Deutsche Bank Markets Research

Asia Industry Date China 11 February 2014 Property China Property Property Industry Update

Tony Tsang Jason Ching, CFA Research Analyst Research Analyst Continued sales growth should (+852) 2203 6256 (+852) 2203 6205 [email protected] [email protected] present positive catalysts

Strong growth in sales resources should drive continued sales growth Top picks 2014 has begun with inexpensive valuations for the Chinese developers, with China Resources Land Buy the sector NAV discount, PE and PB all close to the '-1SD' level of historical (1109.HK),HKD18.30 ranges, and PBs of selected leaders (like COLI and Vanke) now close to Shimao Property (0813.HK),HKD17.20 Buy historical troughs. We believe that these helped set a low base for performance China Vanke (000002.SZ),CNY7.55 Buy measurements for 2014. Given our expectation of a stable policy environment, China Ovs Grand Oceans Buy the strong projected growth in saleable resources (driven by strong growth in (0081.HK),HKD6.53 new starts in 2013) of the key listed developers should drive continued solid Country Garden Holdings Buy sales growth in 2014 and more valuation re-ratings for the sector, in our view. (2007.HK),HKD4.45 Source: Deutsche Bank We expect 30% saleable resources growth for key listed developers in 2014 In 2012 and 2013, the key listed developers achieved average sales growth of Companies Featured 25% and 32% respectively. With the strong sales performance and resulting COLI (0688.HK),HKD20.75 Buy cash inflows, the listed developers also expanded their development scale in China Resources Land Buy 2012 and 2013, which should help drive further growth in sales in 2014-16. (1109.HK),HKD18.30 According to our analysis, given average new construction starts growth of Shimao Property (0813.HK),HKD17.20 Buy 33% in 2013 among the leading developers we monitored and gathered data China Vanke (000002.SZ),CNY7.55 Buy on, saleable resources are anticipated to grow by about 28% YoY on average, China Ovs Grand Oceans Buy translating into 25% YoY growth in contracted sales in 2014, assuming the (0081.HK),HKD6.53 sell-through rate remains flat YoY. Country Garden Holdings Buy (2007.HK),HKD4.45 We expect sales growth of 25-38% for the leaders in 2014 Franshion (0817.HK),HKD2.46 Buy On our analysis, among the leaders, we expect at least 25% YoY contracted Kaisa (1638.HK),HKD2.48 Buy sales growth in 2014 for COLI, 30% YoY growth for CR Land, 38% for Shimao, Central China Real Estate Buy 30% for Country Garden, and 27% for R&F. The other listed developers with (0832.HK),HKD2.28 expected 2014 sales growth of over 25% are: COGO (30%), CCRE (29%), Kaisa Agile Property (3383.HK),HKD7.09 Hold (28%), and Yuexiu (40%). Developers with a high focus on end-user properties Sunac (1918.HK),HKD4.71 Sell are COLI, CR Land, China Vanke, Shimao, Country Garden, R&F, COGO, Kaisa. Yanlord Land (YNLG.SI),SGD1.12 Sell Source: Deutsche Bank Stable monetary environment in 2014 should support good sales growth For 2014, we expect a GDP growth target of c.7.5% (vs. 7.7% growth in 2013), a CPI control target of less than 3.5% (vs. 2.6% in 2013), and M2 growth of c.12-13% (vs. 14% YoY growth in 2013). Thus, we expect the overall monetary environment to remain favorable for the end-user segments (namely first-time homebuyers and first-time home upgrade) in the commodity residential market; and there should be adequate domestic loan quotas for home mortgages to end-users and for financing to developers building residential properties that target end-users. Together with our expectation of stable government tightening policies (unchanged macro stance with micro flexibility) on the property market, this should make 2014 another strong sales year for developers with good growth in saleable resources that target end-users. Inexpensive valuations + expected positive catalysts = buying opportunities Select developers (like R&F, KWG, CCRE) now offer attractive dividend yields even based on actual dividends in 2012, and this should provide downside support to share prices. As developers’ sales start to pick up after CNY, we see more positive catalysts ahead. Overall, we prefer COLI, CR Land, Shimao, Country Garden, China Vanke and COGO for their end-user focus. We also like Franshion, Kaisa and CCRE on continued restructuring and/or accelerating sales in 2014. We remain cautious on Sunac, Yanlord, and Agile on their high- end, large unit-size focus. Key risks: unexpected economic and policy changes.

______Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 054/04/2013.

11 February 2014

Property China Property

Continued good sales growth to drive re-rating

We expect saleable resources growth of about 30% for the key listed developers

In 2012 and 2013, the key listed developers achieved average sales growth of 25% and 32% respectively. With these strong sales performance figures and the resulting cash inflows, these listed developers also increased their development scale in 2012 and 2013, which should help drive further growth in sales in 2014-16. According to our analysis, based on average new construction start growth of 33% YoY in 2013 among the leading developers that we monitored and gathered data on, saleable resources are anticipated to grow by about 28% YoY on average, translating into 25% YoY growth in contracted sales in 2014, assuming the sell-through rate remains flat YoY.

Among the leaders, we expect at least 25% YoY contracted sales growth in 2014 for COLI, 30% YoY growth for CR Land, 38% for Shimao, 30% for Country Garden, and 27% for R&F.

Figure 1: DB forecasts for saleable resources and sales growth in 2014 2013 saleable 2013 2013 2013 Sell- New starts Projected Projected Expected Expected Implied resources contracted contracted through growth in 2014 saleable growth in Sell-through contracted sales growth YoY (RMBmn) sales (RMBmn) sales growth rate 2013 resources saleable rate in 2014 in 2014 (RMBmn) (RMBmn) resources COGO (HK$) 23,500 17,220 27% 73% 9% 31,043 32% 72% 22,456 30% COLI (HK$) 160,000 138,520 24% 87% 11% 230,280 44% 75% 172,710 25% Yuexiu 22,000 14,634 19% 67% 70% 32,570 48% 63% 20,533 40% C C Land 13,333 9,775 24% 73% 60% 16,697 25% 73% 12,241 25% China Vanke 210,000 170,940 21% 81% 25% 247,678 18% 81% 201,610 18% Central China 21,000 14,003 35% 67% 48% 27,097 29% 67% 18,069 29% Sino-Ocean 61,500 35,800 15% 58% 46% 86,022 40% 50% 43,011 20% KWG 24,000 16,300 34% 68% 25% 32,130 34% 60% 19,278 18% Longfor 85,000 48,120 20% 57% -8% 98,973 16% 57% 56,030 16% C. Garden 137,662 106,000 123% 77% 40% 178,890 30% 77% 137,746 30% Agile 76,204 40,340 22% 53% 65% 91,312 20% 53% 48,338 20% CR Land 95,000 66,300 27% 70% 16% 143,460 51% 60% 86,076 30% Shimao 90,000 67,073 46% 75% 53% 104,667 16% 88% 92,403 38% Evergrande 210,000 100,397 9% 48% 12% 230,087 10% 48% 110,000 10% Poly Property 42,000 26,700 14% 64% 2% 48,508 15% 62% 30,029 12% Kaisa 40,000 23,900 38% 60% 22% 51,171 28% 60% 30,575 28% R&F 82,500 42,229 31% 51% 70% 104,624 27% 51% 53,554 27% Average 1,393,699 31% 66% 33% 28% 25% Source: Company, Deutsche Bank

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11 February 2014 Property China Property

