CHINA_PROPERTY_-_2012_-_A_YEAR_OF_VERY_STRONG_SALES_GROWTH_FORCHINESE_DEVELOPERS-2013-01-13.ppt

top picks,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,buy,sell,sell,deutsche bank markets research,asia china property property,industry china property,date 11 january 2013 industry update tony tsang jason ching, cfa,2012 - a year of very strong sales growth for chinese developers listed developers 2012 contracted sales stronger than expected on our analysis, for the 31 listed developers that we monitor, their 2012 full- year contracted sales performance rose by 25% yoy, on average, while their december 2012 contracted sales were up 86% yoy and up 11% mom, on average. developers 2012 sales performance was much stronger than in 2011 and also stronger than market expectations, suggesting solid end-user demand. in addition, their sales growth was stronger than that for the overall property market, reflecting higher market share gains. sunac, cogo and greentown outperformed in terms of 2012 sales growth in 2012, we saw significant sales growth from names like sunac (up 78% yoy), cogo (up 76% yoy), greentown (up 50% yoy) and shimao (up 50% yoy). among the large-caps, colis 2012 sales growth was up 28% yoy, china vankes up 16% yoy, cr lands up 39% yoy, and evergrandes up 15% yoy. we also saw almost all of the developers exceeding their sales targets (with the exception of glorious) by a sizable margin, with an average (revised-up) target achieved rate of 113%, compared with a 2011 target achieved rate of 91% and 112% in 2010. in particular, shimao exceeded its sales target by as much as 50%, and minmetals by 25%, greentown by 24% and yuexiu by 23%. a few developers continued to push hard in december for performance for the month of december, while most of the developers took a breather, after achieving their 2012 full-year sales targets in november, a few names continued to push their performance. in particular, cr land achieved december 2012 sales close to rmb6bn, up 43% mom and up 3% yoy. sunac achieved rmb4.7bn sales (up 15% mom and 147% yoy), cc land achieved rmb1.1bn (up 20% mom and 1% yoy), and yuexiu achieved rmb461m (up 73% mom and down 73% yoy). agile also achieved rmb6bn of sales, up 86% mom and 71% yoy. sector fundamentals best since 2010 in 2h09-10, new supply in the commodity residential market fell, due to tight financing for chinese developers. we expect this falling supply scenario to be repeated in 2013, on the back of 1) lower inventory levels, 2) falling new,research analyst research analyst (+852) 2203 6256 (+852) 2203 6205 alex tam, cfa research associate (+852) 2203 6183 coli (0688.hk),hkd24.60 china ovs grand oceans (0081.hk),hkd10.12 china resources land (1109.hk),hkd22.65 greentown china (3900.hk),hkd15.56 evergrande (3333.hk),hkd4.37 companies featured coli (0688.hk),hkd24.60 china ovs grand oceans (0081.hk),hkd10.12 china resources land (1109.hk),hkd22.65 guangzhou r&f prop (2777.hk),hkd14.10 