20150922-DBS_Group-Better_sell-through_in_Tier_II_cities_18页_640kb

China Property Weekly Digest Summary (Issue No. 142)

Core Content Overview

This report provides a detailed analysis of the real estate market in China, focusing on sales performance, new project launches, and inventory levels across Tier I, II, and III cities as of the week of September 22, 2015. It also includes share price performance and peer valuations for major property developers.

Key Market Trends

Overall Sales Performance

• GFA Sold (Gross Floor Area): Increased by 5% week-over-week (w-o-w), driven by a 133% increase in new launches.
• Total Units Launched: 15,000 units in Tier I/II cities.
• Sell-through Rate: Improved to 69% (up from 64% in the previous week).
• YTD Sales Volume: 22% higher compared to 2014 and 1% higher than 2013.
• YTD ASP (Average Selling Price): 8% lower than 2014 levels, but 1% higher than 2013.

Inventory Levels

• Inventory (Weeks of Sales): Dropped to 58 weeks (from 59 weeks in the previous week), which is better than the 2014 average of 77 weeks.
• Rolling 26 Weeks Inventory: Improved across 16 major cities, indicating a more balanced supply and demand.

Weekly Sales Performance by Tier

Tier I Cities

• Total GFA Sold: 996,000 square meters.
• Week-over-Week Change: -2%.
• Year-over-Year (y-o-y) Change: 36%.
• ASP (Average Selling Price): 25,449 RMB/sq m.
• Week-over-Week Change: +4%.
• Year-over-Year (y-o-y) Change: +23%.
• Key Cities:
  • Beijing: GFA sold -13% w-o-w, -4% y-o-y; ASP 28,666 RMB/sq m, -4% w-o-w, +22% y-o-y.
  • Shanghai: GFA sold -7% w-o-w, +67% y-o-y; ASP 24,623 RMB/sq m, +14% w-o-w, +22% y-o-y.
  • Shenzhen: GFA sold 0% w-o-w, +26% y-o-y; ASP 33,152 RMB/sq m, 0% w-o-w, +48% y-o-y.
  • Guangzhou: GFA sold +28% w-o-w, +54% y-o-y; ASP 15,353 RMB/sq m, +6% w-o-w, +2% y-o-y.

Tier II Cities

• Total GFA Sold: 3,354,000 square meters.
• Week-over-Week Change: +6%.
• Year-over-Year (y-o-y) Change: +38%.
• ASP: 10,743 RMB/sq m.
• Week-over-Week Change: 0%.
• Year-over-Year (y-o-y) Change: -3%.
• Key Cities:
  • Tianjin: GFA sold +9% w-o-w, +96% y-o-y; ASP 12,114 RMB/sq m, +6% w-o-w, +4% y-o-y.
  • Wuhan: GFA sold +7% w-o-w, +17% y-o-y; ASP 5,410 RMB/sq m, +8% w-o-w, +43% y-o-y.
  • Chengdu: GFA sold +5% w-o-w, +22% y-o-y; ASP 18,613 RMB/sq m, +5% w-o-w, +22% y-o-y.
  • Ningbo: GFA sold +9% w-o-w, +42% y-o-y; ASP n.a..
  • Qingdao: GFA sold +9% w-o-w, +42% y-o-y; ASP n.a..
  • Dalian: GFA sold 0% w-o-w, +35% y-o-y; ASP 4,900 RMB/sq m, -7% w-o-w, -16% y-o-y.
  • Fuzhou: GFA sold +10% w-o-w, +3% y-o-y; ASP 4,300 RMB/sq m, +0% w-o-w, -4% y-o-y.
  • Nanchang: GFA sold -4% w-o-w, +26% y-o-y; ASP 10,055 RMB/sq m, -5% w-o-w, +2% y-o-y.
  • Hefei: GFA sold -18% w-o-w, -4% y-o-y; ASP 19,800 RMB/sq m, -12% w-o-w, -19% y-o-y.
  • Shijiazhuang: GFA sold -9% w-o-w, -38% y-o-y; ASP 7,300 RMB/sq m, -11% w-o-w, -17% y-o-y.
  • Haikou: GFA sold 0% w-o-w, +7% y-o-y; ASP 5,110 RMB/sq m, -25% w-o-w, -1% y-o-y.
  • Nanning: GFA sold 0% w-o-w, +187% y-o-y; ASP 20,500 RMB/sq m, +13% w-o-w, +86% y-o-y.
  • Kunming: GFA sold +60% w-o-w, -16% y-o-y; ASP 20,800 RMB/sq m, +38% w-o-w, -5% y-o-y.
  • Wenzhou: GFA sold +32% w-o-w, -18% y-o-y; ASP 6,300 RMB/sq m, +21% w-o-w, -2% y-o-y.
  • Sanya: GFA sold 0% w-o-w, +211% y-o-y; ASP 21,344 RMB/sq m, +12% w-o-w, +21% y-o-y.