Figure 2: China Property: Contracted sales performance of listed developers in 2012 and 2013 Company Ticker 2012 2012 % % YoY 2013 2013 % % YoY Dec-13 % MoM - % YoY - achieved sales achieved growth – achieved sales achieved growth - sales Dec 13 Dec 13 sales target in 2012 2012 sales target in 2013 2013 Agile 3383 HK 33,070 30,000 110% 5% 40,340 42,000 96% 22% 6,410 50% 7% Aoyuan 3883 HK 5,250 5,000 105% 5% 10,038 8,500 118% 91% 2,064 53% 208% BC Land 2868 HK 13,300 12,000 111% 20% 19,610 20,000 98% 47% 5,180 73% 125% CC Land 1224 HK 7,856 6,807 115% 23% 9,775 8,800 111% 24% 1,459 107% 30% CCRE 832 HK 10,350 9,000 115% 27% 14,003 12,600 111% 35% 2,200 105% 110% China SCE 1966 HK 6,016 4,000 150% 32% 10,819 7,500 144% 80% 645 -35% -20% China Vanke 200002 141,220 133,000 106% 16% 170,940 146,300 117% 21% 10,950 -22% -22% CH COLI 688 HK 111,523 100,000 112% 28% 138,520 120,000 115% 24% 6,760 -33% 20% COGO 81 HK 13,520 13,000 104% 76% 17,218 17,000 101% 27% 1,384 14% 376% C. Garden 2007 HK 47,600 43,000 111% 10% 106,000 62,000 171% 123% 9,300 -45% 69% CR Land 1109 HK 52,200 40,000 131% 45% 66,300 57,000 116% 27% 3,920 -33% -37% Evergrande 3333 HK 92,320 80,000 115% 15% 100,397 100,000 100% 9% 2,017 -72% -74% Fantasia 1777 HK 8,014 7,200 111% 14% 10,174 10,000 102% 27% 2,078 48% 147% Gemdale 600383 34,150 32,500 105% 10% 45,040 42,000 107% 32% 6,040 41% 42% CH Glorious 845 HK 10,930 13,000 84% -18% 7,310 11,000 66% -33% 870 -26% 50% Hopson 0754 HK 11,644 15,000 78% 17% 11,270 15,000 75% -3% 560 27% na Kaisa 1638 HK 17,300 16,500 105% 13% 23,900 22,000 109% 38% 2,800 47% 22% KWG 1813 HK 12,201 12,000 102% 6% 16,300 16,000 102% 34% 1,429 -2% 43% LongFor 960 HK 40,130 39,000 103% 5% 48,120 46,000 105% 20% 3,320 -27% -22% Minmetals 230 HK 5,007 4,000 125% 37% 6,132 6,000 102% 22% 928 148% -1% Poly China 600048 101,739 80,000 127% 39% 125,289 120,000 104% 23% 14,192 37% 46% CH Poly Property 119 HK 23,400 19,000 123% 48% 26,700 26,000 103% 14% 2,600 136% 13% Powerlong 1238 HK 6,500 6,000 108% 19% 9,373 8,000 117% 44% 1,574 -15% 83% R&F 2777 HK 32,200 32,000 101% 7% 42,229 42,000 101% 31% 4,717 51% 57% SZ Inv 604 HK 6,123 6,000 102% 34% 9,000 9,000 100% 47% 1,359 16% 264% Shimao 813 HK 46,097 30,700 150% 50% 67,073 55,000 122% 46% 5,748 1% 51% Sino-Ocean 3377 HK 31,100 27,000 115% 15% 35,800 35,000 102% 15% 2,310 -8% 28% Greenland HK 337 HK 3,008 4,200 72% -6% 3,486 4,000 87% 16% 212 -40% -61% Sunac 1918 HK 31,570 30,000 105% 78% 50,830 50,000 102% 61% 5,240 -22% 12% Yuexiu 123 HK 12,300 10,000 123% 36% 14,634 14,500 101% 19% 577 -20% 25% Average 111% 25% 107% 32% 17% 52% Source: Deutsche Bank

Stable monetary environment in 2014 favorable to developers with good saleable resources growth

For 2014, we expect a GDP growth target of about 7.5% (versus 7.7% growth in 2013) and M2 growth of 12-13% (versus 14% YoY growth in 2013). With these targets, we expect the overall monetary environment to remain favorable for the end-user segments in the commodity residential market – that there would be adequate quotas for mortgages to end-users and for financing to developers building end-user properties. Together with our expected stable government policies on the property market, we look for 2014 to be a strong year for developers with good growth in saleable resources.

Deutsche Bank AG/Hong Kong Page 3

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For more details on our views on government policies on the property market, please refer to our report “China Property: Less policy headwinds for 2014” published on 10 Feb 2014.

Figure 3: China GDP and GDP Growth

Rmb (bn) 70,000 16%

60,000 14%

12% 50,000

10% 40,000 8% 30,000 6%

20,000 4%

10,000 2%

0 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E GDP (RMB bn) GDP Growth (%)

Source: CEIC; Deutsche Bank estimates

Figure 4: China Money Supply (M2)

Rmb (bn) 140,000 30%

120,000 25%

100,000 20% 80,000 15% 60,000 10% 40,000

20,000 5%

0 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Money supply M2 YoY growth

Source: CEIC; Deutsche Bank estimates

Page 4 Deutsche Bank AG/Hong Kong

11 February 2014 Property China Property

Taking a look at valuations

Figure 5: China Prop – Discount to NAV (from 2006) Figure 6: China Prop – Disc to NAV (Mkt cap weighted) 40% 40% 30% 20% 20% 10% 0% 0% -10% -20% -20% -30% -40% -40%