greentown china (3900.hk),hkd15.56 evergrande (3333.hk),hkd4.37 c c land (1224.hk),hkd2.93 kaisa (1638.hk),hkd2.59 sunac (1918.hk),hkd6.63 minmetals land limited (0230.hk),hkd1.66 central china real estate (0832.hk),hkd2.78 sino ocean (3377.hk),hkd5.92 yanlord land (ynlg.si),sgd1.60,construction starts in 2012, and 3) continually declining land sales (in the top 300 cities) in 2011 and 2012. with the expected fall in new supply, we expect pricing power to return for the developers, and property prices to likely rise by 5-10% in 2013. in this scenario, we believe overlooked, quality mid- and small- cap developers should see stronger valuation re-ratings ahead. more favorable supply picture in 2013; add more beta; risks our mid- and small-cap top picks are r a sharp deterioration in the economy. _ 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) 072/04/2012.,11 january 2013 property china property report on 2012 sales listed developers showed 2012 full-year contracted sales growth based on our analysis, for the 31 listed developers that we monitor, their 2012 full-year contracted sales performance increased by 25% yoy, on average, while their december 2012 contracted sales performance was up 86% yoy and 11% mom, on average. developers 2012 contracted sales performance was much stronger than in 2011, due to the recovery in chinas real estate market since 3q12. in particular, we note that developers december 2012 monthly sales performance showed significant yoy growth, due to the low base effect from 4q11, as the market underwent a downturn. figure 1: contracted sales of major developers (in rmbm) full-year 2012,%,%,company,ticker,12m11,2011 target,% achieved in 12m11,12m12,2012 achieved 2012 achieved target in 12m12 target in 12m12 (revised) (revised (original) (original,% yoy - 12m12,dec-12,% mom - dec 12,% yoy - dec 12,target),target),agile aoyuan bc land cc land ccre china sce,3383 hk 3883 hk 2868 hk 1224 hk 832 hk 1966 hk,31,520 5,016 11,047 6,378 8,124 4,570,37,000 5,500 15,000 7,500 7,300 5,500,85% 91% 74% 85% 111% 83%,33,070 5,250 13,300 7,856 10,087* 6,016,30,000 5,000 12,000 6,807 9,000 4,000,110% 105% 111% 115% 112% 150%,30,000 5,000 12,000 6,807 9,000 4,000,110% 105% 111% 115% 112% 150%,5% 5% 20% 23% 24% 32%,6,000 670 2,300 1,119 787 807,86% 10% 156% 20% 12% 15%,71% -18% 150% 1% 265% 634%,china vanke 200002 ch 121,500 120,000,101%,141,220,133,000,106%,133,000,106%,16%,14,070,-18%,143%,coli cogo c. garden cr land evergrande fantasia,688 hk 81 hk 2007 hk 1109 hk 3333 hk 1777 hk,87,090 7,687 43,200 35,958 80,393 7,005,80,000 7,000 43,000 30,000 70,000 6,000,109% 110% 100% 120% 115% 117%,111,523 13,520 47,600 52,000 92,320 8,014,100,000 13,000 43,000 40,000 80,000 7,200,112% 104% 111% 130% 115% 111%,80,000 10,000 43,000 40,000 80,000 7,200,139% 135% 111% 130% 115% 111%,28% 76% 10% 45% 15% 14%,5,628 291 5,510 5,980 7,690 842,8% -49% -10% 43% -35% -14%,2% na 45% 3% 499% 65%,gemdale,600383 ch 