Analysis Report on Valuation Bottoming Signals of A-Share Real Estate Sector

Based on collected data and market information, I provide you with a systematic and comprehensive valuation analysis report on the A-share real estate sector.

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Indicator	Vanke A (000002)	China Merchants Shekou (001979)	Industry Characteristics
Current Share Price	$4.73	$9.24	Vanke is close to its 52-week low
P/E (TTM)	-0.95x	23.10x	Most real estate enterprises are in loss
P/B (TTM)	0.32x	-	68% below net asset value
P/S (TTM)	0.20x	-	Extremely low price-to-sales ratio
52-Week Range	$4.62-$8.22	$8.43-$10.55	Vanke is only 2.4% away from its 52-week low
Annual Decline	-30.95%	-10.47%	China Merchants is relatively resilient

Time Period	Decline	Notes
Past 1 Year	-30.95%	Continuous adjustment
Past 3 Years	-74.40%	Deep correction
Past 5 Years	-84.87%	Historical low

Indicator	Value	YoY Change
New Commercial Housing Sales Area	881.01 million sqm	-8.7%
Commercial Housing Sales Volume	RMB 8.3937 trillion	-12.6%
Real Estate Development Investment	-	-17.2%
New Construction Area	-	-20.4%
New Housing Prices in First-Tier Cities	-	-1.7%
Second-Hand Housing Prices in First-Tier Cities	-	-7.0%

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• Vanke A P/B = 0.32x
  : The share price is only 32% of net asset value, meaning the market has discounted the company’s asset value by 68%, hitting a historical extreme range [0]
• Vanke A P/S = 0.20x
  : The price-to-sales ratio is less than 0.2x, indicating extremely pessimistic market pricing [0]
• Negative P/E for Most Enterprises
  : Due to overall industry losses, the traditional P/E valuation method has become invalid, reflecting that the sector is in a deep adjustment period

: Since 2015, the P/B of the real estate sector has hit the 0.3-0.4 range multiple times before staged rebounds occurred; the current valuation is close to a historical extreme.

• The current price of $4.73 is only
  2.4%
  away from the 52-week low of $4.62 [0]
• It has corrected
  42.5%
  from the 52-week high of $8.22, with sufficient decline [0]
• The 20-day moving average ($4.79) and 50-day moving average ($5.26) are in a bearish arrangement, but the deviation rate is narrowing [0]
• KDJ Indicator: K=28.1, D=38.9, J=6.6, indicating an oversold state [0]

• Annual decline is only 10.47%, significantly outperforming Vanke [0]
• PE=23.10x, which is a reasonable valuation level in the sector [0]
• Indicating that market funds are beginning to differentiate towards high-quality real estate enterprises

• The decline rate of sales area (-8.7%) has narrowed compared to the previous year [Provided by User]
• In the fourth quarter, the transaction area of new housing in 100 cities increased by 4% month-on-month, with an 18% month-on-month growth in December [1]
• Shanghai has become the
  only first-tier city to achieve both year-on-year and month-on-month growth in new housing transactions
  [Provided by User]

• Real estate development investment decreased by
  17.2%
  year-on-year, with continuous sector contraction [Provided by User]
• New construction area decreased by
  20.4%
  , with clear expectations of future supply-side contraction [Provided by User]
• Vanke A’s ROE is
  -31.07%
  , and net profit margin is
  -20.92%
  , with deteriorating profitability [0]
• Vanke A’s Q3 financial report shows EPS of -$1.35, significantly lower than expectations [0]

Policy Type	Specific Measures	Impact Assessment
Purchase Restriction Relaxations	Purchase restrictions lifted in areas outside Beijing’s 5th Ring Road, outside Shanghai’s Outer Ring Road, and non-core areas of Shenzhen	Releases purchasing power
Credit Optimization	Mortgage interest rates no longer distinguish between first and second homes, unified at 3.05%	Reduces home purchase costs
Provident Fund Support	Families with multiple children can borrow up to RMB 2.16 million, with ‘withdraw and borrow’ allowed	Stimulates rigid demand
Tax Incentives	Value-added tax on housing held for less than 2 years reduced from 5% to 3%	Promotes second-hand housing circulation
Destocking	Local governments plan to use special bonds to repurchase over RMB 650 billion of idle stock land	Improves supply-demand relationship

• After Shanghai relaxed purchase restrictions on August 25, the average destocking rate in July was 41%; the policy effect requires continuous observation [2]
• The new housing market shows a differentiated pattern, with high-quality projects in core areas remaining popular [3]

