Publicly offered mutual funds have entered the full disclosure period for their second-quarter reports, and the operational performance and profitability of publicly offered REITs (Real Estate Investment Trusts) for the second quarter are also clearly demonstrated.

According to First Financial, based on Wind data statistics, by the end of the second quarter, a total of 36 REITs products had disclosed their second-quarter performance, with 10 of them reporting revenues exceeding 100 million yuan. Among them, energy REITs led in both revenue and net profit, while park-type REITs were affected by lease terminations and ranked lower in terms of revenue. Additionally, there were four REITs with net losses.

In the secondary market, the CSI REITs Total Return Index has risen by 0.15% in the past three months, with an approximate increase of 8% year-to-date. Notably, new energy and affordable housing REITs have seen higher recent gains.

In response to the current dynamics of the REITs market, Huatai Securities analysis suggests that since 2024, with the downward shift of the bond market's interest rate center, non-bank institutions have faced significant allocation pressures, while high-quality assets on the market are relatively scarce. Against this backdrop, REITs have gained market favor due to their higher dividend rates, moderate risk levels, and low correlation with traditional assets.

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Huatai Securities also cautions that the operational status of the underlying assets of REITs is closely linked to the macroeconomic fundamentals, especially for underlying assets such as highways and industrial parks, whose performance is susceptible to fluctuations in the macroeconomic cycle. The specific performance also depends on micro factors such as operational management capabilities, and the impact of the macroeconomic cycle on the real estate and infrastructure sectors often has a certain degree of lag.

Energy Infrastructure REITs Lead in Revenue

Looking at the second-quarter reports, REITs with underlying assets in the energy infrastructure sector have performed relatively well.

Among these products, Penghua Shenzhen Energy REIT topped the list with a revenue of 415 million yuan, and a net profit of 39.987 million yuan during the reporting period.

Among other energy REITs projects, those with revenues exceeding 100 million yuan include CITIC Construction Investment Bank's State Power Investment New Energy REIT, with a revenue of 173 million yuan and a net profit of 28.154 million yuan during the reporting period. In addition, AVIC Jingneng Photovoltaic REIT reported a revenue of 138 million yuan and a net profit of 81.152 million yuan.

From the perspective of distributable amounts, transportation infrastructure REITs have a larger amount available for distribution. The combined distributable amount for nine transportation infrastructure REITs during the reporting period was 690 million yuan, accounting for approximately 48.2% of the industry's total of 1.42 billion yuan. Among them, CICC Anhui Transportation Control REIT, Guojin China Railway Construction REIT, and Ping An Guangzhou Guanghe REIT reported distributable amounts exceeding 100 million yuan during the reporting period, specifically 163 million yuan, 115 million yuan, and 106 million yuan, respectively.In the realm of transportation infrastructure REITs, the performance is analyzed as follows: Guojin China Railway Construction REIT recorded a revenue of 192 million yuan in the second quarter, with a net profit of 38.252 million yuan, ranking high in terms of net profit. Additionally, Ping An Guangzhou Guanghe REIT achieved a net profit of 49.4 million yuan in the second quarter.

According to the statistical analysis by Huafu Securities, in the existing market, transportation REITs hold a dominant position. As of July 17, 2024, there are a total of 41 publicly traded public REITs in China, with a combined issuance scale of 123.44 billion yuan. The types of underlying assets are becoming increasingly rich, including ecological and environmental protection, transportation infrastructure, energy infrastructure, warehousing and logistics, consumer infrastructure, guaranteed rental housing, and park infrastructure. Among them, transportation infrastructure REITs lead in both the number of issues and scale.

However, among the four REITs that suffered net profit losses in the second quarter, the one with the highest net profit loss was CICC Anhui Transportation Control REIT. The fund's revenue in the second quarter was 194 million yuan, but the net profit was -43.446 million yuan. The net profit loss was mainly due to changes in the surrounding road network, road section renovation, and the impact of the rainy season, which led to a decrease in traffic volume and toll revenue.

Huatai Securities analysis indicates that in the second quarter, the toll revenue of various high-speed projects decreased year-on-year in most cases. In June of this year, rainfall in places such as Anhui, Hubei, and Hunan affected the situation. At the same time, due to the free passage of small passenger cars during holidays such as Qingming Festival and Labor Day, and the number of free days being two more than the same period last year, the toll revenue in the second quarter decreased year-on-year and quarter-on-quarter in most cases.