30,920,32,500,95%,34,150,32,500,105%,32,500,105%,10%,4,260,9%,-10%,glorious greentown kaisa kwg longfor minmetals,845 hk 3900 hk 1638 hk 1813 hk 960 hk 230 hk,13,322 33,100 15,289 11,500 38,268 3,660,15,000 50,000 15,000 15,000 40,000 4,045,89% 66% 102% 77% 96% 90%,10,930 49,500* 17,300 12,400* 40,130 5,007,13,000 40,000 16,500 12,000 39,000 4,000,84% 124% 105% 103% 103% 125%,13,000 40,000 16,500 12,000 39,000 4,000,84% 124% 105% 103% 103% 125%,-18% 50% 13% 8% 5% 37%,580 4,000 2,300 1,200 4,270 940,4% -44% 5% 0% 9% 5%,5% -30% 25% 118% 63% 192%,poly cn,600048 ch 73,242,80,000,92%,101,739,80,000,127%,80,000,127%,39%,9,707,12%,73%,poly property powerlong r&f sz inv shimao sino-ocean spg land sunac yuexiu yuzhou,119 hk 1238 hk 2777 hk 604 hk 813 hk 3377 hk 337 hk 1918 hk 123 hk 1628 hk,15,800 5,569 30,040 4,586 30,700 27,005 3,207 17,706 9,054 4,297,18,000 10,000 32,000 4,700 36,000 30,000 8,000 18,300 9,000 6,500,88% 56% 94% 98% 85% 90% 40% 97% 101% 66%,23,400 6,500 32,200 6,123 46,097 31,100 2,573* 31,570 12,300 6,529,19,000 6,000 32,000 6,000 30,700 27,000 4,200 30,000 10,000 5,000,123% 108% 101% 102% 150% 115% 61% 105% 123% 131%,16,000 6,000 32,000 6,000 30,700 27,000 4,200 22,000 10,000 5,000,146% 108% 101% 102% 150% 115% 61% 144% 123% 131%,48% 17% 7% 34% 50% 15% -20% 78% 36% 52%,2,300 860 3,001 373 3,811 1,800 113 4,690 461 369,28% 87% 9% -50% 25% -18% 0% 15% 73% -10%,53% 153% -1% 7% 70% -42% -68% 147% -73% 39%,average,91%,113%,116%,25%,12%,86%,source: deutsche bank, company data page 2,note: coli in hkdm,*deutsche bank estimates for full-year-2012 data,deutsche bank ag/hong kong,jan-10,jul-10,jan-11,jul-11,jan-12,mar-10,mar-11,nov-10,nov-11,mar-12,jul-12,jul-12,may-10,may-11,sep-10,sep-11,sep-12,nov-10,nov-11,may-10,may-11,may-12,nov-12,may-12,mar-10,mar-11,mar-12,may-11,may-12,jan-11,jan-12,mar-11,mar-12,jul-11,jul-12,sep-11,sep-12,nov-11,nov-12,mar-11,may-11,mar-12,jan-11,jan-12,may-12,sep-11,nov-11,sep-12,jul-11,nov-12,sep-10,sep-11,sep-12,jan-10,jul-10,jan-11,jul-11,jan-12,jul-12,sunac,cogo,yuzhou,shimao,greentown,polyproperty,crland,polycn,minmetals,yuexiu,szinv,chinasce,coli,ccre,ccland,bcland,powerlong,chinavanke,sino-ocean,evergrande,fantasia,kaisa,gemdale,c.garden,kwg,r&f,agile,longfor,aoyuan,glorious,spgland,nov-12,mom,yoy,11 january 2013 property china property,figure 2: 31 developers total contracted sales mom,figure 3: 31 developers total contracted sales yoy,140 120 100,mthly contracted sales momentum - mom,140% 120% 100% 80%,140 120 100,mthly contracted sales momentum - yoy,140% 120% 100% 80%,60%,60%,80 60 40 20 - 31 developers total mthly contracted sales (rmbbn) source: company data, deutsche bank figure 4: 31 developers average sales yoy 2012 120%,40% 20% 0% -20% -40% -60% -80%,80 60 40 20 - 31 developers total mthly contracted sales (rmbbn) source: company data, deutsche bank figure 5: 31 developers average sales yoy monthly 140%,40% 20% 0% -20% -40% -60% -80%,100% 80% 60% 40%,ytd avg sales yoy,120% 100% 80% 60%,avg mthly sales