困境房企：清理跑道

EquitiesREMD Distressed developers:Clearing the runway China ◆Distressed developers have mostlyfulfilledtheirhousingdelivery obligations; debt restructuring helps relievetheburden Oliver Yu*Analyst, Asia Real EstateThe Hongkong and Shanghai Banking Corporation Limitedoliver.y.o.x.yu@hsbc.com.hk+852 2288 2050 ◆Idle land acquisition willfacilitate inventory clearanceandreduce future supply Michelle Kwok*Head of Asia Real Estate and HK EquityResearchThe Hongkong and Shanghai Banking Corporation Limitedmichellekwok@hsbc.com.hk+852 2996 6918 ◆Prefer CRL, C&D,and Seazen, all rated Buy;adjust TPs forfourdevelopersdue to change inestimates Stephen Wang*, CFAAnalyst, Asia Real EstateThe Hongkong and Shanghai Banking Corporation Limitedstephen.wang@hsbc.com.hk+852 2284 1675 Notan easy way out.While wearealready aspiringto 2027 earnings recovery formajor developers (Catch me if you can, 8 April2026),distressed names remainunder pressure from higher inventory impairments(Figure 2), losses on jointdevelopments, and−mostcritically−stillelevatedleverage despite the significantimprovement in net debt.Forequity investors,we thinkit’s premature to consider aninflectionpoint for distressed developers, with property market recovery onlybenefitting leading playersand the overhang that any rally could be followed by asell-offdue to meaningful dilution associated with convertible bondconversion(Figure4).A clearer signal of a full market recoverywould beifmore privatedevelopers return to the land market, or successfully swap idle land for higher-qualitysites−supporting greater risk appetite for stock selection. Charlotte Ye*AssociateGuangzhou * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations. Delivery improving, but inventory overhangremains.Across five distresseddevelopers, contract liabilities (undelivered homes) have fallen byc80% vs end-2021,leaving more manageable delivery commitments(Figure 6). However, inventoryclearanceremains slowas new projects increasingly outcompete legacy stock. Weestimate itcould takeupto13 years toclear existing inventories (Figure8), raisingthe risk of further debt restructuring if cashflows weaken.We cut our TPs for fourdevelopers byanaverageof34% on lower estimates for revenue and margins(seepage5 for details). Potential policy lever:Idle land buybacks.Buying existing projects from distresseddevelopers remains challenging due to pricing disputes and the risk of adding toaffordable housing oversupply. In contrast, idle land buybacks could more effectivelyreduce future supply and ease financial strain.With typically over 50% of landbanksin undeveloped (often non-prime) sites, repurposing these areas for public facilitiescould improve local amenities without worsening housing oversupplyand enhancedevelopers’balance sheet quality. Stock preference.We maintain a preference for higher-quality developers−CRL,C&D, and Seazen (allratedBuy)−as they should gain market share and pricingpower as weaker competitors exit. We donot expect them to acquire distressedpeers’ projects, which could dilute landbank quality; reduced supply should also helpthe market reach a new equilibrium faster. HSBC Global Investment Summit 14 to 16 April 2026 Find out more Issuer of report:The Hongkong and ShanghaiBanking Corporation Limited Disclosures & DisclaimerThis report must be read with thedisclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Investment Research at:https://www.research.hsbc.com Source:Company data, HSBC What’schanged Welowerour revenue forecasts for 2026/27 for the four developers by 1-26% to reflect slower-than-expected inventoryclearance and revenue booking. Wecutour gross margin forecasts for2026/27 by 2.2-9.2ppt forthree distressed developers as they continue to destock with largediscounts and incur inventory impairment. However,we raiseourforecasts for ShenzhenInvestmentontheexpectation ofahigher contribution from its recurring businesses. As a result, we continue to expectanet loss fordistresseddevelopers,whilewe expect anearnings recovery forShenzhen Investment.In addition,we continue to factor in EPS dilutionfor CIFIandCountry Gardenas the mandatory convertible bond holders gradually convert theirbonds into equity shares.With this report wealsointroduce our estimates for 2028forthesefour stocks. Valuation and risks Financials & valuation: C&DInternational Source: Companydata, LSEG Datastream, HSBC estimates\ Financials & valuation: China Resources Land Source: Company data,Refinitiv Datastream, HSBC estimates Financials & valuation: China Vanke Financials & valuation: CIFI Holdings Financials & valuation: Country Garden Holding Financials & valuation: Seazen Group Financials & valuation: Shenzhen Investment Source: Company data, Bloomberg, HSBC estimates Disclosure appendix Analyst Certification The followi