

By the end of December 2018, in the A-share market, Vanke A's market value was 262.9 billion yuan, Poly Development's market value was 140.2 billion yuan, and China Merchants Shekou's market value was 137.1 billion yuan. In the H-share market, China Evergrande, China Resources Land, and Country Garden had market values of 265.9 billion Hong Kong dollars, 181.9 billion Hong Kong dollars, and 169.9 billion Hong Kong dollars, respectively. Including the aforementioned three real estate companies, a total of 11 companies entered the "club" of companies with a market value of over 100 billion Hong Kong dollars.

The turning point occurred in 2021. As the real estate market cooled down, in July of that year, *ST Blueray failed to repay some of its debts on schedule. In September, Evergrande Group also defaulted on its debts. After October, several real estate companies faced difficulties in repaying US dollar debts.

Around the same time, the stock prices of listed real estate companies entered a downward channel. According to data from CRIC, starting from 2021, the total market value of 100 listed real estate companies (excluding those that have been delisted) in the A-share market fell by 10.17% and 8.39% year-on-year at the end of 2021 and 2022, respectively. The year-on-year decline for 81 listed real estate companies in the H-share market was 23.53% and 6.7%, respectively.

A report from the Shanghai Yiju Real Estate Research Institute shows that by the end of 2023, the total market value of the 298 Chinese real estate listed companies included in the research sample was 2.28 trillion yuan, a decrease of 1.1 trillion yuan year-on-year. Among them, the market value of development companies was 1.76 trillion yuan, accounting for 77.2%.

According to data from Choice, as of April 10, 2024, the total market value of 123 companies in the A-share real estate sector was 1.1 trillion yuan, a reduction of about 800 billion yuan compared to 1.9 trillion yuan in the same period of 2021. As of April 10, 2024, the total market value of 85 companies in the H-share real estate sector was 1.57 trillion Hong Kong dollars, a reduction of about 2.76 trillion Hong Kong dollars compared to 4.33 trillion Hong Kong dollars in the same period of 2021.

After the continuous decline, when will the stock prices of listed real estate companies bottom out? Industry insiders believe that with the continuous optimization and adjustment of real estate supply and demand policies, the willingness of homebuyers to purchase homes may welcome a mild recovery. Coupled with the continuous implementation of financing support for "white list" projects, it is conducive to boosting market confidence. The future market recovery and improvement in the operation of real estate companies will also promote the repair of real estate company stock prices.