yoy,40%,20% 0% -20% -40% -60% -80% source: company data, deutsche bank figure 6: 2012 contracted sales growth ranking,20% 0% -20% -40% -60% -80% source: company data, deutsche bank,100% 80% 60% 40% 20% 0% -20% -40% source: company data, deutsche bank deutsche bank ag/hong kong,% yoy - 12m12 average,page 3,chinasce,shimao,yuzhou,crland,polycn,minmetals,greentown,polyproperty,yuexiu,ccland,evergrande,sino-ocean,ccre,coli,fantasia,bcland,c.garden,agile,powerlong,chinavanke,sunac,gemdale,aoyuan,kaisa,cogo,kwg,longfor,szinv,r&f,glorious,spgland,11 january 2013 property china property figure 7: ytd sales target achievement 160%,% achieved in 12m12 (revised target),average,140% 120% 100% 80% 60% 40% 20% 0% source: company data, deutsche bank in 2012, we saw significant sales growth from names like sunac (up 78% yoy), cogo (up 76% yoy), greentown (up 50% yoy) and shimao (up 50% yoy). among the large- caps, colis 2012 sales growth was up 28% yoy, china vankes up 16% yoy, cr lands up 39% yoy, and evergrandes up 15% yoy. we also saw almost all of the developers that we monitor exceeding their sales targets (with the exception of glorious) by a sizable margin, with an average (revised- up) target achieved rate of 113%, compared with a 2011 target achieved rate of 91% and 112% in 2010 target achieved rate of 2010. in particular, shimao exceeded its sales target by as much as 50%, and minmetals by 25%, greentown by 24% and yuexiu by 23%. for the month of december, while most of the developers took a breather, after achieving their 2012 full-year sales targets in november, a few names took the opportunity and continued to push their performance. in particular, cr land achieved december 2012 sales close to rmb6bn, up 43% mom and up 3% yoy. sunac achieved rmb4.7bn sales (up 15% mom and 147% yoy), cc land achieved rmb1.1bn (up 20% mom and 1% yoy), and yuexiu achieved rmb461m (up 73% mom and down 73% yoy). agile also achieved rmb6bn of sales, up 86% mom and 71% yoy.,page 4,deutsche bank ag/hong kong,sep-11,mar-12,may-09,may-10,may-11,may-12,sep-10,mar-09,mar-10,mar-11,sep-09,sep-12,jan-09,jan-10,jan-11,jan-12,may-09,may-10,may-11,may-12,mar-09,mar-10,mar-11,mar-12,nov-09,nov-10,nov-11,mar-09,mar-10,mar-11,mar-12,jan-09,jan-10,jan-11,jan-12,nov-12,nov-09,nov-10,nov-11,nov-12,sep-09,sep-10,sep-11,sep-12,may-09,nov-09,may-10,nov-10,may-11,nov-11,may-12,may-09,mar-09,may-10,mar-10,may-11,mar-11,may-12,mar-12,mar-09,nov-09,mar-10,nov-10,mar-11,nov-11,mar-12,may-09,may-10,may-11,may-12,nov-12,jan-09,sep-09,jan-10,jan-11,sep-10,jan-12,sep-11,sep-12,jan-13,jul-09,jul-10,jul-11,jul-12,nov-09,nov-10,nov-11,mar-09,mar-10,mar-11,may-09,may-10,may-11,mar-12,may-12,nov-12,sep-09,sep-10,sep-11,sep-12,jan-09,jan-10,jan-11,jan-12,nov-12,sep-09,sep-10,sep-11,nov-09,nov-10,nov-11,nov-12,sep-12,sep-09,sep-10,sep-11,sep-12,jan-13,jul-09,jul-10,jul-11,jul-12,jan-13,jul-09,jul-10,jul-11,jan-09,jan-10,jan-11,jan-12,jan-13,jul-12,jul-09,jul-10,jul-11,jul-12,jan-13,jan-09,jan-10,jan-11,jan-12,jan-13,jul-09,jul-10,jul-11,jul-12,jul-09,jul-10,jul-11,jul-12,11 