• The turnover of the Shanghai and Shenzhen stock markets has exceeded RMB 2 trillion for 11 consecutive trading days, with increased market activity [4]
• The weekly transaction volume of second-hand housing in Shenzhen increased by 1% month-on-month, showing four consecutive weeks of growth [2]
• The transaction proportion of high-end improved housing has increased to 60%, with improved demand actively entering the market [3]

• The ‘price for volume’ pattern continues in the second-hand housing market, with high listed volume [3]
• Expectations of housing price adjustments have not been fully resolved [3]

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┌─────────────────────────────────────────────────────────────┐
│           Comprehensive Assessment of Bottoming Signals of A-Share Real Estate Sector                        │
├─────────────────────────────────────────────────────────────┤
│                                                             │
│   Valuation Bottom:    ████████████░░░░  85%  Emerged                 │
│   ─────────────────────────────────────────────────────     │
│   Policy Bottom:    ████████████████░  95%  Confirmed                │
│   ─────────────────────────────────────────────────────     │
│   Price Bottom:    ███████████░░░░░░  75%  Initially Emerging              │
│   ─────────────────────────────────────────────────────     │
│   Fundamental Bottom:  ████████░░░░░░░░░  45%  Still Forming              │
│   ─────────────────────────────────────────────────────     │
│   Sentiment Bottom:    ██████████░░░░░░░  65%  Marginal Improvement              │
│                                                             │
│   Comprehensive Score:  ███████████░░░░░░  73%                        │
│                                                             │
└─────────────────────────────────────────────────────────────┘

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Specifically:

1. Valuation Bottom Has Formed
   : Indicators such as P/B and P/S are at historical extremes, with severe asset discounts
2. Policy Bottom Has Been Confirmed
   : The intensity of combined policy measures including purchase restriction relaxations, credit optimization, tax incentives, and destocking is unprecedented
3. Price Bottom Is Being Confirmed
   : Share prices of high-quality real estate enterprises are close to historical lows, with limited downside space
4. Fundamentals Still Await Recovery
   : Indicators such as sales, investment, and construction are still declining, but the decline rate has narrowed

Type	Characteristics	Investment Recommendations
High-Quality Leading Enterprises	China Merchants Shekou, China Resources Land, etc.	Relatively reasonable PE, stable cash flow, can accumulate on dips
Oversold Targets	Vanke A, etc.	Extremely low P/B, high rebound elasticity, but need to pay attention to fundamental risks
Regional Leading Enterprises	Binjiang Group, Yuexiu Property, etc.	Deeply rooted in core cities, benefiting from regional recovery
High-Leverage Real Estate Enterprises	China Fortune Land Development, etc.	High risk, recommended to avoid

• Shanghai’s housing prices continue to lead growth, forming a demonstration effect
• Marginal improvement in commercial housing sales data
• More destocking policies are implemented
• Further interest rate cuts

• Sales data fall short of expectations, with the decline rate expanding again
• Credit risk exposure of some real estate enterprises
• Macroeconomic recovery falls short of expectations
• Spillover of overseas market volatility

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The chart above shows the K-line trend and technical indicators of Vanke A (000002.SZ), from which we can observe:

• The share price continued to decline in 2025 and is currently in a bottom consolidation range
• Trading volume has increased recently, indicating increased capital attention
• Technical indicators show short-term oversold conditions, with potential rebound opportunities

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[0] Jinling AI Financial Database - Real-time quotes, technical analysis, financial analysis data

[1] Xinhua News Agency - “Multiple Policies Promote the Stabilization of the Real Estate Market” (2025-11-02)
http://www.news.cn/fortune/20251102/512457f871774164928a3ce8e436cae6/c.html

[2] China Real Estate Association - “Shanghai Relaxes Purchase Restrictions, the Property Market Enters a New Round of ‘Defense Battle’” (2025-08-26)
http://www.fangchan.com/news/6/2025-08-26/7365925282563560015.html

[3] China Business Network - “2025 Property Market: High in Early Stage, Low in Late Stage! Insiders Expect Gradual Stabilization After Four Years of Adjustment” (2026-01-01)
https://www.9fzt.com/common/e3b240f2de2aa39c16dfbbebb23c1af6.html

[4] Eastmoney - “Turnover of Shanghai and Shenzhen Stock Markets Exceeds RMB 2 Trillion for 11 Consecutive Trading Days” (2026-01-19)
https://quote.eastmoney.com/zz/2.931775.html