SOE developers’ sales held up in the off-season; premium land replenishment becomes the next key differentiator

Overview

The report believes China real estate sales showed strong resilience during the traditional slow season. Six key SOE developers’ July sales rose 13% year on year, and secondary-home transactions also continued to grow, indicating that underlying market momentum and low-base effects jointly drove improvement in the year-on-year trend. As most developers in August mainly rely on subsequent batches of existing projects and lack major first-launch projects, near-term sales are expected to be stable but unlikely to significantly beat expectations; the speed and quality of land replenishment will become the main factor differentiating developers.

Core views

The sector recovery is still in its early stage, but the sales resilience of key SOE developers, policy support, and improved secondary-home liquidity provide support. CR Land and C&D International have recently been actively acquiring premium land, which should help improve 2027 sales visibility, and they are preferred names thanks to their high-end project layouts and stronger earnings certainty. COLI’s high-end project pipeline is also receiving more attention, but its traditional advantage of using ample cash to acquire large land parcels is narrowing as peers adopt joint-venture structures to bid.

Analysis framework

The report assesses sector momentum by combining monthly contracted sales of key developers, secondary-home transactions in nine key cities, the national residential land market, key land auctions in August, and future project launch plans. It uses a NAV discount method to evaluate the fair value of core recommended companies, while also examining sales, margins, recurring income, land bank quality, and execution track record.

Methodology notes

• Equity valuationNet asset value discount method

  Add together the gross asset value of development projects and investment properties and deduct net debt to derive NAV per share, then apply a target discount based on operating quality, financial strength, and historical trading range.

  CR Land uses a 21% NAV discount, equivalent to 1 standard deviation above its historical average, applied to NAV per share of HKD55.50; C&D International uses a 53% NAV discount, equivalent to 0.25 standard deviations above its historical average, applied to NAV per share of HKD42.40.

• Sector cycle analysisSales and land replenishment tracking

  Assess developers’ near-term momentum and medium-term saleable-resource visibility through contracted sales, secondary-home transactions, launch plans, and the speed and quality of land acquisitions.

  Against the backdrop of relatively limited new launches in August, premium land replenishment is viewed as a key indicator determining 2027 sales capability and relative developer performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Resources Land (1109.HK)

  Top pick, maintained at Buy

  Strengths

  Leading layout in core cities and high-end projects, strong recurring income, improving sales momentum, solid execution track record, and active land replenishment.

  Weaknesses

  Valuation and earnings remain affected by residential sales, development margins, and shopping mall business performance.

  Comparison

  Compared with most developers in the sector, CR Land has stronger earnings visibility, recurring income, and high-quality city exposure, and is expected to benefit earlier from a market recovery.

  Risks

  Inability to sustain sales momentum, margins below expectations, significant slowdown in the shopping mall business, decline in dividend stability, and macro and real estate policy uncertainty.

• C&D International (1908.HK)

  Top pick, maintained at Buy

  Strengths

  July sales rose 50% year on year, active participation in the land market, relatively new land bank, better margin recovery trend, and competitiveness in high-end projects.

  Weaknesses

  Operating performance is relatively sensitive to continued land acquisitions, project sell-through, and execution of joint-venture projects.

  Comparison

  C&D’s July sales growth significantly outpaced other key SOE developers, and its recent active land acquisitions help enhance 2027 sales visibility.

  Risks

  Slower land acquisitions, sharp deterioration in sales, substantial margin compression, low-priced share placement, joint-venture project risks, and policy uncertainty.

• COLI

  Key name to watch

  Strengths

  July sales rose 28% year on year, high-end project pipeline is richer, and customer attention is rising.

  Weaknesses

  Its traditional competitive advantage of relying on ample cash to acquire large land parcels is narrowing.

  Comparison

  Sales growth was second only to C&D, but the report’s explicit top picks remain CR Land and C&D International.

  Risks

  Peers may enhance land bidding capabilities through joint-venture structures, potentially weakening its relative advantage in acquiring large premium land parcels.

Key data

• July sales of six key SOE developersUp 13% year on yearDown an average of 45% month on month, mainly reflecting the traditional slow-season effect.
• July sales growth of key developersC&D +50%; COLI +28%; China Jinmao +9%; CR Land +6%C&D’s outstanding performance was mainly driven by the strong launch of the Hangzhou One Beyond project.
• Secondary-home transactions in nine key citiesUp 9% year on yearTransaction resilience helps improve liquidity in the housing upgrade chain.
• Key land auctions in August17 land parcels, total starting price RMB55bnThe speed and quality of land replenishment are the main near-term indicators to watch.
• CR Land valuationCurrent price HKD33.20; target price HKD43.80; upside 31.9%Maintain Buy rating; valuation uses a 21% NAV discount.
• C&D International valuationCurrent price HKD15.37; target price HKD19.90; upside 29.5%Maintain Buy rating; valuation uses a 53% NAV discount.
• Market data reference date2026-07-31Unless otherwise stated, the report’s market data are as of the close on this date.

Impact & implications

Year-on-year sales improvement and continued policy support are conducive to protecting the initial recovery and stabilizing homebuyer confidence, but insufficient supply in August means the sector is unlikely to achieve clear upside surprises solely through near-term launches. Investment opportunities will further concentrate in developers that can continuously acquire premium land in core cities, have high-end project capabilities, clear margin recovery paths, and stable cash flow. If local governments loosen housing provident fund policies and introduce targeted home-purchase subsidies ahead of the September-to-October peak season, this could provide additional support for sales momentum.

Risks

• Major first-launch projects in August are limited, and contracted sales lack obvious room to significantly exceed expectations.
• The sector’s sales recovery remains fragile, and year-on-year growth may come under pressure after low-base effects fade.
• Intensifying competition for premium land may raise land costs and compress future project margins.
• The strength or implementation speed of local support policies may fall short of expectations.
• There is uncertainty around the macro economy, homebuyer confidence, and property-specific policies.
• Individual stocks also face risks from sales deterioration, margin compression, joint-venture project execution, and dividend stability.

What to watch

• Results of key tier-one city land auctions in August and the actual transaction premiums for the 17 land parcels.
• The speed, cost, and city distribution of premium land replenishment by CR Land and C&D International.
• The number of first launches and sell-through rates of new projects by key developers from August to September.
• Whether secondary-home transactions in nine key cities can continue year-on-year growth.
• Whether local governments loosen housing provident fund policies or introduce targeted home-purchase subsidies ahead of the traditional September-to-October peak season.
• Launch performance of COLI’s high-end project pipeline and whether its advantage in acquiring large land parcels continues to narrow.
• Margin recovery, recurring income, and dividend stability of core developers.