China / Hong Kong Industry Focus China Property Sector
Refer to important disclosures at the end of this report
DBS Group Research . Equity 19 Jul 2018
1H18 results preview: Interim results likely to serve as positive catalysts HSI: 28,117
Most developers likely to post double-digit core ANALYST earnings growth; high overall dividend yield but not Danielle WANG CFA, +852 2820 4915 expecting any surprises [email protected] Ken HE CFA, +86 21 6888 3375 Expect gearing to be higher than end-2017, and funding [email protected] cost to be higher as well Carol WU +852 2863 8841 Most are likely to maintain their presales targets except [email protected] Jason LAM +852 2971 1773 for China Jinmao (817 HK) and Shui On Land (272 HK) [email protected] Prefer Shimao (813 HK), Evergrande (3333 HK), and Country Garden (2007 HK) Top picks Expect decent core earnings growth with strong growth in top line, but higher net debt ratio and funding costs. Overall, most T arget Mk t F Y19F of the developers are likely to enjoy double-digit growth in core Price Price Rec Cap PE earnings. Evergrande (3333 HK), Country Garden (2007 HK), HK$ HK$ US$bn x Aoyuan (3383 HK), CIFI (884 HK), Longfor (960 HK), CR Land Country Garden (1109 HK), KWG (1813 HK), and GZ R&F (2777 HK) are likely to 12.52 20.65 BUY 34.8 4.0 (2007 HK) report over 30% y-o-y growth in core earnings with stable gross Evergrande margins. Although some investors are expecting new revenue 20.40 40.51 BUY 34.4 4.4 booking method under IFRS 15 starting from 2018 will (3333 HK) Shimao Property accelerate developers’ revenue book and in turn help earning 21.15 28.77 BUY 9.2 5.5 growth, our discussions with developers indicate that most of (813 HK) them expect limited impact on their earnings. This is due to (1) Source: Thomson Reuters, DBS Bank (Hong Kong) Limited (“DBS HK”) companies are not well prepared to provide sufficient support documents for construction progress; and (2) different auditors have different interpretation of the accounting rule.
Most developers to maintain sales targets despite a decent hit- rate in 1H18. Major listed developers have locked in on average 49% of their full-year sales targets, which is lower than 56% achieved in 1H17. China Jinmao and Shui On Land are likely to revise up targets, since their 1H18 lock-in ratios have respectively hit 78% and 114%, while most other developers are likely to maintain their current targets given the uncertain market outlook in 4Q18. We are expecting developers to report a higher interim net debt ratio compared to end-FY17, together with higher funding cost. Given the tightening credit environment, we do not expect developers to surprise the market by lifting dividend payout ratio or announcing a special dividend.
Prefer Shimao (813 HK), Evergrande (3333 HK), and Country Garden (2007 HK). In 2015 when RMB witnessed an unexpected sharp depreciation, the China property sector traded at the lowest forward PE of 4.5x. The sector is now trading at 6.1x FY18F PE and 4.6x FY19F PE, which is not far from the trough. FY18E/FY19E sector average dividend yield reached 6.0%/7.3%. We prefer names with sufficient landbank, able to leverage on partnerships, strong YTD presales, and disciplined landbanking strategy along with financing capability. We like Shimao, Evergrande, COLI, Country Garden, and CR Land. In terms of valuation, Country Garden, Evergrande and Shimao are our top picks.
ed-JS / sa-AH / CS
Industry Focus China Property Sector
Interim results trend
Company Net debt level 1H18 revenue expectation Expected Expected Gross margin Expected net compared with end-17 yoy revenue gross margin v s F Y17 profit yoy growth growth
Agile 3383 HK ↑ to c. 80% 45% of full year ↑ >37% → ↑ ↑ CIFI 884 HK ↑ but <80% 35% yoy growth ↑ ↑ Stable at 27% → ↑ ↑ Central China 832 HK ↑ Slight increase ↑ c. 25% → ↑ Longfor 960 HK ↑ but <70% 30% of full year ↑ ↑ c. 34% → ↑ COLI 688 HK ↓from 1Q18 >40% but <50% of full year ↑ 32% ↑ ↑ CR Land 1109 HK ↑, but <50% >40% of full year ↑ ↑ >40% ↑ ↑ ↑ Shimao 813 HK ↑, but <65% up 15-20% y-o-y ↑ >30% ↑ ↑ KWG 1813 HK ↑ to c. 70% >Rmb10bn ↑ ↑ c. 35% → ↑ ↑ Guangzhou R&F 2777 HK ↑ from end-17's 173% 35-40% of full year delivery ↑ ↑ c. 38% → ↑ ↑ Evergrande 3333 HK ↓<140% c. Rmb300bn ↑ ↑ >30% ↑ ↑ ↑ SOHO* 410 HK ↓<50% rents up 10% y-o-y ↑ 75-80% ↑ ↑ Yanlord YLLG SP → at c. 50% >Rmb12bn ↑ 45+% → ↑ Country Garden 2007 HK ↑ but <70% 30% of full year ↑ ↑ c. 25-27% →↑ ↑ ↑ Yuexiu 123 HK ↑ to c. 80% 40% of full year ↓ c.25% → → Yuzhou 1628 HK ↑ to c. 80% >20% yoy growth ↑ c. 32% → ↑ China SCE 1966 HK ↑ to 80%-85% 30% of full year ↑ 30-32% ↓ ↑ ↑ Aoyuan 3883 HK ↑ 60%+ >Rmb10bn ↑ ↑ 26-27% → ↑ ↑ Logan 3380 HK <70% 30% of full year ↑ 36-37% →↑ ↑ Times 1233 HK ↑, but 70% 30% of full year ↑ 26-28% →↑ ↑ ↑↑ means over 30% growth
Source: DBS. HK
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Industry Focus China Property Sector
Results announcement dates
Company Company Date in 2017 Date in 2018 Jinmao investment 6139 HK 8/7/2017 8/14/2018 China Jinmao 817 HK * 8/8/2017 likely 8/28/2018 CIFI 884 HK 8/9/2017 8/15/2018 Yuexiu REIT 405 HK 8/9/2017 8/2/2018 Logan Property 3380 HK 8/10/2017 Mid-Aug COGO 81 HK * 8/10/2017 8/22/2018 Yanlord YLLG SP * 8/15/2017 2nd week of Aug (13 or 14 Aug) Longfor 960 HK 8/16/2017 8/21/2018 China Aoyuan 3883 HK 8/17/2017 8/20/2018 Beijing Capital Land 2868 HK 8/18/2017 8/24/2018 COLI 688 HK * 8/21/2017 8/23/2018 Joy City 207 HK 8/21/2017 8/20/2018 SOHO China 410 HK * 8/22/2017 8/17/2018 R&F 2777 HK 8/22/2017 8/24/2018 Yuzhou 1628 HK 8/22/2017 8/24/2018 CR Land 1109 HK * 8/23/2017 8/20/2018 Sino Ocean 3377 HK * 8/24/2017 8/23/2018 Vanke B200002 * 8/24/2017 8/20/2018 Red Star 1528 HK 8/28/2017 8/27/2018 Agile 3383 HK * 8/28/2017 last week of Aug Evergrande 3333 HK * 8/28/2017 8/28/2018 Shimao 813 HK * 8/29/2017 8/28/2018 Yuexiu 123 HK * 8/13/2018 Central China 832 HK * 8/30/2017 8/22/2018 Sunac 1918 HK 8/30/2017 Likely 8/31/2018 Country Garden 2007 HK * 2H Aug 8/21/2018 KWG 1813 HK End Aug 2nd week of Aug China SCE 1966 HK 8/23/2018 Color Life 1778 HK Around Aug 20, 2018 Greentown Services 2869 HK 8/24/2018 A-Living 3319 HK 8/9/2018
CG Services 6098 HK 8/22/2018 * DBS HK Coverage
Source: DBS HK
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Industry Focus China Property Sector
Most developers are on track to exceed sales targets this year
1 2 3 3> 6M17 Targeted growth 6M18 yoy growth 2>1? 6M18 lock in lock in? Likelihood to achieve target Large cap COLI 688 HK 25% 18% FALSE 52% FALSE Challenging CR Land 1109 HK 20% 32% TRUE 20% FALSE Might Vanke 2202 HK 13% 10% FALSE 51% FALSE Challenging CG 2007 HK 45% 43% FALSE 52% FALSE Challenging Evergrande 3333 HK 10% 25% TRUE 55% TRUE Likely Longfor 960 HK 28% 5% FALSE 49% FALSE Challenging Sunac 1918 HK 24% 76% TRUE 43% TRUE Likely Large cap average 24% 22% 46%
Mid cap Agile 3383 HK 23% 16% FALSE 43% FALSE Challenging BJ Cap Land 2868 HK 34% 47% TRUE 48% TRUE Likely China Jinmao Hldgs 817 HK 59% 198% TRUE 78% TRUE Likely CIFI 884 HK 35% 40% TRUE 47% TRUE Likely Future Land 1030 HK 42% 94% TRUE 53% TRUE Likely Greentown 3900 HK 14% 7% FALSE 40% FALSE Challenging R&F 2777 HK 59% 47% FALSE 44% FALSE Challenging KWG 1813 HK 71% 82% TRUE 50% FALSE Might Logan 3380 HK 52% 84% TRUE 54% TRUE Likely Shimao 813 HK 39% 60% TRUE 52% TRUE Likely Sino-Ocean 3377 HK 42% 48% TRUE 45% TRUE Likely Yuexiu 123 HK 35% 40% TRUE 51% TRUE Likely Mid-cap average 40% 51% 50%
Small cap Aoyuan 3883 HK 60% 144% TRUE 55% TRUE Likely CCRE 832 HK 48% 82% TRUE 56% TRUE Likely SCE 1966 HK 50% 34% FALSE 42% TRUE Might COGO* 81 HK 27% 54% TRUE 61% TRUE Likely Greenland HK 337 HK 33% -6% FALSE 38% FALSE Challenging Poly HK 119 HK 6% 9% TRUE 60% TRUE Likely Powerlong 1238 HK 67% 80% TRUE 47% TRUE Likely Shui On Land* 272 HK 15% 212% TRUE 114% TRUE Likely Times 1233 HK 32% 53% TRUE 47% TRUE Likely Yuzhou 1628 HK 49% 0% FALSE 36% FALSE Challenging Small cap average 39% 66% 49%
Average (Overall)# 36% 50% 49% Source: Company, DBS HK
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Industry Focus China Property Sector
