Open Source Securities: Monthly sales of the real estate industry have improved as scheduled, and the decline in funds collection by real estate companies has significantly narrowed.

Open Source Securities released a research report, stating that since the end of September, real estate policies have been continuously relaxed, while monetary and fiscal policies have been continuously reducing the cost of buying a house. As a result, sales data in October have improved as expected, with the smallest monthly decline since the small rebound in 2023, and significant improvement in sales repayment in the funds of real estate enterprises. According to Wind data, in the first two weeks of November, the transaction volumes of new and second-hand houses in first-tier cities remained high, and the cumulative sales decline for the year continued to narrow. Sales data for November are promising after the full release of policy effects. The main points of Open Source Securities are as follows: Sales data improved as expected in October, with cumulative sales decline narrowing for five consecutive months The National Bureau of Statistics released data on real estate investment and sales for January-October 2024. From January to October, the sales area of commercial housing in the country was 779 million square meters, a year-on-year decrease of 15.8% (September was -17.1%), with a 17.7% year-on-year decrease in the sales area of commercial residential properties. From January to October, the sales value of commercial housing was 7.69 trillion yuan, a year-on-year decrease of 20.9% (September was -22.7%), with a 22.0% year-on-year decrease in the sales value of commercial residential properties. In October, the year-on-year decreases in sales area and sales value of commercial housing were 1.6% and 1.0% respectively, marking the third consecutive month of narrowing declines and the smallest declines since May 2023, showing an improvement as expected in the "Silver October" sales period. By region, from January to October, the year-on-year growth rates of sales area in the eastern, central, western, and northeastern regions were -14.4%, -17.2%, -17.5%, and -12.4%, the declines narrowing slightly. The decrease in new construction area widened, while the decrease in completed construction area narrowed From January to October 2024, the new construction area of houses in the country was 612 million square meters, a year-on-year decrease of 22.6% (September was -22.2%), showing an expanding decline for the seventh consecutive month, with a 22.7% year-on-year decrease in the new construction of residential properties. In October, the new construction area was 52 million square meters, a 26.7% year-on-year decrease, as decreased land acquisition continued to impact new construction scale. From January to October, the completed construction area of houses was 420 million square meters, a year-on-year decrease of 23.9% (September was -24.4%), with a 23.4% year-on-year decrease in the completion area of residential properties. In October, the completed construction area was 52 million square meters, a 19.6% year-on-year decrease. Significant improvement in sales repayment funds, while the financing environment for real estate enterprises remains challenging From January to October 2024, the investment in real estate development amounted to 8.63 trillion yuan, a year-on-year decrease of 10.3% (September was -10.1%), with a 10.4% year-on-year decrease in the investment in residential development. In October, the monthly investment amount was 0.76 trillion yuan, a 12.3% year-on-year decrease, showing that the performance of sales repayments continues to suppress the investment momentum of real estate enterprises. From January to October 2024, the funds in place for real estate development enterprises amounted to 8.72 trillion yuan, a cumulative year-on-year decrease of 19.2% (September was -20.0%), with the decline narrowing for the seventh consecutive month. Among them, the cumulative year-on-year changes in domestic loans, self-raised funds, deposits and prepayments, and individual mortgage loans were -6.4%, -10.5%, -27.7%, -32.8% (September was -6.2%, -9.1%, -29.8%, -34.9%). Looking at the data for the month, with the improvement in sales sentiment in October, there was a slight improvement in sales repayment funds, with monthly growth rates of deposits and prepayments and individual mortgage loans increasing by 22.4% and 17.2% respectively compared to the previous month. At the same time, the cumulative decreases in domestic loans and self-raised funds widened, indicating that the financing environment for real estate enterprises remains challenging. Recommended stocks: 1) Real estate enterprises with high investment intensity, preferred regional layout, and market-oriented mechanisms: Poly Developments and Holdings Group (600048.SH), GREENTOWN CHINA (03900), China Merchants Shekou Industrial Zone Holdings (001979.SZ), CHINA OVERSEAS (00688), Xiamen C&D Inc. (600153.SH), YUEXIU PROPERTY (00123), Hangzhou Binjiang Real Estate Group (002244.SZ), C&D INTL GROUP (01908); 2) Dual-driving forces of residential and commercial real estate, benefiting from real estate recovery and consumption promotion policies: Seazen Holdings (601155.SH), LONGFOR GROUP (00960); 3) Continuous increase in the scale and penetration rate of second-hand housing transactions, with broad prospects for the real estate after-service market: BEKE-W (02423), 5i5j Holding Group (000560.SZ). Risk warning: (1) Industry sales recovery is below expectations, financing improvement is below expectations, and the financial risk of real estate enterprises further increases. (2) Policy relaxation is below expectations.