-60% -50% -60% -80% -70% Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13

Sector Avg Discount to NAV Mean +1SD -1SD Sector Avg Disc to NAV (MktCap Wtd) Mean +1SD -1SD

Source: Source: Bloomberg Finance LP, Deutsche Bank Source: Bloomberg Finance LP, Deutsche Bank

Figure 7: China Prop – Sector P/E (From 2006) Figure 8: China Prop – Sector P/E (Mkt cap weighted) 45.0x 40.0x 40.0x 35.0x 35.0x 30.0x 30.0x 25.0x 25.0x 20.0x 20.0x 15.0x 15.0x

10.0x 10.0x

5.0x 5.0x

0.0x 0.0x Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-13 Sep-12 Sep-11 Sep-10 Sep-09 Sep-08 Sep-07 Sep-06 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-13 May-12 May-11 May-10 May-09 May-08 May-07 May-06

Sector Avg P/E Mean +1SD -1SD Sector Avg P/E (MktCap Wtd) Mean +1SD -1SD

Source: Bloomberg Finance LP, Deutsche Bank Source: Bloomberg Finance LP, Deutsche Bank

Figure 9: China Prop – Sector P/B (From 2006) Figure 10: China Prop – Sector P/B (Mkt cap weighted) 6.0x 4.5x 5.0x 4.0x 3.5x 4.0x 3.0x

2.5x 3.0x 2.0x 2.0x 1.5x 1.0x 1.0x 0.5x

0.0x 0.0x Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13

Sector Avg P/B Mean +1SD -1SD Sector Avg P/B (MktCap Wtd) Mean +1SD -1SD

Source: Bloomberg Finance LP, Deutsche Bank Source: Bloomberg Finance LP, Deutsche Bank