Interim results preview — Key things to watch CIFI (884.HK) CIFI’s fast land acquisition pace in 1H18 is positive to support growth. How is the balance sheet holding up? Where is the Agile (3383.HK) funding from? Does management expect tightening credit What is the impact of Hainan’s policy tightening? environment to impact CIFI’s long term growth plans? What is the progress of refinancing and repayment of short What level will margins be maintained at? term debt? Saleable resources in 2H18 and the management's view on Agile has entered a couple of new cities in 2017 and 1H18. growth in 2018 and 2019. How did Agile do in the new markets so far? What is the progress of strategic sizeable landbanking from Land acquisition plans for 2H18 primary land development? Will the company be able to maintain >30% core earnings Central China RE (832.HK) growth with more projects acquired via partnerships? 1H18 presales has improved significantly. What are the What is the status of property management company reasons behind this? Can sales momentum continue? spinoff? Any potential change in shareholding structure? What is the expected earnings contribution from asset-light China Overseas Grand Oceans (81 HK) projects in the coming two years? After the latest rights issue, will COLI continue to raise its Central China is facing two sets of changes to accounting stake in COGO through other sources? Based on the route methods. What is the expected net impact on FY18 and taken by peers, will privatisation of COGO be a possible FY19 earnings? scenario in the future? What is the company’s 2H18 sales target and planned saleable resources to be launched? China Vanke (2202 HK/000002 CH) Is there any budget/target for land acquisition in 2018? Will What is the estimated saleable resources to be launched in the company look to enter other new cities? How many 2H18? What will the pace of launch be like in 2H18? cities will the company be entering in the medium term? Will the company accelerate its construction pace to drive What is the outlook for tier-3 cities? Any impact from earnings growth? pledged supplementary lending (PSL) tightening? Has the The company has recently been quite aggressive in the company witnessed any slowdown recently? acquisition of retail malls and logistic assets. What is the What is the company’s margin trend going forward? rationale behind this and are there any new targets for these new businesses? Are there any updates on long-term rental housing segment? Any timeline on the spin-off of new businesses – such as the company’s property management business? When can potential synergies with Shenzhen Metro be realised? Are there any updates on Anbang? Is Anbang looking to dispose its stake in the company? Any timetable for H-share placement?
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Industry Focus China Property Sector
China Overseas (688 HK) CR Land (1109 HK) Will management raise full year sales target as in the past? Land acquisition plans for 2H18 and any plans to catch up in What is the key performance requirement for the new share terms of scale? Growth plans in 2018 and 2019? option scheme? When can we expect the second batch of Any plans to reform incentive system? share option scheme? What is the company's margin trend? Any hedging for existing offshore debt? What is the expected impact on P/L and B/S? We have heard that the company is considering buying standalone shopping malls. Will this be a new earnings Any updates on the company’s new businesses? driver? Given the heated land market, will the company consider
M&A as a key land acquisition method going forward? Will the company consider pursuing other land replenishment Evergrande (3333.HK) methods? What is the status of A-share listing approval? Any updated Will the company be able to maintain its leading position in timeline? profit generation? After successful deleveraging and margin enhancement, What are the KPIs for the senior management team? What what are the other areas of improvement? is the key evaluation criteria? How is Hainan project doing after local tightening? What is the management‘s view on new investments in the China Jinmao (817 HK) tech sector? What is the strategy? Will top management continue to buy shares from the open market? Is there a cap on management’s shareholding? Logan (3380 HK) New sales target for the full year? What is the status of Greater Bay Area’s development plan? Net gearing target? Any room for further share buybacks? Any insights on that front? How is the primary land market? Launch schedule for land Will the company consider spinning off the property sales in 2H18? What is the pricing trend? management business? What is the margin on those projects with synergy from What is the progress of redevelopment projects? primary land and secondary development? What is the strategy to address the current tightening credit What is the company’s land acquisition strategy? environment? Any further plans in SOE mixed-ownership reform? Will China Jinmao’s financials continue to consolidate into Longfor (960 HK) Sinochem’s P/L? Can we expect no further constraints from Does Longfor consider 2018 and 2019 to be the Sinochem on revenue/earnings booking? opportunities to exceed peers in land bank and presales Any updates on Changsha’s primary land business phase II? growth? What are the expected margins and growth in 2018 and 2019? Country Garden (2007.HK) Any updates on commercial and rental housing businesses? Will deliveries in 2018 and 2019 keep pace with presales growth? Will management continue to increase dividend payout ratio? What is the share buyback plan? What level of presales is the ceiling in management’s view? What is the outlook on Tier 3/4 markets after PSL slowdown? There have been reports about project quality, ceasing to purchase land in Tier 3/4 cities, suspending cash outflow, etc. Are these true? And what are the reasons behind the reports? What is the expected growth in 2019?
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Industry Focus China Property Sector
Jinmao Investments (6139 HK) Sino-Ocean Land (3377 HK) Is the ongoing hotel recovery sustainable? What is the What is the launch schedule in 2H18? Will the potential outlook on hotels’ F&B businesses? construction suspension in Jing-Jin-Ji in 4Q18 be similar to 4Q17? What is the outlook of the Shanghai office market? What is the company’s land banking strategy in 2018? Will Are there any plans for the company to deal with the it raise its attributable proportion at the project level? potential currency mismatch? Any hedge for existing offshore debt? What is the expected Any acquisition plans? impact on P/L and B/S? How is the new asset-light business doing? Any update on When will synergies with China Life materialise? long-term rental housing business? Sino-Ocean Capital was quite active in acquiring cold chain Any updates on tapping into onshore REITs? logistics assets. What is the investment strategy for Sino- Is the management relatively independent or will the Ocean Capital? What kind of scale can we expect over the company’s growth be affected by China Jinmao’s greater medium term? focus on residential areas? Any update on asset-light strategy for commercial property business? Shimao Property (813 HK) Can we expect further synergies with China Huarong or Will the company raise its full year sales target? What is the Yupei? Is there any guidance on the timeline? launch schedule for 2H18? Any incremental saleable Any update regarding the company’s senior housing resources in 2H18 given accelerated land banking in 1H18? business? What kind of scale can we expect for the share buyback? Any update on the cooperation with Anbang? Any hedges for existing offshore debt? What is the expected Any updates on the share option scheme and potential impact on P/L and B/S? further cooperation with Swire? What is the company’s land acquisition strategy in 2H18? How does the company foresee its margin trend going SOHO China (410 HK) forward? Is the new incentive scheme doing well in regions Can we expect to see further disposal of assets? outside Fujian? What is the organic growth for traditional rental business, Any updates on the commercial property business? How is after the implementation of profit-sharing scheme at the the asset-light hotel business model going? is there any project level? interaction between the company and its A-share subsidiary? What kind of dividend policy can we expect without asset disposals?
Any update on the potential spin-off of 3Q business? Shui On Land (272.HK) Any impact from the new accounting rule – IFRS16 on the Management’s view on the Shanghai property market asset light business, such as in 3Q? Any plans for further asset disposals this year? Any update on the development of 3Q business and mid- What is the company’s long-term plan for business focus term target? Any criteria for the project/city to tap into? and expansion? What is the profitability of the business or early projects? What is the schedule of debts due?
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Industry Focus China Property Sector
Yuzhou (1628 HK) Yuexiu REIT (405 HK) Will new launches pick up pace, given its presales lock-in What is the outlook for office sector in Guangzhou, and the ratio of 35% in 1H18? wholesale mall? What are the plans to refinance its onshore bond puttable Latest performance of hotel and serviced apartments? What and offshore bond due? What is the expected funding cost? is the latest performance for Wuhan project that was acquired in late-2017? What is the status of M&As? Are there any plans for the company to deal with the How is Coastal Greenland’s integration progressing? potential currency mismatch? What is the status of introducing a new incentive plan? Any disposal plans?
