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报告摘要

China Property Sector Summary (October 15, 2013)

Core Content Overview

This report provides an analysis of the China property sector as of October 15, 2013, with a focus on sales performance, pricing trends, and valuation comparisons. It also highlights the importance of policy clarity in shaping the market outlook.

Key Market Trends

Sales Momentum: Despite tightening credit policies, there was strong sales momentum during the Golden Week, particularly in the mass market segment. Developers such as Yanlord, COLI, and Yuexiu Property showed significant increases in presales.
Sales Growth: The sector saw a 20% y-o-y increase in presales for the first nine months of 2013 (9M13), with developers collectively locking in 77% of their sales targets.
ASP Increase: The average selling price (ASP) for the sector was 12% higher compared to the FY12 average, indicating a shift in demand towards higher-priced properties.
Country Garden's Achievement: Country Garden was the first developer to meet its full year sales target, highlighting its strong market position.

Policy Outlook

Credit Approval Tightening: Banks continued to tighten mortgage loan quotas and increase interest rates, which led to an increase in panic purchases.
Uncertainty: The upcoming Third Plenary Session of the 18th Central Committee in mid-November is expected to provide more clarity on the policy tone, which will significantly impact the sector.

Valuation Analysis

Sector Valuation: The property sector is currently trading at 6.8x FY14 PE, 46% discount to NAV, and 0.9x P/BV, compared to historical averages of 10x PE, 37% discount to NAV, and 1.2x P/BV.
Top Picks: The report recommends focusing on strong players, with COLI and COGO being highlighted as top picks.
Valuation Comparison: The report provides a detailed comparison of valuation metrics across different tiers of developers, with Tier 1 players being more attractive based on PE and P/BV.

Sales Performance Highlights

Developer	13-Sep Sales (RMB Mn)	9M13 Sales (RMB Mn)	Y-o-Y Growth	m-o-m Growth
Vanke	128,510	128,510	33%	2%
COLI	89,007	89,007	19%	78%
Poly CN	88,666	88,666	21%	13%
Evergrande	74,650	74,650	27%	30%
Country Garden	64,700	64,700	119%	235%
CR Land	50,710	50,710	35%	25%
Shimao	48,106	48,106	35%	59%
Greentown	43,600	43,600	34%	20%
Longfor	35,300	35,300	26%	6%
Sunac	32,600	32,600	70%	22%
R&F	29,462	29,462	32%	22%
Sino-Ocean	28,000	28,000	19%	13%
Agile	24,950	24,950	20%	55%
Poly HK	21,100	21,100	23%	5%
KWG	11,937	11,937	36%	26%
SPG	2,482	2,482	16%	21%
Total	864,012	864,012	37%	20%

Valuation Comparison Table

Company Name	11-Oct Price (HK$)	Mkt Cap (HK$bn)	12-m Target (HK$)	EPS Growth (%)	PE 13F x	Discount to NAV (%)
China Overseas	24.35	199.0	26.12	4	10.2	19.8
Country Garden	5.55	102.4	5.94	12	30	57.9
CR Land	23.35	136.1	24.49	(20)	22	38.2
Evergrande	3.65	58.5	4.66	(1)	(8)	58.4
Longfor	13.48	73.3	n.a.	(4)	16	59.4
Shimao Property	20.20	70.1	20.12	(5)	30	60.8
China Vanke 'B'	14.98	165.0	n.a.	24	22	53.9
Agile Property	9.34	32.2	11.37	(19)	12	59.4
COGO	9.78	22.3	12.00	14	36	11.4
Franshion	2.67	24.5	3.40	(8)	27	53.4
Greentown	15.86	34.2	n.a.	(1)	17	49.5
Guangzhou R&F	13.40	43.2	n.a.	(1)	15	69.2
Hopson Dev	10.10	17.5	n.a.	(1)	16	60.9
KWG Property	5.17	15.0	n.a.	(2)	18	72.1
Poly (Hong Kong)	4.94	18.0	n.a.	5	17	70.6
Shui On Land	2.69	21.5	2.70	(78)	25	58.5
Sino-Ocean Land	4.95	29.1	4.50	(30)	19	48.7
Soho China	6.70	32.5	6.17	(67)	26	52.8
Sunac China	5.41	18.0	n.a.	(31)	32	54.7
Yanlord Land	1.25	2.4	1.24	(33)	13	43.0
Yuexiu Property	2.19	20.4	2.90	(32)	37	54.5
Average (Overall)	-	-	-	-	-	54.8

Policy and Market Outlook

The report emphasizes the importance of policy clarity, particularly in relation to the upcoming Third Plenary Session of the 18th Central Committee.
It suggests that investors should focus on strong developers who have demonstrated consistent sales growth and are better positioned to navigate the regulatory environment.
The China Overseas and Country Garden are highlighted as top picks due to their strong performance and valuation advantages.

Conclusion

The China property sector showed strong sales momentum despite tightening credit conditions. Developers such as Country Garden, COLI, and Yuexiu Property led in sales growth and target achievement. The sector is currently trading at a discount to NAV, suggesting potential for value appreciation. The upcoming policy session is a key event to watch, as it could significantly influence the market's future direction. Investors are advised to focus on strong players and monitor policy developments closely.

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