Deutsche Bank AG/Hong Kong Page 5

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Figure 11: China Prop – Valuation table DB Trade Report Mkt 12M 11 Feb Target Implied Est. NAV EPS PE(x) Cap Daily T/O Company Ticker Rating Ccy Ccy USDm USDm Price Price Upside NAV Disc 13F 14F 15F 13F 14F 15F Covered COLI 688 HK Buy HKD HKD 21,861 60.17 20.75 31.15 50% 34.6 -40% 2.64 3.18 3.67 7.9 6.5 5.6 China Vanke - A 000002 CH Buy CNY CNY 14,171 138.83 7.55 12.60 67% 15.8 -52% 1.36 1.67 2.00 5.6 4.5 3.8 CR Land 1109 HK Buy HKD HKD 13,755 24.53 18.30 27.27 49% 34.1 -46% 1.69 2.21 2.36 10.8 8.3 7.8 Country Garden 2007 HK Buy HKD CNY 10,588 13.67 4.45 6.50 46% 8.7 -49% 0.49 0.63 0.78 7.1 5.5 4.5 Shimao 813 HK Buy HKD CNY 7,700 17.12 17.20 21.88 27% 31.3 -45% 1.72 2.26 2.93 7.8 5.9 4.6 Longfor 960 HK Buy HKD CNY 7,604 8.98 10.84 17.20 59% 21.5 -50% 1.12 1.34 1.61 7.6 6.3 5.3 CSCI 3311 HK Buy HKD HKD 6,928 8.52 13.82 15.21 10% 15.2 -9% 0.70 0.88 1.07 19.7 15.7 12.9 Evergrande 3333 HK Buy HKD CNY 6,869 21.73 3.32 5.25 58% 7.5 -56% 0.49 0.59 0.71 5.3 4.4 3.7 R&F 2777 HK Buy HKD CNY 4,486 9.92 10.80 18.55 72% 30.9 -65% 1.78 2.38 2.88 4.7 3.6 2.9 SOHO China 410 HK Buy HKD CNY 4,167 5.88 6.11 7.70 26% 12.8 -52% 0.59 0.67 NA 8.0 7.2 NA Sino-Ocean 3377 HK Sell HKD CNY 3,943 4.34 4.20 4.17 -1% 10.4 -60% 0.48 0.61 0.80 6.9 5.3 4.1 Hui Xian REIT 87001 HK Buy CNY CNY 3,212 1.15 3.77 4.40 17% 6.3 -40% 0.22 0.22 0.23 17.4 17.0 16.5 Agile 3383 HK Hold HKD CNY 3,182 9.34 7.09 10.00 41% 16.7 -57% 1.37 1.52 1.71 4.0 3.7 3.2 Franshion 817 HK Buy HKD HKD 2,905 1.93 2.46 4.00 63% 5.7 -57% 0.29 0.34 0.42 8.5 7.2 5.8 Shui On 272 HK Buy HKD CNY 2,414 3.87 2.34 5.01 114% 8.4 -72% 0.49 0.46 NA 3.7 4.0 NA Sunac 1918 HK Sell HKD CNY 2,020 10.66 4.71 4.24 -10% 8.5 -44% 0.89 1.28 1.03 4.1 2.9 3.6 Yuexiu 123 HK Buy HKD CNY 1,959 5.67 1.63 2.60 60% 4.4 -63% 0.16 0.20 0.24 8.0 6.3 5.2 COGO 81 HK Buy HKD HKD 1,921 4.31 6.53 15.16 132% 16.8 -61% 1.45 2.06 2.80 4.5 3.2 2.3 Poly Property 119 HK Buy HKD HKD 1,814 7.26 3.86 7.82 103% 11.2 -65% 0.82 0.97 NA 4.7 4.0 NA Yanlord YLLG SP Sell SGD CNY 1,722 1.88 1.12 1.15 3% 2.3 -51% 0.49 0.59 0.71 10.9 9.1 7.5 E-House EJ US Buy USD USD 1,640 11.54 12.15 15.90 31% 0.0 NA 0.56 0.76 0.94 21.5 16.1 13.0 Kaisa 1638 HK Buy HKD CNY 1,576 3.31 2.48 4.15 67% 6.9 -64% 0.51 0.62 0.76 3.8 3.1 2.5 KWG 1813 HK Buy HKD CNY 1,570 3.93 4.21 6.68 59% 11.1 -62% 0.83 1.09 1.31 3.9 3.0 2.5 Central China 832 HK Buy HKD CNY 716 0.43 2.28 4.37 92% 7.3 -69% 0.49 0.82 0.89 3.6 2.2 2.0 C C Land 1224 HK Buy HKD HKD 571 0.47 1.71 4.87 185% 9.7 -82% 0.35 0.44 0.52 4.9 3.9 3.3 Far East Global 830 HK Buy HKD HKD 495 1.79 1.78 3.28 84% 3.3 -46% 0.05 0.09 0.22 33.7 19.1 8.1 Minmetals 230 HK Buy HKD HKD 417 0.45 0.97 2.00 106% 3.4 -71% 0.28 0.32 NA 3.4 3.0 NA Not Rated China Vanke - B 200002 CH NR HKD CNY 14,171 3.89 12.33 NA NA NA NA 2.50 1.71 1.71 3.8 5.6 5.6 NWCL 917 HK NR HKD HKD 4,595 1.41 4.11 NA NA NA NA 0.34 0.44 0.44 12.1 9.3 9.3 Hopson 754 HK NR HKD HKD 2,168 2.65 7.49 NA NA NA NA 1.16 1.43 1.43 6.5 5.3 5.3 Shenzhen Inv 604 HK NR HKD HKD 1,915 4.24 2.76 NA NA NA NA 0.44 0.48 0.48 6.3 5.8 5.8 Mingfa 846 HK NR HKD CNY 1,610 0.45 2.05 NA NA NA NA NA NA NA Glorious 845 HK NR HKD CNY 1,236 1.38 1.23 NA NA NA NA 0.12 0.15 0.15 8.1 6.6 6.6 Renhe 1387 HK NR HKD CNY 1,131 1.36 0.42 NA NA NA NA NA NA NA Fantasia 1777 HK NR HKD CNY 957 1.04 1.29 NA NA NA NA 0.22 0.26 0.26 4.7 3.8 3.8 BJ North Star 588 HK NR HKD CNY 707 0.20 1.63 NA NA NA NA 0.28 0.33 0.33 4.5 3.9 3.9 Greenland Hong 337 HK NR HKD CNY 604 2.89 4.10 NA NA NA NA 0.22 0.27 0.27 14.4 12.0 12.0 Kong Aoyuan 3883 HK NR HKD CNY 556 0.66 1.55 NA NA NA NA 0.14 0.42 0.42 8.7 2.9 2.9 BC Land 2868 HK NR HKD CNY 408 1.13 3.10 NA NA NA NA 0.60 0.81 0.81 4.0 3.0 3.0 Zhong An 672 HK NR HKD CNY 400 0.45 1.31 NA NA NA NA 0.29 0.72 0.72 3.5 1.4 1.4 Overall average -56% 7.8 6.1 5.3 Source: Deutsche Bank, Company, Bloomberg Finance LP Consensus estimates for companies NR