Yuexiu property (123 HK) Yanlord (YLLG.SP) Any timetable for asset injection from parentco and Does the company expect presales to pick up in 2H18 or a Guangzhou Metro? Will this bring incremental saleable loosening in presales permit approvals? And what is the resources in 2H18? How will the acquisition be funded? outlook for 2019? Can we expect asset injection to become a sustainable land Any changes in land acquisition plans and budget for this banking channel for the company? year? Any other land banking strategy in Greater Bay area? The company seems to have brought in new staff and Any potential to raise sales target? What is the launch pace formed new strategies to accelerate asset turn. What are the and saleable resources in 2H18? strategic plans? Margin trend? Will the company consider a dual listing in Hong Kong? Or What is the latest update on C-REIT? will the company consider privatisation given the current attractive valuation? Any plan for disposal of other assets?
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Industry Focus China Property Sector
Valuation comparison
3-mth daily Net Disc/ 18-J ul Mk t trading 12-m EPS gth PE PE Yield Yield ROE ROE Gearing P/Bk NAV (Prem) Price Cap v alue Recom target 18F 19F 18F 19F 18F 19F 18F 19F F Y17A 18F to NA V Company Name Code HK$ US$bn US$m HK$ % % x x % % % % % x HK$ % Large cap China Overseas* 688 HK 24.3 34.0 53.8 BUY 34.32 (8) 26 7.1 5.6 3.9 5.0 13.4 15.2 27.1 0.9 34.7 30.1 CR Land* 1109 HK 27.2 24.1 42.3 BUY 34.50 7 18 7.6 6.5 4.5 5.3 16.3 17.3 35.9 1.2 34.2 20.5 China Vanke 'H'* 2202 HK 25.0 37.3 32.9 BUY 39.18 22 24 6.9 5.6 5.1 6.4 23.7 24.7 8.8 1.5 33.8 25.9 Country Garden* 2007 HK 12.5 34.8 103.5 BUY 20.65 36 56 6.2 4.0 5.3 8.3 35.0 42.1 56.9 1.9 20.6 39.1 Evergrande* 3333 HK 20.4 34.4 66.2 BUY 40.51 84 18 5.1 4.4 16.2 11.5 37.8 38.9 183.7 1.9 40.2 49.2 Longfor* 960 HK 20.6 15.6 14.0 BUY 25.63 (7) 28 8.4 6.6 4.8 6.1 16.3 18.8 47.7 1.3 28.7 28.3 Sunac China 1918 HK 25.7 14.4 73.8 NR n.a. 16 62 6.8 4.2 3.1 4.6 30.9 30.2 256.7 1.7 n.a. n.a. A v erage 22 33 6.9 5.3 6.1 6.7 24.8 26.7 88.1 1.5 32.2 Mid cap Agile Property* 3383 HK 11.9 6.0 17.3 BUY 18.57 22 26 5.3 4.2 8.5 10.6 16.3 18.1 96.0 0.8 19.0 37.3 BJ Cap Land 'H' 2868 HK 3.4 0.4 2.0 NR n.a. 36 26 3.0 2.4 9.4 11.9 n.a. n.a. 173.1 n.a. n.a. n.a. China Jinmao Hldgs* 817 HK 3.8 5.6 16.1 HOLD 3.20 15 37 9.6 7.0 4.2 5.7 11.1 13.7 73.3 1.1 4.6 18.0 CIFI Holdings 884 HK 4.8 4.7 15.7 NR n.a. 11 30 5.3 4.1 6.5 8.4 24.3 25.6 70.0 1.1 n.a. n.a. Future Land 1030 HK 6.6 5.0 22.9 NR n.a. 19 35 7.0 5.2 4.7 6.5 31.1 30.5 100.4 1.9 n.a. n.a. Greentown 3900 HK 10.0 2.8 8.2 NR n.a. 32 8 8.3 7.7 2.3 2.6 6.9 6.7 75.3 0.6 n.a. n.a. Guangzhou R&F 2777 HK 14.3 1.9 15.0 NR n.a. (53) 23 3.9 3.2 10.4 12.5 17.5 19.0 179.9 0.6 n.a. n.a. Kaisa Group 1638 HK 2.8 2.2 6.5 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 300.0 n.a. n.a. n.a. KWG Property 1813 HK 8.7 3.5 16.0 NR n.a. 27 29 4.9 3.8 6.9 8.8 17.7 19.6 67.9 0.7 n.a. n.a. Logan Property* 3380 HK 10.0 7.0 14.8 BUY 12.13 10 31 6.5 5.0 6.0 7.9 31.2 33.8 83.9 1.9 15.2 33.9 Shenzhen Inv 604 HK 2.8 2.9 6.6 NR n.a. (42) 17 7.5 6.5 6.4 7.2 8.5 8.3 22.0 0.5 n.a. n.a. Shimao Property* 813 HK 21.2 9.2 21.4 BUY 28.77 17 21 6.6 5.5 6.1 7.4 15.2 16.7 63.4 1.0 30.9 31.5 Sino-Ocean Land* 3377 HK 4.4 4.3 6.7 BUY 6.68 (7) 22 5.9 4.8 7.0 8.5 9.4 10.7 61.8 0.5 8.9 50.7 Yanlord Land*^ YLLG SP 1.5 2.2 3.1 BUY 2.27 10 16 4.0 3.4 5.0 5.8 14.6 15.0 50.8 0.5 3.6 59.1 Yuexiu Property* 123 HK 1.4 2.3 8.0 BUY 2.08 6 25 6.3 5.1 6.3 7.9 7.2 8.5 72.8 0.4 3.5 58.5 A v erage# 7 25 6.0 4.8 6.4 8.0 16.2 17.4 99.4 0.9 41.3 Small cap China Aoyuan 3883 HK 5.4 1.9 9.6 NR n.a. 50 36 5.0 3.6 7.0 9.7 25.1 26.8 51.0 1.0 n.a. n.a. Central China* 832 HK 3.7 1.3 1.2 BUY 3.87 (7) 93 10.0 5.2 3.0 5.8 9.5 16.7 25.7 0.9 5.1 29.0 China Merchants Land 978 HK 1.3 0.8 0.7 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7.2 8.5 46.4 n.a. n.a. n.a. China SCE 1966 HK 3.5 1.7 5.5 NR n.a. (16) 38 4.4 3.2 7.2 9.7 21.2 24.1 79.3 0.8 n.a. n.a. China South City*^^ 1668 HK 1.5 1.5 4.1 BUY 2.77 15 69 9.0 5.3 5.9 10.0 4.5 7.3 85.6 0.4 n.a. n.a. COGO* 81 HK 2.6 1.2 3.1 BUY 5.00 45 13 3.0 2.6 1.7 1.9 15.8 15.3 25.4 0.4 11.7 77.4 Gemdale Props 535 HK 0.8 1.6 2.6 NR n.a. 70 32 4.0 3.0 2.9 2.9 23.1 23.4 22.9 0.9 n.a. n.a. Greenland 337 HK 2.9 1.0 1.2 NR n.a. 25 34 4.2 3.1 7.1 9.5 15.4 16.2 97.4 1.0 n.a. n.a. Hopson Dev 754 HK 6.6 1.9 1.4 NR n.a. (76) 2 10.4 10.3 2.9 2.9 n.a. n.a. 71.5 0.3 n.a. n.a. LVGEM 95 HK 2.7 1.7 0.7 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 126.2 0.1 n.a. n.a. Minmetals Land 230 HK 1.2 0.5 0.4 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 97.1 n.a. n.a. n.a. Modern Land (China) 1107 HK 1.3 0.5 0.2 NR n.a. (10) 43 4.8 3.3 6.2 7.3 17.6 17.6 83.1 0.4 n.a. n.a. Poly (Hong Kong) 119 HK 3.1 1.5 3.3 NR n.a. (9) 1 5.1 5.0 5.6 5.5 6.9 7.5 83.0 0.4 n.a. n.a. Powerlong 1238 HK 4.0 2.0 1.9 NR n.a. 14 26 3.5 2.8 8.3 10.5 14.4 14.3 98.4 0.6 n.a. n.a. Road King 1098 HK 14.0 1.3 1.1 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 95.8 n.a. n.a. n.a. Shui On Land* 272 HK 1.8 1.8 5.2 HOLD 2.05 (49) n.a. 15.9 n.a. 3.8 0.0 2.0 0.0 69.3 0.3 5.1 65.6 SRE Group 1207 HK 0.2 0.4 0.1 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 91.5 n.a. n.a. n.a. Sunshine 100 China 2608 HK 2.8 0.9 0.7 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 231.6 n.a. n.a. n.a. Times Property 1233 HK 10.0 2.3 5.0 NR n.a. 28 28 4.4 3.5 6.8 8.7 22.1 24.7 57.5 0.8 n.a. n.a. Wuzhou Int'l 1369 HK 0.1 0.0 2.0 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 247.5 n.a. n.a. n.a. Yuzhou Properties* 1628 HK 4.4 2.4 9.6 BUY 7.31 22 24 4.2 3.4 9.1 11.3 23.7 25.2 77.1 0.9 9.3 52.9 Zhong An 672 HK 0.4 0.3 0.3 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12.4 n.a. n.a. n.a. A v erage# 16 40 5.5 3.7 5.8 7.3 15.5 16.9 71.9 0.6 56.2 Average (Overall)# 11 30 6.1 4.6 6.0 7.3 17.7 19.3 81.1 0.9 41.6~
