E-House Foundations Looking Outright Shaky 易居中国根基明显摇晃

By newsdoug on June 1, 2011

E-House (NYSE: EJ), one of China’s top homegrown real estate services providers and an industry bellwether, has just announced earnings that look decidedly downbeat, hinting at an even bigger sector downturn than many may have expected. (company announcement) The company trumpeted revenue that grew 17 percent in the first quarter, with a similar increase expected in the current quarter. But that figure is less than half the rise in expenses, which jumped 40-50 percent as the company underwent a major expansion. The result was that E-House slipped into the red for the quarter and forecast more anemic transaction volumes and weak market sentiment in the near term. The worrisome element in all of this is that the weak sentiment hasn’t really set into the broader market yet, with only active home sellers (and a few buyers who can obtain loans) really feeling the pinch of Beijing’s relentless moves to cool the market. Once the broader market sits up and takes notice that sales volumes won’t improve and new buyers are becoming a rarity, I expect to see sentiment slide sharply, probably by the end of this year. When that happens, look for not only E-House, but peers like Soufun (NYSE: SFUN) to slip even further. The downturn could even drag down big-name developers like Vanke (Shenzhen: 000001), in a correction that could eventually see market values drop by as much as 30-40 percent from their current overinflated highs.

Bottom line: E-House’s rapid decline into the red and decidedly downbeat outlook are an early sign that China’s housing market may be in for a sharper decline than many expect.

中国顶级本土房地产服务提供商之一、行业领头羊易居中国<EJ.N>刚刚宣布黯淡业绩，暗示整个行业的下滑趋势或甚於先前预期。易居中国第一季度营收增长17%，本季度预计录得类似增幅。但该数字不及支出增幅的一半，易居中国支出跳涨40%-50%。目前该公司正大举扩张。结果是一季度利润亏损，这预示近期公司股票交易量更难活跃、市场情绪低落。所有这些中令人担忧的因素在於，低落的情绪尚未扩散至更广泛的市场，仅有积极售房者（及一些可以获得贷款的购房者）真正感受到了政府抑楼市的力度。一旦市场安静下来，意识到房屋销量难有改善，新的购房者少之又少，我预计市场情绪会大幅下滑，出现时间有可能在今年年底。一旦这样，除易居中国外，同行如搜房<SFUN.N>等可能也在劫难逃。而且行业巨头如万科<000002.SZ>等也可能面临修正，最终市值或从目前高位缩水大约30%-40%。

一句话：易居利润急剧亏损及其确定无疑的黯淡前景或是一种早期信号，预示中国房地产市场的可能陷入比料想更加严重的下滑趋势。