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Figure 12: China property – valuations (cont.) EPS growth % BVPS PB(x) DPS Dividends yield % Net gearing % Company Ticker 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F 13F 14F 15F Covered COLI 688 HK 15 21 16 13.1 15.9 19.1 1.6 1.306 1.1 0.4 0.5 0.5 2.1 2.2 2.3 25.1 10.4 0.9 China Vanke - A 000002 CH 19 23 20 7.0 8.4 10.2 1.1 0.894 0.7 0.2 0.2 0.3 2.7 3.3 4.0 37.8 37.3 34.3 CR Land 1109 HK 36 31 7 13.2 15.1 17.1 1.4 1.215 1.1 0.4 0.4 0.4 1.9 1.9 1.9 57.6 46.4 35.5 Country Garden 2007 HK 25 30 23 2.5 2.9 3.4 1.4 1.209 1.0 0.2 0.2 0.3 5.2 6.8 8.5 55.6 49.9 43.3 Shimao 813 HK 36 31 29 11.8 13.6 16.1 1.1 0.987 0.8 0.4 0.4 0.4 2.5 2.5 2.5 69.1 52.5 47.8 Longfor 960 HK 9 20 20 6.4 7.5 8.8 1.3 1.130 1.0 0.2 0.3 0.3 2.7 3.2 3.8 55.1 46.7 36.3 CSCI 3311 HK 24 25 22 4.1 4.9 5.9 3.3 2.808 2.4 0.2 0.2 0.2 1.4 1.4 1.4 30.5 31.5 25.7 Evergrande 3333 HK 17 20 21 3.0 3.4 3.9 0.9 0.758 0.7 0.2 0.2 0.3 7.7 9.3 11.3 79.1 74.1 67.7 R&F 2777 HK 13 34 21 9.5 11.2 13.3 0.9 0.755 0.6 0.7 0.7 0.8 8.3 8.5 8.9 95.7 76.0 5.9 SOHO China 410 HK 14 12 NA 5.6 6.5 NA 0.9 0.735 NA 0.3 0.3 NA 5.4 5.4 NA -72.5 -65.3 NA Sino-Ocean 3377 HK 16 29 30 6.7 7.1 7.7 0.5 0.463 0.4 0.2 0.2 0.2 6.1 7.0 7.5 49.9 46.8 44.9 Hui Xian REIT 87001 HK 38 2 3 5.4 5.3 5.2 0.7 0.709 0.7 0.2 0.2 0.2 6.3 6.4 6.6 -24.5 -31.0 NA Agile 3383 HK 3 11 13 9.6 10.7 12.0 0.6 0.517 0.5 0.4 0.4 0.5 7.2 7.7 8.3 55.9 58.5 59.2 Franshion 817 HK 51 17 24 3.4 3.7 4.2 0.7 0.657 0.6 0.1 0.1 - 3.3 3.7 0.0 34.1 12.7 -11.5 Shui On 272 HK 55 (6) NA 6.5 7.4 NA 0.3 0.249 NA 0.1 0.1 NA 7.1 7.1 NA 42.2 35.0 NA Sunac 1918 HK 11 44 (20) 4.3 5.4 6.3 0.9 0.679 0.6 0.2 0.2 0.2 4.1 5.4 6.0 168.6 152.6 73.8 Yuexiu 123 HK (13) 27 21 2.5 2.6 2.8 0.5 0.486 0.5 0.1 0.1 0.1 5.5 5.5 5.5 66.8 63.5 58.0 COGO 81 HK 56 42 36 4.9 6.8 9.4 1.3 0.963 0.7 0.2 0.2 0.2 2.3 3.1 3.1 8.8 -65.3 -106.3 Poly Property 119 HK 49 19 NA 8.4 9.5 NA 0.5 0.408 NA - - NA 0.0 0.0 NA 82.6 58.7 18.9 Yanlord YLLG SP 9 20 21 8.8 9.2 9.8 0.6 0.579 0.5 0.1 - - 1.8 0.0 0.0 45.8 48.4 42.4 E-House EJ US 34 24 5.8 6.1 6.6 2.1 1.985 1.8 0.2 0.2 0.2 1.6 1.6 1.6 -28.6 -24.7 -20.3 Kaisa 1638 HK 66 20 23 3.5 4.2 5.1 0.6 0.460 0.4 - - - 0.0 0.0 0.0 84.1 67.3 53.1 KWG 1813 HK 6 30 21 6.0 6.8 7.9 0.6 0.481 0.4 0.2 0.2 0.2 6.7 6.7 6.7 51.8 23.7 11.5 Central China 832 HK 66 66 9 2.6 3.3 4.1 0.7 0.532 0.4 0.1 0.2 0.2 7.8 10.3 13.9 39.9 32.6 -22.3 C C Land 1224 HK 76 26 17 5.6 5.9 6.4 0.3 0.287 0.3 0.1 0.1 - 2.9 3.5 0.0 34.7 12.4 -22.0 Far East Global 830 HK 77 136 0.5 0.6 0.7 