^ Denominated in SGD for price ~ Simple average discount to NAV; Market cap weighted average NAV = 32% # Exclude outliners ~~Gross Gearing ^^ FY16: 17F; FY17: FY18F; FY18: FY19F Source: Thomson Reuters, *DBS HK
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Industry Focus China Property Sector
PE valuations, 2009 to 2017 trough (based on earnings forecasts)
18-J ul Mk t 18F 19F Price Cap PE PE T rough T rough T rough T rough T rough T rough T rough T rough T rough Company Name Code HK$ US$bn x x 2009 2010 2011 2012 2013 2014 2015 2016 2017 China Overseas* 688 HK 24.25 34.0 7.1 5.6 11.1 12.8 6.5 7.2 7.8 6.1 6.7 5.8 5.8 CR Land* 1109 HK 27.20 24.1 7.6 6.5 13.1 14.4 7.2 10.1 11.9 7.1 8.2 7.0 6.2 China Vanke 'H'* 2202 HK 25.00 37.3 6.9 5.6 n.a. n.a. n.a. n.a. n.a. 6.3 6.8 6.5 7.3 Country Garden* 2007 HK 12.52 34.8 6.2 4.0 4.9 10.1 5.0 5.5 6.2 3.8 4.0 4.7 6.3 Evergrande* 3333 HK 20.40 34.4 5.1 4.4 n.a. 3.8 2.9 3.3 4.2 3.4 4.3 6.4 7.7 Longfor* 960 HK 20.60 15.6 8.4 6.6 17.8 13.8 6.3 5.6 7.4 5.3 5.4 5.5 5.7 Sunac China 1918 HK 25.65 14.4 6.8 4.2 n.a. 4.5 1.4 1.5 3.1 2.2 2.7 3.1 7.8 A v erage 6.9 5.3 11.7 9.9 4.9 5.5 6.8 4.9 5.4 5.6 6.7 Agile Property* 3383 HK 11.90 6.0 5.3 4.2 3.2 8.5 2.7 3.8 4.0 2.4 3.0 3.3 4.6 BJ Cap Land 'H' 2868 HK 3.35 0.4 3.0 2.4 3.1 5.1 1.9 2.0 3.3 2.6 3.1 3.5 4.1 China Jinmao Hldgs* 817 HK 3.81 5.6 9.6 7.0 7.0 14.8 6.0 5.9 7.3 4.8 5.1 5.1 5.7 CIFI Holdings 884 HK 4.78 4.7 5.3 4.1 n.a. n.a. n.a. n.a. 3.8 3.2 2.7 2.8 3.6 Greentown 3900 HK 9.96 2.8 8.3 7.7 2.3 6.3 2.0 1.5 3.3 2.3 3.1 3.4 5.5 Guangzhou R&F 2777 HK 14.26 1.9 3.9 3.2 4.8 6.8 3.2 3.2 4.7 3.8 3.1 3.5 3.7 Kaisa Group 1638 HK 2.80 2.2 n.a. n.a. n.a. 3.5 3.7 3.0 2.8 1.9 1.7 1.9 2.0 KWG Property 1813 HK 8.65 3.5 4.9 3.8 2.9 8.0 3.1 2.8 3.7 2.9 3.2 3.1 3.4 Logan Property* 3380 HK 10.02 7.0 6.5 5.0 n.a. n.a. n.a. n.a. n.a. 3.5 3.6 3.8 3.8 Shenzhen Inv 604 HK 2.77 2.9 7.5 6.5 4.2 6.5 3.8 4.4 6.2 5.3 5.4 6.2 6.5 Shimao Property* 813 HK 21.15 9.2 6.6 5.5 4.2 8.6 3.6 3.9 6.4 4.3 3.3 3.2 4.6 Sino-Ocean Land* 3377 HK 4.39 4.3 5.9 4.8 9.0 11.3 4.1 5.4 6.7 6.0 5.9 5.1 5.6 Yanlord Land*^ YLLG SP 1.49 2.2 4.0 3.4 6.6 9.3 5.0 7.1 9.3 7.5 7.1 7.0 4.8 Yuexiu Property* 123 HK 1.44 2.3 6.3 5.1 3.0 9.0 4.6 4.5 5.8 5.9 6.3 5.3 7.8 A v erage# 6.0 4.8 4.6 8.1 3.7 4.0 5.0 3.9 3.9 4.0 4.7 China Aoyuan 3883 HK 5.40 1.9 5.0 3.6 12.7 10.2 5.1 5.1 5.1 2.2 3.2 2.8 3.6 Central China* 832 HK 3.65 1.3 10.0 5.2 1.5 3.9 2.8 2.8 3.5 2.6 2.5 2.3 2.7 China Merchants Land 978 HK 1.31 0.8 n.a. n.a. n.a. n.a. n.a. n.a. 12.0 4.4 5.4 3.9 5.6 China SCE 1966 HK 3.48 1.7 4.4 3.2 n.a. 4.7 3.7 2.9 2.4 5.6 4.5 3.7 4.7 China South City*^^ 1668 HK 1.48 1.5 9.0 5.3 17.7 6.9 4.3 4.5 4.3 5.1 5.7 5.8 6.9 COGO* 81 HK 2.63 1.2 3.0 2.6 n.a. n.a. 3.7 5.0 6.3 3.1 3.1 2.7 4.2 Gemdale Props 535 HK 0.81 1.6 4.0 3.0 n.a. n.a. n.a. n.a. 10.9 14.1 3.8 5.5 4.2 Greenland 337 HK 2.85 1.0 4.2 3.1 1.2 4.2 1.4 1.2 0.8 11.7 8.0 4.8 4.0 Hopson Dev 754 HK 6.62 1.9 10.4 10.3 2.2 4.9 2.8 2.8 5.6 3.9 10.7 12.1 11.0 LVGEM 95 HK 2.71 1.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0.0 7.5 10.1 Minmetals Land 230 HK 1.24 0.5 n.a. n.a. 1.3 6.9 3.8 2.3 4.2 3.6 4.5 7.5 7.5 Modern Land (China) 1107 HK 1.30 0.5 4.8 3.3 n.a. n.a. n.a. n.a. n.a. 2.3 2.4 2.0 2.5 Poly (Hong Kong) 119 HK 3.13 1.5 5.1 5.0 3.8 14.9 4.2 4.9 5.2 3.9 5.7 13.0 17.6 Powerlong 1238 HK 4.00 2.0 3.5 2.8 4.7 5.2 1.5 1.6 3.6 2.8 3.2 2.7 3.1 Road King 1098 HK 13.98 1.3 n.a. n.a. 1.6 5.4 2.2 2.4 6.5 6.8 6.8 6.8 6.8 Shui On Land* 272 HK 1.76 1.8 15.9 n.a. 3.3 9.4 5.6 6.5 9.1 10.6 5.8 6.4 5.6 SRE Group 1207 HK 0.17 0.4 n.a. n.a. 1.6 2.0 2.3 0.9 1.1 1.1 1.1 1.1 1.1 Sunshine 100 China 2608 HK 2.84 0.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5.7 5.8 5.3 7.8 Times Property 1233 HK 9.97 2.3 4.4 3.5 n.a. n.a. n.a. n.a. n.a. 2.5 2.2 1.9 2.6 Wuzhou Int'l 1369 HK 0.05 0.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7.3 5.2 22.3 22.3 Yuzhou Properties* 1628 HK 4.39 2.4 4.2 3.4 9.6 5.5 2.7 3.6 3.6 2.4 2.1 3.3 3.6 Zhong An 672 HK 0.41 0.3 n.a. n.a. 3.6 7.7 4.1 9.9 5.3 8.3 8.3 8.3 8.3 A v erage# 5.5 3.7 5.0 6.5 3.3 3.8 5.3 5.2 4.5 6.0 6.6 Average (Overall)# 6.1 4.6 5.8 7.8 3.7 4.2 5.4 4.7 4.5 5.3 6.0 ^ Denominated in SGD for price # Exclude outliners ^^ FY16: 17F; FY17: FY18F; FY18: FY19F Source: Thomson Reuters, *DBS HK
Page 10
Industry Focus China Property Sector
PE valuations, 2009 to 2017 peak (based on earnings forecasts)
18-J ul Mk t 18F 19F Price Cap PE PE Peak Peak Peak Peak Peak Peak Peak Peak Peak Company Name Code HK$ US$bn x x 2009 2010 2011 2012 2013 2014 2015 2016 2017 China Overseas* 688 HK 24.25 34.0 7.1 5.6 25.1 20.4 12.1 12.4 12.0 9.0 9.9 8.7 8.9 CR Land* 1109 HK 27.20 24.1 7.6 6.5 30.4 26.3 15.2 17.6 17.0 12.3 12.8 10.8 10.0 China Vanke 'H'* 2202 HK 25.00 37.3 6.9 5.6 n.a. n.a. n.a. n.a. n.a. 9.0 11.8 11.8 10.5 Country Garden* 2007 HK 12.52 34.8 6.2 4.0 19.3 15.9 11.0 8.7 9.5 7.7 6.9 8.4 15.2 Evergrande* 3333 HK 20.40 34.4 5.1 4.4 n.a. 74.1 8.9 6.1 6.4 4.6 14.2 13.2 16.5 Longfor* 960 HK 20.60 15.6 8.4 6.6 24.4 21.7 14.2 11.9 11.5 7.5 8.7 8.2 11.3 Sunac China 1918 HK 25.65 14.4 6.8 4.2 n.a. 5.8 3.5 5.5 5.5 5.1 6.3 12.4 46.7 A v erage 6.9 5.3 24.8 18.0 10.8 10.4 10.3 7.9 10.1 10.5 12.1 Agile Property* 3383 HK 11.90 6.0 5.3 4.2 21.0 17.8 11.1 7.1 7.6 4.8 5.7 5.8 9.4 BJ Cap Land 'H' 2868 HK 3.35 0.4 3.0 2.4 15.9 11.9 5.9 4.7 