Tier III Cities

• Total GFA Sold: 1,332,000 square meters.
• Week-over-Week Change: +2%.
• Year-over-Year (y-o-y) Change: +42%.
• ASP: 5,962 RMB/sq m.
• Week-over-Week Change: +3%.
• Year-over-Year (y-o-y) Change: +9%.
• Key Cities:
  • Dongguan: GFA sold 0% w-o-w, +52% y-o-y; ASP 9,623 RMB/sq m, +8% w-o-w, +43% y-o-y.
  • Weifang: GFA sold +72% w-o-w, +97% y-o-y; ASP 4,219 RMB/sq m, +0% w-o-w, +97% y-o-y.
  • Baotou: GFA sold -3% w-o-w, -51% y-o-y; ASP 5,410 RMB/sq m, -8% w-o-w, -43% y-o-y.
  • Xuzhou: GFA sold +21% w-o-w, +55% y-o-y; ASP 21,500 RMB/sq m, +3% w-o-w, +48% y-o-y.
  • Bengbu: GFA sold -5% w-o-w, -23% y-o-y; ASP n.a..
  • Yangzhou: GFA sold +32% w-o-w, +74% y-o-y; ASP 7,700 RMB/sq m, +93% w-o-w, +36% y-o-y.
  • Huizhou: GFA sold 0% w-o-w, +42% y-o-y; ASP 6,700 RMB/sq m, +0% w-o-w, +44% y-o-y.
  • Lianyungang: GFA sold -19% w-o-w, +36% y-o-y; ASP 9,400 RMB/sq m, -15% w-o-w, -13% y-o-y.
  • Shantou: GFA sold 0% w-o-w, +157% y-o-y; ASP 8,604 RMB/sq m, -16% w-o-w, +13% y-o-y.
  • Jiujiang: GFA sold +26% w-o-w, -49% y-o-y; ASP 5,110 RMB/sq m, +13% w-o-w, +37% y-o-y.
  • Shaoguan: GFA sold 0% w-o-w, -44% y-o-y; ASP 5,055 RMB/sq m, +0% w-o-w, -2% y-o-y.
  • Dongying: GFA sold +11% w-o-w, +127% y-o-y; ASP 4,200 RMB/sq m, +11% w-o-w, +127% y-o-y.
  • Huaian: GFA sold -2% w-o-w, +61% y-o-y; ASP 4,337 RMB/sq m, -3% w-o-w, +44% y-o-y.
  • Wuhu: GFA sold +28% w-o-w, +37% y-o-y; ASP 4,100 RMB/sq m, +4% w-o-w, +37% y-o-y.
  • Guan: GFA sold +14% w-o-w, +58% y-o-y; ASP 5,100 RMB/sq m, +35% w-o-w, +46% y-o-y.
  • Zhangzhou: GFA sold +0% w-o-w, +93% y-o-y; ASP 4,100 RMB/sq m, +6% w-o-w, +93% y-o-y.

