20140416-DBS_Group-CHINA_PROPERTY_SECTOR_EXPECTEDLY_STRONG_2Q_STILL_ELUSIVE_20页_756kb

报告摘要

DBS Group Research Summary: Equity Analysis - April 16, 2014

Core Content Overview

This report provides an analysis of the property development sector in China, focusing on sales performance, valuation metrics, and investment recommendations for listed developers. The report highlights the mixed performance of developers in the first quarter of 2014, the uncertain outlook for second-quarter sales, and the current market valuations in comparison to historical data.

Main Points

Sales Performance

1Q14 Sales: Listed developers saw a 24% y-o-y decline in sales, while the market as a whole dropped by the same percentage. However, property sales in March showed a 43% m-o-m increase, indicating a potential rebound.
April Sales: The first two weeks of April saw a 7% m-o-m decline, and YTD sales volume for 1Q14 dropped 20% y-o-y, with Tier I cities experiencing the largest decline of 36% due to low inventories and limited new offers.
Sales Target Lock-in Ratios: On average, developers locked in 17% of their 2014 sales targets in 1Q14, compared to 25% in 1Q13. Major developers such as Vanke, Country Garden, Evergrande, and COLI achieved >25% lock-in ratios, while others like BJ Capital Land, Central China, and Fantasia saw <10% lock-in ratios.

Valuation and Market Performance

The sector is currently trading at 5.7x FY14F PE, 0.7x P/BV, and 59% discount to NAV, which is lower than its historical average of 9.5x / 1.1x / 37%.
Despite the weak market sentiment, some stocks are considered attractively valued, including COLI, Franshion, COGO, and Shimao.
The HSI index closed at 22,671.

Key Developers and Their Performance

Tier 1 Players

Company Name	Code	Price (HK$)	Market Cap (HK$bn)	Target Price (HK$)	Recommendation	FY14F PE	12-Month Target (HK$)	Pre-Sales Lock-in Ratio
China Overseas	688 HK	20.15	164.7	29.84	Buy	7.3	29.84	27%
Country Garden	2007 HK	3.32	61.3	6.22	Buy	4.8	6.22	25%
CR Land	1109 HK	16.96	98.9	21.60	Buy	10.4	21.60	20%
Evergrande	3333 HK	3.81	55.3	4.43	Buy	4.7	4.43	8%
Shimao	813 HK	16.42	57.0	25.83	Buy	5.7	25.83	5%

Tier 2 Players

Company Name	Code	Price (HK$)	Market Cap (HK$bn)	Recommendation	FY14F PE	Pre-Sales Lock-in Ratio
Agile Property	3383 HK	6.57	22.9	Buy	4.0	17%
COGO	81 HK	5.05	11.5	Buy	3.4	10%
Franshion	817 HK	2.55	23.4	Buy	6.3	12%
Yuexiu Property	123 HK	1.58	14.7	Buy	6.3	17%

Tier 3 Players

Company Name	Code	Price (HK$)	Market Cap (HK$bn)	Recommendation	FY14F PE	Pre-Sales Lock-in Ratio
BJ Cap Land 'H'	2868 HK	2.83	5.7	NR	2.4	25%
C C Land	1224 HK	1.55	4.0	Hold	5.5	15%
Central China	832 HK	1.98	4.8	Buy	3.4	9%
KWG Property	1813 HK	4.35	12.6	NR	3.5	23%
Shui On Land	272 HK	2.21	17.7	Hold	15.0	13%

Key Insights

Sales Trends: While there was a strong rebound in March, the first two weeks of April showed a decline, suggesting the market is still weak and the sales pick-up may be delayed.
Valuation: The sector is currently undervalued, with some stocks offering attractive valuations despite the lack of near-term catalysts.
Recommendations: The report recommends buying COLI, Franshion, COGO, and Shimao, highlighting their strong fundamentals and valuation potential.
Market Sentiment: Weak buying sentiments and lack of credit support are expected to continue affecting the sector in the short term.

Conclusion

The report outlines a mixed sales performance for the first quarter of 2014, with listed developers outperforming the market despite the overall decline. The sector is undervalued, and while a re-rating is unlikely in the near term, certain stocks are highlighted as good investment opportunities due to their strong fundamentals and current valuations.

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