Looking forward to the highway industry, the second-quarter report of Guojin China Railway Construction REIT mentioned that the overall development of the highway industry is relatively stable. According to data from the Ministry of Transport, from January to May 2024, the national cumulative completion of road passenger traffic was 483.67 million person-times, with a year-on-year growth rate of 12.4%; the national cumulative completion of road freight volume was 162.23 million tons, with a year-on-year growth rate of 4.4%.

Park and warehousing logistics REITs are under pressure.

In addition to the transportation and energy sectors, REITs in the consumer infrastructure field performed relatively stable in the second quarter.

Specifically, during the reporting period, Huaxia China Resources Commercial REIT's revenue was 174 million yuan, with a net profit of 11 million yuan. The cumulative distributable amount was 86.66 million yuan. Calculated based on the fundraising scale (corresponding to the issue price of 6.902 yuan per share), the corresponding annualized distribution rate reached 5.05%.

Huaxia Jinmao Commercial REIT achieved a total revenue of 23.2168 million yuan and a distributable amount of 13.3037 million yuan in the second quarter. Calculated based on the fundraising scale, the simple annualized distribution rate reached 5.01%.

According to a research report by CICC, the overall operation of listed consumer infrastructure projects in the second quarter remained relatively stable, mainly due to the project's active operational management capabilities, such as adjusting the tenant mix through business management, attracting customer flow through event planning, and other measures. However, looking at the overall industry environment, since the beginning of the year, China's consumption has shown a trend of recovery, but the momentum of recovery is weakening. The total retail sales of social goods have been declining on a cumulative quarter-on-quarter basis from 5.5% in February to 3.7% in June, and consumer confidence still needs to be boosted.In comparison, park-type and affordable rental housing REITs had relatively weaker revenues in the second quarter.

Disclosures show that the net profit of Huaxia Fund CR Land C-REIT during the reporting period was 2.642 million yuan. The net profit of CICC Xiamen Affordable Housing REIT was 6.927 million yuan. The net profit of Huaxia Beijing Affordable Housing REIT during the reporting period was 8.32 million yuan.

Industry analysts suggest that under the current market conditions, REITs in the park and affordable rental housing sectors are facing certain pressures in terms of revenue growth.

Additionally, in the park-type REITs sector, according to the second-quarter report, Huaan Zhangjiang Industrial Park REIT reported a net loss of 4.927 million yuan during the reporting period; CCB Zhongguancun Industrial Park REIT reported a net loss of 1.496 million yuan.

The aforementioned research report from CICC states that in the second quarter, the revenues of industrial park REITs turned positive on a quarter-over-quarter basis, with Shekou REIT, Dongjiu REIT, and Lingang REIT showing more significant improvements. The decline in operations for the remaining projects has also somewhat moderated. It is anticipated that against the backdrop of a slow macroeconomic recovery, accompanied by the activation of a new round of leases, industrial park REITs may enter a relatively stable period. However, further operational recovery and improvement still await clear signals of a revival in corporate activities.

The secondary market is gradually warming up.

Looking at the trend in the secondary market, public REITs have shown a gradual warming trend this year.

According to statistics from Tianfeng Securities, last week, the China Securities REITs Index rose by 0.62%, the total REITs index increased by 0.73%, the property rights REITs index went up by 0.74%, and the operating rights REITs index climbed by 0.45%.

As of July 24, the total market value of infrastructure public REITs on the Shanghai Stock Exchange was 79.663 billion yuan, with a total transaction amount of 257.079 million yuan on that day; the total market value of infrastructure REITs on the Shenzhen Stock Exchange was 34.239 billion yuan. On July 24, 2024, the total transaction volume of infrastructure REITs on the Shenzhen Stock Exchange was 30.2461 million shares, with a total transaction amount of 104.4454 million yuan.

However, some REITs products have seen significant cumulative declines in the past six months, such as the Harvest JD Logistics Infrastructure REIT with a cumulative decline of 13.07%, and the Huaan Zhangjiang Industrial Park REIT with a cumulative decline of 3.03%.The second-quarter report indicates that the operation of most infrastructure assets is facing certain pressures. Zhongtai Securities advises investors to continue to focus on opportunities brought about by the improvement of the macro environment, policy environment, and the fundamentals of infrastructure asset operations in the future market.

Huafu Securities believes that since March 2024, the overall transaction activity of public REITs has been declining month by month, and the trading sentiment has returned to rationality. The valuation performance of REITs of different asset types has shown some divergence. Currently, the valuation levels of consumer infrastructure, warehousing logistics, and park infrastructure are relatively high, with some even reaching over 90%. However, in comparison, the valuation yields of energy and affordable housing REITs are relatively at a lower historical percentile. There are also park infrastructure REITs and warehousing logistics REITs whose current asset values are considered undervalued, revealing their configuration value.