Share Price Performance and Peer Valuations

Summary of Valuation Metrics

| Company Name | Code | Price (HK$) | Mkt Cap (HK$) | Mkt Trading (US$m) | EPS Growth | PE Ratio | PE Yield | Yield | ROE | ROE Gearing | P/B | Disc/(Prem)% |
|--------------|------|------------|----------------|---------------------|------------|----------|----------|--------|-----|-------------|------|------------|--------------|
| China Overseas* | 688 HK | 24.55 | 242.1 | 81.8 | Buy | 38.96 | (8) | 7 | 7.9 | 7.4 | 2.2 | 2.6 | 17.2 |
| Country Garden* | 2007 HK | 2.77 | 62.6 | 9.5 | Buy | 4.86 | (20) | 8 | 5.2 | 4.8 | 3.6 | 3.9 | 18.2 |
| CR Land* | 1109 HK | 19.38 | 134.3 | 46.0 | Buy | 24.98 | (28) | 16 | 10.6 | 9.2 | 2.6 | 2.5 | 11.0 |
| China Vanke | 2202 HK | 16.68 | 184.3 | 26.9 | Buy | 23.41 | 8 | 17 | 8.9 | 7.6 | 3.6 | 3.9 | 18.2 |
| Dalian Wanda | 3699 HK | 47.05 | 213.0 | 46.8 | NR | n.a. | (41) | 24 | 9.7 | 7.8 | 3.6 | 3.0 | 11.4 |
| Evergrande* | 3333 HK | 4.73 | 68.6 | 53.2 | Hold | 5.35 | (50) | 37 | 9.2 | 6.7 | 10.9 | 2.7 | 5.7 | 7.8 |
| Longfor | 960 HK | 10.02 | 58.4 | 4.8 | NR | n.a. | (19) | 7 | 11.7 | 11.0 | 0.0 | 0.0 | 2.5 |
| Shui On Land* | 272 HK | 1.81 | 14.5 | 4.6 | Hold | 1.97 | (131) | n.a. | n.a. | n.a. | 3.4 | 0.5 | (1.5) |
| Sino-Ocean Land* | 3377 HK | 4.26 | 32.1 | 5.3 | Buy | 6.70 | (21) | 26 | 7.5 | 6.0 | 5.5 | 4.4 | 8.3 |
| Soho China* | 410 HK | 3.07 | 16.0 | 4.9 | FV | 3.60 | (93) | 67 | 47.8 | 28.7 | 9.8 | 1.1 | 0.7 |
| Sunac China | 1918 HK | 4.53 | 15.4 | 13.2 | NR | n.a. | 12 | 23 | 3.4 | 2.8 | 5.1 | 5.3 | 20.0 |
| Yanlord Land^∧ | YLLG SP | 1.045 | 2.0 | 1.4 | Buy | 1.54 | (29) | 44 | 10.2 | 7.0 | 1.3 | 1.4 | 4.6 |
| Yuexiu Property* | 123 HK | 1.31 | 16.2 | 5.1 | Hold | 1.49 | (41) | 16 | 7.9 | 6.8 | 5.5 | 5.3 | 5.7 |

Key Observations

• Mkt Cap: Varies significantly among companies, with China Overseas having the highest at 242.1 HK$.
• Mkt Trading (US$m): Reflects market activity, with CR Land showing the highest at 46.0 US$m.
• EPS Growth: Indicates earnings growth, with Sino-Ocean Land showing the highest at +26%.
• PE Ratio: Reflects valuation, with China Overseas at 38.96 and Sino-Ocean Land at 6.70.
• PE Yield: Shows the relationship between price and earnings, with China Vanke at 8.0 and Sino-Ocean Land at 5.5.
• Yield: Indicates dividend return, with China Vanke at 7.6% and Sino-Ocean Land at 6.0%.
• ROE: Shows return on equity, with Soho China at 47.8% and Sino-Ocean Land at 7.5%.
• ROE Gearing: Reflects leverage, with Soho China at 28.7% and Sino-Ocean Land at 7.0%.
• P/B: Price-to-book ratio, with Soho China at 47.8 and Sino-Ocean Land at 7.5.
• Disc/(Prem) %: Indicates discount or premium to NAV, with Soho China at +10.2% and Shui On Land at -1.5%.

Summary of Key Points

• Sales Trends: Improved sell-through rates and increased new launches contributed to a 5% w-o-w increase in overall GFA sold.
• Inventory: Inventory levels improved, with a 58-week digestion period, better than the 2014 average of 77 weeks.
• ASP: Overall ASP increased slightly, but varied significantly by city.
• Share Price Performance: Share prices and valuations show a mix of growth and stability, with some companies showing Buy recommendations and others Hold or NR (Not Rated).
• Peer Valuations: Companies like China Overseas and Sino-Ocean Land show strong market positions with higher valuations and growth potential.