5.3 3.6 6.3 5.9 7.4 China Jinmao Hldgs* 817 HK 3.81 5.6 9.6 7.0 22.1 21.4 16.6 10.2 10.1 8.4 8.4 8.2 11.5 CIFI Holdings 884 HK 4.78 4.7 5.3 4.1 n.a. n.a. n.a. n.a. 5.9 4.4 5.1 5.4 8.4 Greentown 3900 HK 9.96 2.8 8.3 7.7 18.3 15.1 6.1 6.3 6.6 4.5 6.1 7.8 10.8 Guangzhou R&F 2777 HK 14.26 1.9 3.9 3.2 17.8 13.7 8.0 7.4 8.1 5.2 4.8 6.0 7.2 Kaisa Group 1638 HK 2.80 2.2 n.a. n.a. n.a. 8.4 10.0 6.9 6.3 4.4 2.3 8.9 37.4 KWG Property 1813 HK 8.65 3.5 4.9 3.8 22.1 19.3 9.9 6.6 6.6 5.2 6.2 4.7 7.2 Logan Property* 3380 HK 10.02 7.0 6.5 5.0 n.a. n.a. n.a. n.a. n.a. 3.8 6.6 6.0 11.1 Shenzhen Inv 604 HK 2.77 2.9 7.5 6.5 14.9 10.6 9.0 8.6 11.8 8.0 10.3 10.1 9.1 Shimao Property* 813 HK 21.15 9.2 6.6 5.5 18.4 15.4 9.7 9.5 9.0 7.5 6.2 5.6 7.7 Sino-Ocean Land* 3377 HK 4.39 4.3 5.9 4.8 24.8 19.8 10.3 12.1 11.9 9.2 9.9 8.2 9.3 Yanlord Land*^ YLLG SP 1.49 2.2 4.0 3.4 19.8 14.6 10.5 15.0 14.7 11.2 12.7 9.8 7.9 Yuexiu Property* 123 HK 1.44 2.3 6.3 5.1 25.8 22.0 11.1 9.3 9.5 8.1 11.1 10.6 10.5 A v erage# 6.0 4.8 19.5 15.3 9.7 8.6 8.4 6.0 6.9 7.2 9.1 China Aoyuan 3883 HK 5.40 1.9 5.0 3.6 45.4 22.5 10.0 5.1 5.1 5.1 4.6 4.3 8.0 Central China* 832 HK 3.65 1.3 10.0 5.2 9.4 7.8 5.6 6.3 6.3 4.1 4.4 3.9 8.5 China Merchants Land 978 HK 1.31 0.8 n.a. n.a. n.a. n.a. n.a. n.a. 13.5 13.5 15.6 11.6 5.6 China SCE 1966 HK 3.48 1.7 4.4 3.2 n.a. 6.9 5.5 3.8 6.6 5.6 5.6 7.6 7.4 China South City*^^ 1668 HK 1.48 1.5 9.0 5.3 19.6 20.4 12.3 6.6 6.9 11.8 9.5 10.8 17.2 COGO* 81 HK 2.63 1.2 3.0 2.6 n.a. n.a. 9.8 9.8 10.0 6.4 6.1 6.3 8.8 Gemdale Props 535 HK 0.81 1.6 4.0 3.0 n.a. n.a. n.a. n.a. 21.9 57.7 50.0 10.6 10.0 Greenland 337 HK 2.85 1.0 4.2 3.1 14.0 10.7 3.8 8.9 52.6 28.2 21.6 12.2 7.1 Hopson Dev 754 HK 6.62 1.9 10.4 10.3 10.3 7.5 6.4 16.0 15.7 16.1 24.6 22.4 29.8 LVGEM 95 HK 2.71 1.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0.0 11.5 26.6 Minmetals Land 230 HK 1.24 0.5 n.a. n.a. 13.2 20.1 n.a. 7.1 6.9 5.9 7.6 7.5 7.5 Modern Land (China) 1107 HK 1.30 0.5 4.8 3.3 n.a. n.a. n.a. n.a. n.a. 2.8 5.8 5.8 3.8 Poly (Hong Kong) 119 HK 3.13 1.5 5.1 5.0 51.0 41.2 16.1 9.8 9.9 6.4 27.9 670.0 637.5 Powerlong 1238 HK 4.00 2.0 3.5 2.8 7.0 8.2 6.5 5.6 6.7 4.9 4.6 5.3 6.5 Road King 1098 HK 13.98 1.3 n.a. n.a. 7.2 7.3 7.0 7.6 7.6 6.8 6.8 6.8 6.8 Shui On Land* 272 HK 1.76 1.8 15.9 n.a. 21.3 16.6 17.6 12.6 17.6 17.4 87.1 11.7 8.6 SRE Group 1207 HK 0.17 0.4 n.a. n.a. 4.6 3.7 2.9 2.4 1.1 1.1 1.1 1.1 1.1 Sunshine 100 China 2608 HK 2.84 0.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6.7 7.4 8.0 7.8 Times Property 1233 HK 9.97 2.3 4.4 3.5 n.a. n.a. n.a. n.a. n.a. 3.5 3.2 3.6 5.7 Wuzhou Int'l 1369 HK 0.05 0.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12.4 29.6 22.3 22.3 Yuzhou Properties* 1628 HK 4.39 2.4 4.2 3.4 11.7 9.9 5.8 6.5 6.5 4.6 5.2 5.2 6.3 Zhong An 672 HK 0.41 0.3 n.a. n.a. 26.8 19.8 12.3 14.9 10.3 8.3 8.3 8.3 8.3 A v erage# 5.5 3.7 13.2 12.4 8.7 8.2 9.5 8.6 10.1 8.9 10.2 Average (Overall)# 6.1 4.6 20.1 14.7 9.5 8.8 9.2 7.6 9.1 8.7 10.1 ^ Denominated in SGD for price # Exclude outliners ^^ FY16: 17F; FY17: FY18F; FY18: FY19F Source: Thomson Reuters, *DBS HK
Page 11
Industry Focus China Property Sector
Share price performance
Price Performance 2007 1-w k 2-w k 1-mth 2-mth 3-mth 5-mth 6-mth YTD 1-y r 2012 2013 2014 2015 2016 2017 high % % % % % % % % % % % % % % % % Tier 1 players China Overseas 688 HK (2.4) (2.8) (15.4) (11.3) (7.1) (15.4) (14.0) (3.6) (5.5) 78.0 (5.6) 5.7 21.5 (24.4) 22.4 29.2 CR Land 1109 HK 5.0 8.4 (6.2) (11.7) (4.6) (9.9) 3.2 18.3 11.7 69.1 (8.9) 6.4 14.2 (22.8) 31.9 31.4 China Vanke 'H' 2202 HK (0.8) (0.4) (19.0) (18.6) (24.2) (32.0) (36.8) (19.9) 7.8 62.8 (3.2) 43.0 32.4 (22.7) 76.3 63.0 Country Garden 2007 HK (2.3) (1.6) (22.7) (21.3) (15.4) (5.0) (20.3) (11.7) 44.8 46.4 15.3 (32.8) 2.6 36.5 243.3 1.9 Evergrande 3333 HK (4.4) (1.7) (10.1) (18.6) (18.9) (15.5) (24.7) (24.3) 29.4 32.0 (30.4) 6.1 117.2 (29.2) 458.0 n.a. Longfor Properties 960 HK (0.7) 2.5 (16.3) (13.6) (11.6) (14.2) (9.5) 5.2 13.7 72.9 (28.6) (7.8) 15.7 (14.9) 99.0 n.a. Sunac China 1918 HK (3.9) 0.8 (19.7) (26.6) (21.6) (17.9) (23.1) (20.7) 60.9 272.7 (22.5) 69.7 (24.0) 7.5 401.6 n.a. A v erage (1.4) 0.7 (15.6) (17.4) (14.8) (15.7) (17.9) (8.1) 23.3 90.5 (12.0) 12.9 25.7 (10.0) 190.3 31.4 Tier 2 players Agile Property 3383 HK 3.7 (1.0) (23.9) (27.4) (28.9) (6.4) (10.9) 0.3 48.0 56.6 (23.8) (46.9) (2.0) (8.6) 200.3 (39.6) BJ Cap. Land 2868 HK (3.2) 4.7 (14.8) (22.6) (24.4) (25.2) (27.0) (17.5) (17.7) 110.5 (18.0) 11.4 20.7 (18.0) 39.5 (55.1) China Jinmao Hldgs 817 HK 0.5 2.7 (15.0) (19.6) (13.0) (23.8) (1.0) 10.8 13.4 85.9 (3.2) (17.4) 19.4 (21.1) 64.6 (39.0) CIFI Holdings 884 HK 2.6 4.4 (20.6) (27.8) (24.1) (28.7) (21.5) 1.5 29.5 n.a. 17.1 (6.1) 12.3 20.8 125.4 n.a. Future Land 1030 HK 2.3 3.4 (14.1) (2.1) 1.4 0.2 10.3 35.5 136.3 n.a. (38.3) (21.7) 86.1 18.7 208.2 n.a. Greentown 3900 HK (1.0) 3.2 (17.5) (18.2) (4.8) (20.1) (20.3) (1.0) 1.5 321.4 (16.6) (35.0) 0.0 (18.4) 60.2 (49.1) GZ R&F 2777 HK (2.6) (3.1) (21.2) (27.3) (23.4) (28.7) (29.4) (19.1) 11.9 110.1 (12.1) (16.3) 0.6 (1.8) 87.8 (67.1) Kaisa Group 1638 HK (6.7) (7.3) (32.5) (36.1) (34.6) (34.7) (41.5) (36.5) (14.4) 79.1 4.2 (36.4) (1.9) 0.0 182.7 n.a. KWG 1813 HK (1.5) (1.8) (27.3) (29.7) (19.3) (28.4) (25.3) (5.3) 57.8 122.2 (26.1) 33.5 13.1 (17.8) 107.5 (31.7) Logan Property 3380 HK 0.0 2.0 (16.2) (21.0) (12.7) (11.8) 6.0 24.0 57.5 n.a. n.a. 10.0 9.1 11.4 175.8 n.a. Shenzhen Inv 604 HK 0.4 (0.4) (8.9) (17.1) (14.2) (17.6) (19.0) (14.5) (22.2) 125.9 (7.0) (23.6) 62.8 (14.3) 4.2 (64.3) Shimao Property 813 HK 1.7 11.9 (18.7) (9.0) 1.0 (2.5) (6.0) 24.4 51.5 120.5 21.9 (2.7) (20.5) (26.4) 67.7 (27.2) Sino-Ocean 3377 HK (0.7) 2.3 (17.6) (22.6) (21.9) (22.2) (29.2) (18.6) 11.4 60.8 (12.1) (13.4) 12.7 (30.2) 55.3 (70.7) Yanlord Land YLLG SP 1.4 (3.9) (11.8) (10.8) (12.4) (8.6) (14.4) (8.0) (14.9) 59.2 (19.4) (15.1) (3.4) 31.3 22.7 (64.7) Yuexiu Property 123 HK (2.7) 2.1 (13.3) (21.7) (18.6) (9.4) (7.1) (1.4) 2.1 118.8 (22.0) (16.8) (10.1) (20.9) 37.7 (50.0) A v erage (0.4) 1.3 (18.2) (20.9) (16.7) (17.9) (15.8) (1.7) 23.5 114.2 (11.1) (13.1) 13.3 (6.4) 96.0 (50.8) Tier 3 players China Aoyuan 3883 HK 0.0 0.7 (21.1) (21.6) (15.9) (10.1) (8.2) 25.9 70.3 67.8 11.6 (24.5) 32.5 9.2 141.0 (27.2) Central China 832 HK 0.6 2.0 (16.1) (5.4) 6.1 4.3 3.1 (0.3) 73.0 76.8 (12.8) (26.8) (7.4) 4.3 116.6 n.a. China Merchants Land 978 HK 0.0 0.8 (12.7) (17.1) (21.6) (10.9) (15.5) (9.0) (20.6) 105.1 18.8 (40.0) 36.8 (28.2) 28.6 (70.6) China SCE Property 1966 HK (0.9) 0.0 (14.9) (17.7) (12.1) (10.5) (9.4) 3.3 (5.7) 20.2 16.2 (12.4) 8.0 33.1 44.6 n.a. China South City 1668 HK 0.0 0.7 (10.3) (13.5) (11.9) (23.3) (28.2) (27.8) (5.7) 17.0 88.0 60.9 (50.6) (7.4) 26.5 n.a. COGO 81 HK (0.8) 0.4 (22.9) (29.1) (24.4) (34.6) (38.0) (36.9) (38.8) 105.6 (20.7) (46.7) (16.7) (22.9) 69.2 (40.5) Gemdale Props 535 HK 1.3 1.3 (12.0) (12.9) (10.0) (23.6) (12.9) 0.0 17.4 163.6 60.9 (28.6) 4.0 (8.7) 70.5 84.1 Greenland 337 HK (1.4) (2.1) (13.4) (26.9) (25.8) (28.2) (25.0) (8.4) (3.7) 53.5 90.4 (18.3) (1.9) (36.1) 61.1 (61.9) Hopson Dev 754 HK 0.6 0.0 (16.9) (16.3) (19.2) (14.0) (17.0) (13.6) (13.9) 207.2 (24.6) (24.0) 8.7 (10.5) 10.9 (78.8) LVGEM 95 HK 4.6 (4.2) (15.0) (13.7) (20.1) (21.0) (15.6) (9.1) 23.7 30.4 236.7 119.8 9.0 (1.2) 24.7 250.1 Minmetals Land 230 HK (0.8) (2.4) (17.3) (17.3) (13.3) (13.3) (10.8) (5.3) 27.8 70.7 (19.5) (13.6) 1.1 3.3 40.9 (66.5) Modern Land (China) 1107 HK 4.0 1.6 (12.2) (11.6) (7.8) (29.0) (27.8) (22.6) 7.5 n.a. n.a. 1.6 98.4 (53.2) 79.5 n.a. Poly HK 119 HK 3.0 1.6 (16.3) (19.9) (14.5) (26.5) (22.5) (23.1) (13.1) 79.8 (31.7) (22.9) (20.7) 1.6 58.4 (72.6) Powerlong 1238 HK (0.7) (0.5) (15.1) (13.6) (2.9) 1.8 (0.7) 5.5 13.3 58.7 0.6 (34.3) 50.5 39.0 66.2 n.a. Road King 1098 HK 1.7 9.9 (8.0) (12.1) (7.3) (2.5) 0.4 3.7 39.8 52.1 9.6 (11.7) 3.1 (4.6) 109.3 (18.2) Shui On Land 272 HK (2.8) (4.9) (18.1) (26.4) (17.8) (20.7) (19.6) (18.5) (2.8) 58.9 (31.1) (23.1) 16.4 (21.6) 29.3 (82.2) SRE Group 1207 HK (0.6) (5.2) (10.8) (6.2) (12.2) (18.3) (21.4) (17.1) (7.8) 24.2 (32.9) (20.8) 73.8 (45.5) 0.0 (95.2) Sunshine 100 China 2608 HK 0.7 0.0 (0.4) 1.1 (0.4) (16.5) (11.8) (19.1) (12.6) n.a. n.a. n.a. 21.7 4.8 (5.1) n.a. Times Property 1233 HK (4.9) (6.3) (24.5) (23.4) (9.4) 18.4 14.9 29.6 69.0 n.a. n.a. (5.7) (18.2) 40.4 102.9 n.a. Wuzhou Int'l 1369 HK 1.9 (15.9) (22.1) (89.4) (91.8) (92.9) (93.8) (93.9) (93.4) n.a. n.a. 14.0 (44.9) (3.7) 11.5 n.a. Yuzhou Properties 1628 HK 0.5 1.9 (15.4) (25.3) (20.8) (18.2) (19.4) 5.3 0.0 37.1 2.9 1.0 7.7 28.6 54.4 n.a. Zhong An 672 HK 3.8 9.3 (6.8) (16.3) (24.1) (36.9) (44.6) (55.4) (59.8) 7.5 26.3 (20.8) (28.9) (21.0) 187.5 (85.8) A v erage 0.4 (0.5) (14.6) (19.8) (17.1) (19.4) (19.3) (13.0) 2.9 68.7 21.6 (8.4) 8.3 (4.6) 60.4 (28.1)
Average (Overall) (0.1) 0.3 (16.0) (19.8) (16.6) (18.3) (17.8) (8.4) 13.2 87.6 3.8 (6.6) 12.8 (6.0) 93.2 (28.5)
Source: Thomson Reuters
Page 12
Industry Focus China Property Sector
Discount to NAV
Sector average (DBSV coverage only) Agile Property (3383 HK)
% % 40 20
20 0
0 (20) +2SD: -11.1% +1SD -30.2% (20) (40) +1SD: -25.6% Avg: -52.1% Mean: -40.2% (40) (60)
(60) -1SD: -54.7% (80) -1SD -74% -2SD: -69.2%
(80) (100)
Jul-08
Jul-13
Jul-18
Jan-09
Jan-16
Oct-06
Sep-13
May-11
May-18
Nov-11
Nov-16 Mar-10 Mar-15 Central China (832 HK) China Jinmao Holdings (817 HK)
% % (20) (20) (30) (30) +1SD -32% (40) (50) +1SD -55.6% (40) Avg: -47.5% (60) (50) (70) Avg: -65.8% (60) (80) -1SD -75.9% -1SD -63% (90) (70) (100)
(80)
Jul-18
Jan-09
Oct-12
Sep-14
Nov-10
Aug-16
Jul-18
Jan-12
Jun-17
Feb-13
Apr-15
Dec-10
Nov-09 Mar-14 May-16 China Overseas (688 HK) COGO (81 HK)
% % 80 0 60 (10) 40 (20) 20 (30) +1SD 2.8% +1SD -38.2% (40) 0 (50) Avg: -55.1% (20) (60) (40) -1SD -29.4% Avg: -13.3% (70) (60) (80) -1SD -71.9%
(80) (90)
Jul-18
Jul-18
Jan-10
Jun-13
Jan-05
Oct-16
Feb-15
Sep-11
Oct-10
Sep-12
Sep-14
Dec-06 Nov-08
Aug-16
Source: Thomson Reuters, DBS HK
Page 13
Industry Focus China Property Sector
Discount to NAV (continued)
CR Land (1109 HK) China Vanke (2202 HK)
% % 30 100 20 10 80 0 60 (10) +1SD -13.5% 40 (20) Avg: -27.8% +1SD 19% (30) 20 (40) Avg: -3.4% (50) -1SD -42.2% 0 (60) (20) (70) -1SD -25.8%
(80) (40)
Jul-18
Jul-06 Jul-09 Jul-12 Jul-15 Jul-18
Jan-18
Jun-15 Jun-16
Oct-17
Feb-17
Sep-15 Apr-18
Dec-15
Jan-05 Jan-08 Jan-11 Jan-14 Jan-17
Nov-16
Mar-16
Aug-16 Aug-17 May-17 Country Garden (2007 HK) Evergrande (3333 HK)
% % 100 300 80 250 60 200 40 150 20 +1SD -6.6% 100 0 (20) Avg: -27.5% 50 +1SD -2.1% (40) 0 Avg: -42.2% (60) -1SD -48.5% (50) (80)
(100) -1SD -82.3%
Jul-18
Jan-09
Oct-12
Sep-14
Nov-10
Aug-16
Jul-18
Feb-17
Apr-11
Sep-12
Nov-09 Mar-14 Aug-15 Longfor (960 HK) Shimao Property (813 HK)
% % 0 60 40 (10) 20 +1SD -21% (20) 0 Avg: -31.6% (30) (20) +1SD -25% Avg: -42% (40) (40) -1SD -42.3% (60) (50) -1SD -59% (80) (60)
(100)
Jul-18
Jan-17
Jun-17
Oct-17
Apr-17
Dec-17
Jul-18
Mar-18
Aug-17
May-18
Jan-09
Sep-14
Dec-10
Nov-12 Mar-07 Aug-16 Source: Thomson Reuters, DBS HK
Page 14
Industry Focus China Property Sector
Discount to NAV (continued)
Shui On Land (272 HK) Sino-Ocean Land (3377 HK)
% % 0 60 (10) 40 (20) (30) 20 (40) +1SD -48.3% 0 (50) (20) +1SD -21.5% (60) Avg: -40.8% Avg: -57.7% (40) (70) -1SD -67.2% (80) (60) -1SD -60.1% (90) (80) (100)
(100)
Jul-08
Jul-18
Jan-14