3.3 2.914 2.5 - - - 0.0 0.0 0.0 -28.8 -23.0 -16.8 Minmetals 230 HK 52 14 NA 2.4 2.7 NA 0.4 0.362 NA 0.0 0.0 NA 1.7 2.0 NA 29.4 28.0 NA Not Rated China Vanke - B 200002 CH 6 (32) - 12.4 14.8 17.7 0.8 0.7 0.5 0.6 0.6 0.6 5.7 5.7 5.7 37.8 37.3 34.3 NWCL 917 HK 19 29 - 6.0 6.8 6.8 0.7 0.6 0.6 0.1 0.1 0.1 1.9 1.9 1.9 26.8 26.9 10.3 Hopson 754 HK 26 23 - 24.7 26.3 26.3 0.3 0.3 0.3 0.0 0.0 0.0 0.1 0.5 0.5 78.7 68.2 59.2 Shenzhen Inv 604 HK 4 9 - 5.3 5.1 5.1 0.5 0.5 0.5 0.1 0.2 0.2 5.4 5.6 5.6 NA NA NA Mingfa 846 HK NA NA NA NA NA NA NA NA NA NA NA NA Glorious 845 HK (36) 24 - 2.5 2.7 2.7 0.4 0.4 0.4 - 0.0 0.0 0.0 0.2 0.2 82.3 77.9 75.9 Renhe 1387 HK NA NA NA NA NA NA NA NA NA NA NA NA Fantasia 1777 HK 9 22 - 1.5 1.6 1.6 0.7 0.6 0.6 0.1 0.1 0.1 5.5 6.4 6.4 104.4 94.3 NA BJ North Star 588 HK 47 18 - NA NA NA NA NA NA NA NA NA Greenland Hong 337 HK (85) 20 - 3.5 3.7 3.7 0.9 0.9 0.9 0.0 0.0 0.0 0.8 1.0 1.0 NA 48.6 NA Kong Aoyuan 3883 HK (36) 200 - 2.8 3.1 3.1 0.4 0.4 0.4 0.1 0.1 0.1 4.1 8.3 8.3 66.9 40.8 1.6 BC Land 2868 HK 3 35 - 4.2 5.6 5.6 0.6 0.4 0.4 0.2 0.3 0.3 9.1 10.6 10.6 NA 108.1 43.1 Zhong An 672 HK NA 148 - 2.7 3.5 3.5 0.4 0.3 0.3 0.0 0.1 0.1 3.9 7.8 7.8 74.6 87.3 93.1 Overall average 20 32 15 0.9 0.8 0.7 4.0 4.6 4.9 49.9 43.0 27.3 Source: Deutsche Bank, Company data, Bloomberg Finance LP consensus estimates for companies NR

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11 February 2014 Property China Property

Appendix 1

Important Disclosures

Additional information available upon request

For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Tony Tsang/Jason Ching

Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total 450 55 % share-holder return (TSR = percentage change in 400 share price from current price to projected target price 350 300 38 % plus pro-jected dividend yield ) , we recommend that 250 investors buy the stock. 200 150 27 % Sell: Based on a current 12-month view of total share- 100 22 % 7 % 17 % holder return, we recommend that investors sell the 50 stock 0 Buy Hol d Sel l Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Companies Covered Cos. w/ Banking Relationship Notes: Asia-Pacific Universe

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were: Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12- month period Sell: Expected total return (including dividends)

of -10% or worse over a 12-month period

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11 February 2014 Property China Property

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