Jun-09
Oct-06
Feb-13
Oct-15
Apr-11
Sep-16
Nov-14
Mar-12
Aug-07
Aug-17
May-10
Jul-18
Jan-12
Oct-07
Nov-09 Mar-14 May-16 SOHO China (410 HK) Yuexiu Property (123 HK)
% % (30) 100 80 (32) 60 (34) +1SD -34.5% 40 (36) 20 Avg: -37.2% 0 (38) (20) +1SD -29.2% (40) (40) Avg: -46.1% -1SD -39.9% (60) (42) -1SD -62.9%
(80) (44)
Jul-12
Jul-18
Jul-17
Jan-17
Jan-18
Oct-07
Oct-13
Feb-16
Jun-15
Jun-16
Oct-17
Dec-08
Dec-14
Sep-15
Sep-16
Apr-17
Apr-18
Dec-14
Dec-15
Mar-10
Mar-15
Mar-16 May-11 May-17 Yanlord Land (YLLG SP)
% 60 40 20 0 (20) +1SD -26.8% Avg: -42.3% (40) (60) -1SD -57.8% (80)
(100)
Jul-18
Jan-12
Oct-07
Nov-09 Mar-14 May-16 Source: Thomson Reuters, DBS HK
Page 15
Industry Focus China Property Sector
PE charts
Sector average Agile Property (3383 HK)
x x 40 16 35 14 30 12 25 +2SD: 17.5x +1SD: 8.8x 10 20 15 +1SD: 12.9x 8 Avg: 6.5x 10 Mean: 8.3x 6 5 4 -1SD: 3.6x 0 2 -1SD: 4.2x -2SD: -1x
(5) 0
Jul-16
Jul-18
Jan-05
Oct-10
Sep-12
Jul-17
Dec-06
Nov-08
Aug-14
Oct-11
Feb-16
Apr-10
Dec-05
Dec-18
Nov-08
Mar-13 Aug-14 May-07 Central China (832 HK) China Jinmao Holdings (817 HK)
x x 12 30
10 25 +1SD: 7.1x 8 20 +1SD: 14x 6 Avg: 5.5x 15 Avg: 9.3x 4 10
2 -1SD: 4x 5 -1SD: 4.6x
0 0
Jun-08
Jun-15
Oct-11
Oct-12
Oct-13
Sep-09
Sep-10
Sep-13
Dec-11
Dec-17
Dec-18
Dec-18
Nov-14
Nov-15
Nov-16
Mar-10
Mar-17 Aug-07 Aug-08 China Overseas (688 HK) COGO (81 HK)
x x 190x (Dec-07) 35 40 30 35 30 25 25 +1SD: 18.2x 20 +1SD: 14x 20 15 15 Avg: 7.8x Avg: 9.4x 10 10 5 -1SD: -2.6x 5 0 -1SD: 4.7x
0 J -5
Jul-07
Jan-99
Jan-05
Jun-10
Feb-16
Sep-04
Apr-13
Sep-09 Apr-14
Dec-18
Dec-11 Dec-18
Nov-01 Aug-16 May-07 Source: Thomson Reuters, DBS HK
Page 16
Industry Focus China Property Sector
PE charts (continued)
CR Land (1109 HK) China Vanke (2202 HK)
x x 50 12.0 45 11.0 40 10.0 +1SD: 9x 35 30 9.0 Avg: 7.8x 25 +1SD: 17.8x 8.0 20 7.0 15 Avg: 11x 6.0 10 5 -1SD: 4.2x 5.0 -1SD: 6.7x
0 J 4.0
Jan-05
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Sep-09 Apr-14
Dec-11 Dec-18
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18 Aug-16 May-07 Country Garden (2007 HK) China Evergrande (3333 HK)
x x 100 18 16 80 14 60 12 10 +1SD: 7.1x 40 +1SD: 29.2x 8 20 Avg: 12x 6 Avg: 4.9x 4 0 2 -1SD: 2.8x -1SD: -5.2x
-20 0
Jan-15
Jun-12
Feb-11
Oct-13
Sep-17
Dec-18
Nov-09
Jan-17
May-16
Feb-13
Feb-15
Apr-07
Dec-18 Mar-09 Mar-11 Longfor (960 HK) Shimao Property (813 HK)
x x 11 70 10 60 9 +1SD: 7.8x 8 50 Avg: 6.5x 7 40 6 30 5 +1SD: 17.3x 4 -1SD: 5.2x 20 Avg: 8.7x 3 10 2 -1SD: 0.2x
0
Nov-09
Nov-12
Nov-15
Nov-18
May-11
May-14
May-17
Jul-06
Jan-10
Jun-15 Apr-08
Dec-18
Nov-11 Mar-17 Aug-13 Source: Thomson Reuters, DBS HK
Page 17
Industry Focus China Property Sector
PE charts (continued)
Shui On Land (272 HK) Sino-Ocean Land (3377 HK)
x x 38 40 33 35 28 30 +1SD: 15.8x 23 25 18 20 +1SD: 14.3x 13 15 Avg: 10.2x Avg: 9.4x 8 10 3 -1SD: 4.7x 5 -1SD: 4.5x
-2 0
Jun-14
Sep-07 Sep-16
Jul-08
Dec-09 Dec-18
Mar-12
Jun-15
Oct-06
Apr-10
Sep-13
Dec-11 Dec-18 Mar-17 SOHO China (410 HK) Yuexiu Property (123 HK)
x x 80 35 70 30 60 25 50 +1SD: 33.3x 40 20 30 15 +1SD: 12.2x Avg: 16.5x 20 10 Avg: 7.5x 10 -1SD: -0.3x 5 -1SD: 2.9x 0
-10 0
Jan-03
Oct-15
Jul-11
Dec-18
Mar-06
Aug-12
May-09
Oct-07
Feb-17
Apr-15
Dec-18 Aug-09 May-13 Yanlord (YLLG SP)
x 35 30 25 20 +1SD: 14.3x 15 Avg: 8.9x 10 5 -1SD: 3.4x
0
Jan-10
Jun-06
Apr-08
Dec-18
Nov-11
Mar-17 Aug-13 May-15 Source: Thomson Reuters, DBS HK
Page 18
Industry Focus China Property Sector
PB charts
Sector average Agile Property (3383 HK)
x x 3.5 6.0 3.0 5.0 2.5 +2SD 1.9x 2.0 4.0 +1SD 1.4x 1.5 3.0 +1SD: 2.1x 1.0 Mean 1.0x 0.5 2.0 -1SD 0.5x 0.0 Avg: 1.2x 1.0 (0.5) -2SD -0.01x -1SD: 0.3x
0.0
Jul-16
Jul-18
Jan-05
Oct-10
Sep-12
Dec-06 Nov-08
Aug-14
Jul-17
Oct-11 Feb-16
Apr-10
Dec-05 Dec-18
Nov-08
Mar-13 Aug-14 May-07 Central China (832 HK) China Jinmao Holdings (817 HK) x x 1.6 3.5 1.4 3.0 1.2 2.5 +1SD: 0.9x 1.0 2.0 0.8 Avg: 0.7x +1SD: 1.4x 1.5 0.6 1.0 Avg: 1x 0.4 -1SD: 0.5x 0.2 0.5 -1SD: 0.6x
0.0 0.0
Jun-08
Jun-15
Oct-11
Oct-12
Oct-13
Sep-13
Sep-09
Sep-10
Dec-11
Dec-18
Dec-17
Dec-18
Nov-14
Nov-15
Nov-16
Mar-10
Mar-17 Aug-07 Aug-08 China Overseas (688 HK) COGO (81 HK)
x x 5.0 3.0 4.5 4.0 2.5 3.5 2.0 3.0 +1SD: 2.4x +1SD: 1.3x 2.5 1.5 2.0 Avg: 1.7x 1.0 1.5 Avg: 0.7x 1.0 0.5 -1SD: 0.2x 0.5 -1SD: 0.9x
0.0 0.0
Jul-07
Jan-99
Jun-10
Feb-16
Sep-04
Apr-13
Dec-18
Nov-01
Jan-05
Sep-09
Apr-14
Dec-11
Dec-18 Aug-16 May-07 Source: Thomson Reuters, DBS HK
Page 19
Industry Focus China Property Sector
PB charts (continued)
CR Land (1109 HK) China Vanke (2202 HK)
x x 3.5 2.6 3.0 2.4
2.5 2.2 +1SD: 1.7x 2.0 2.0 +1SD: 1.8x 1.8 1.5 Avg: 1.3x Avg: 1.6x 1.6 1.0 1.4 0.5 1.2 -1SD: 0.8x -1SD: 1.3x
0.0 1.0
Jan-05
Sep-09
Apr-14
Dec-11
Dec-18
Jun-14 Jun-15 Jun-17 Jun-18 Jun-16
Aug-16
May-07
Dec-14 Dec-16 Dec-17 Dec-18 Dec-15 Country Garden (2007 HK) China Evergrande (3333 HK)
x x 10.0 3.5 3.0 8.0 2.5 6.0 2.0 +1SD: 1.8x
4.0 +1SD: 3.2x 1.5 Avg: 1.2x 1.0 2.0 Avg: 1.7x 0.5 -1SD: 0.1x -1SD: 0.7x
0.0 0.0
Jan-15
Jun-12
Feb-11
Oct-13
Sep-17
Dec-18
Jan-17
Nov-09
Feb-13
Feb-15
Apr-07
May-16
Dec-18 Mar-09 Mar-11 Longfor (960 HK) Shimao Property (813 HK)
x x 3.0 4.5 4.0 2.5 3.5 +1SD: 1.8x 2.0 3.0 1.5 Avg: 1.3x 2.5 +1SD: 1.7x 1.0 -1SD: 0.9x 2.0 1.5 Avg: 1.1x 0.5 1.0 0.0 0.5 -1SD: 0.5x
0.0
Nov-09
Nov-12
Nov-15
Nov-18
May-11 May-14
May-17
Jul-06
Jan-10
Jun-15
Apr-08
Dec-18
Nov-11 Mar-17 Aug-13 Source: Thomson Reuters, DBS HK
Page 20
Industry Focus China Property Sector
PB charts (continued)
Shui On Land (272 HK) Sino-Ocean Land (3377 HK)
x x 2.5 3.7 3.2 2.0 2.7 1.5 +1SD: 1x 2.2 1.7 1.0 +1SD: 1.1x Avg: 0.6x 1.2 Avg: 0.8x 0.5 0.7 -1SD: 0.2x -1SD: 0.4x 0.2
0.0
Jun-14
Sep-07
Sep-16
Dec-09
Dec-18
Mar-12
Jul-08
Jun-15
Oct-06
Apr-10
Sep-13
Dec-11 Dec-18 Mar-17 SOHO China (410 HK) Yuexiu Property (123 HK)
x x 3.5 1.6 3.0 1.4 1.2 2.5 1.0 2.0 +1SD: 0.8x +1SD: 1x 0.8 1.5 Avg: 0.6x 0.6 1.0 Avg: 0.7x 0.4 0.5 0.2 -1SD: 0.4x -1SD: 0.4x
0.0 0.0
Jul-11
Jan-03
Oct-15
Oct-07
Feb-17
Dec-18
Apr-15
Dec-18
Mar-06
Aug-12
May-09 Aug-09 May-13 Yanlord (YLLG SP) x 5.0 4.5 4.0 3.5 3.0 2.5 +1SD: 1.8x 2.0 1.5 Avg: 1.1x 1.0 0.5 -1SD: 0.3x
0.0
Jan-10
Jun-06
Apr-08
Dec-18
Nov-11
Mar-17 Aug-13 May-15 Source: Thomson Reuters, DBS HK
Page 21
Industry Focus China Property Sector
DBS HK recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends
Completed Date: 19 Jul 2018 08:29:38 (HKT) Dissemination Date: 19 Jul 2018 08:51:49 (HKT)
Sources for all charts and tables are DBS HK unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank (Hong Kong) Limited (“DBS HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS HK, DBS Vickers (Hong Kong) Limited (“DBSV HK”), and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS HK.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.
DBS Vickers Securities (USA) Inc (“DBSVUSA”), a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.
Page 22
Industry Focus China Property Sector
ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group. COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS HK, DBSVS or their subsidiaries and/or other affiliates have proprietary positions in China Overseas Land & Investment Limited (688 HK), China Resources Land Limited (1109 HK), China Vanke Company Limited 'H' (2202 HK), Country Garden Holdings Company Limited (2007 HK), China Evergrande Group (3333 HK), Sunac China Holdings Limited (1918 HK), Guangzhou R&F Properties Company (2777 HK), Shimao Property Holdings Limited (813 HK) and Sino-Ocean Group Holding Limited (3377 HK) recommended in this report as of 16 Jul 2018.
2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
3. DBS Bank Ltd, DBS HK, DBSVS, DBS Vickers Securities (USA) Inc (“DBSVUSA”), or their subsidiaries and/or other affiliates beneficially own a total of 1% of the issuer's market capitalization of Jinmao Investments & Jinmao (China) (6139 HK) and Yuexiu Real Estate Investment Trust (405 HK) as of 16 Jul 2018.
4. Compensation for investment banking services: DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from China Overseas Land & Investment Limited (688 HK), China Jinmao Holdings (817 HK), Logan Property Holdings Company Limited (3380 HK), Sino-Ocean Group Holding Limited (3377 HK), Yanlord Land Group Limited (YLLG SP), Yuexiu Property Company Limited (123 HK), Central China Real Estate Limited (832 HK), China South City Holdings Limited (1668 HK), Gemdale Properties & Investment Corporation Limited (535 HK), Poly Property Group Company Limited (119 HK), Road King Infrastructure Limited (1098 HK) and Yuexiu Real Estate Investment Trust (405 HK) as of 30 Jun 2018.
5. DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for China Overseas Land & Investment Limited (688 HK), Logan Property Holdings Company Limited (3380 HK), Sino- Ocean Group Holding Limited (3377 HK), Yanlord Land Group Limited (YLLG SP), Yuexiu Property Company Limited (123 HK), China South City Holdings Limited (1668 HK), Poly Property Group Company Limited (119 HK) and Yuexiu Real Estate Investment Trust (405 HK) in the past 12 months, as of 30 Jun 2018.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
6. Disclosure of previous investment recommendation produced: DBS Bank Ltd, DBSVS, DBS HK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
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Industry Focus China Property Sector
RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946. DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong) Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the regulated activity of advising on securities.
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report. Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. United This report is produced by DBS HK which is regulated by the Hong Kong Monetary Authority
Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, International Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
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Industry Focus China Property Sector
United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. United States This report was prepared by DBS HK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank (Hong Kong) Limited 18th Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong Tel: (852) 2820-4888, Fax: (852) 2521-1812
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Industry Focus China Property Sector
DBS Regional Research Offices
HONG KONG MALAYSIA SINGAPORE DBS Bank (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 18th Floor Man Yee Building 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 68 Des Voeux Road Central Capital Square, Marina Bay Financial Centre Tower 3 Central, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 2820 4888 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E
INDONESIA THAILAND PT DBS Vickers Sekuritas (Indonesia) DBS Vickers Securities (Thailand) Co Ltd Contact: Maynard Priajaya Arif Contact: Chanpen Sirithanarattanakul DBS Bank Tower 989 Siam Piwat Tower Building, Ciputra World 1, 32/F 9th, 14th-15th Floor Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan, Jakarta 12940, Indonesia Bangkok Thailand 10330 Tel: 62 21 3003 4900 Tel. 66 2 857 7831 Fax: 6221 3003 4943 Fax: 66 2 658 1269 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand
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