january 2013 property china property taking a look at valuations,figure 8: sector discount to nav 0% -10% -20%,figure 9: sector discount to nav (mktcap weighted) 0% -10% -20%,-30% -30% -40% -40% -50%,-60% -70% -80%,-50% -60% -70%,sector avg discount to nav,mean,+1sd,-1sd,sector avg disc to nav (mktcap wtd),mean,+1sd,-1sd,source: company data, deutsche bank figure 10: sector p/e 30.0x 25.0x,source: company data, deutsche bank figure 11: sector p/e (mktcap weighted) 25.0x 20.0x,20.0x 15.0x 15.0x 10.0x 10.0x,5.0x 0.0x,5.0x 0.0x,sector avg p/e,mean,+1sd,-1sd,sector avg p/e (mktcap wtd),mean,+1sd,-1sd,source: company data, deutsche bank figure 12: sector p/b 2.5x 2.0x,source: company data, deutsche bank figure 13: sector p/b (mktcap weighted) 3.0x 2.5x,2.0x 1.5x 1.5x 1.0x 1.0x,0.5x 0.0x,0.5x 0.0x,sector avg p/b,mean,+1sd,-1sd,sector avg p/b (mktcap wtd),mean,+1sd,-1sd,source: company data, deutsche bank deutsche bank ag/hong kong,source: company data, deutsche bank,page 5,13,11 january 2013 property china property figure 14: china property valuation table,db,trade report,mkt cap,12m jan-10 daily t/o,target implied,est.,nav,eps,pe(x),company,ticker,rating,ccy,ccy,usdm usdm price,price upside nav,disc,12e,13e,14e,12e,13e,14e,covered,coli cr land longfor country garden evergrande r&f agile csci sino-ocean greentown soho china franshion hui xian reit yuexiu cogo shui on poly property sunac yanlord kwg kaisa c c land,688 hk 1109 hk 960 hk 2007 hk 3333 hk 2777 hk 3383 hk 3311 hk 3377 hk 3900 hk 410 hk 817 hk 87001 hk 123 hk 81 hk 272 hk 119 hk 1918 hk yllg sp 1813 hk 1638 hk 1224 hk,buy buy buy buy buy buy buy buy sell buy buy buy buy buy buy buy buy buy sell buy buy buy,hkd hkd hkd hkd hkd hkd hkd hkd hkd hkd hkd hkd cny hkd hkd hkd hkd hkd sgd hkd hkd hkd,hkd 26,198 57.10 hkd 17,177 23.30 cny 10,813 14.38 cny 9,994 12.99 cny 8,741 47.12 cny 6,044 10.50 cny 5,162 17.71 hkd 4,664 9.80 cny 4,483 4.27 cny 4,349 3.94 cny 4,195 6.85 hkd 3,463 1.93 cny 3,360 1.80 cny 3,227 6.55 hkd 3,015 3.32 cny 2,988 3.78 hkd 2,970 11.90 cny 2,618 4.38 cny 2,553 6.11 cny 2,318 5.79 cny 1,702 2.46 hkd 1,001 1.51,24.85 22.85 15.44 4.25 4.52 14.54 11.60 9.30 5.94 15.70 6.36 2.93 4.12 2.69 10.24 3.86 6.38 6.73 1.61 6.21 2.69 3.00,25.70 21.80 16.00 3.85 6.16 16.79 12.95 10.00 3.63 16.55 7.70 3.55 4.63 3.04 9.91 5.01 7.82 6.66 1.00 6.59 4.00 4.75,3% -5% 4% -9% 36% 15% 12% 8% -39% 5% 21% 21% 12% 13% -3% 30% 23% -1% -38% 6% 49% 58%,28.6 27.3 20.0 5.5 8.8 28.0 18.5 10.0 9.1 25.5 12.8 5.1 6.6 4.3 12.4 8.4 11.2 10.3 2.0 11.0 6.7 9.5,-13% -16% -23% -23% -49% -48% -37% -7% -34% -38% -50% -42% -38% -38% -17% -54% -43% -34% -20% -43% -60% -68%,2.03 1.37 1.06 0.38 0.60 1.71 1.23 0.54 0.39 1.85 0.52 0.25 0.21 0.29 1.03 0.31 0.55 0.90 0.40 0.79 0.36 0.27,2.88 1.56 1.31 0.43 0.74 1.79 1.53 0.60 0.45 2.26 0.59 0.30 0.24 0.30 1.93 0.49 0.82 1.18 0.50 0.80 0.49 0.40,3.54 2.02 1.60 0.50 0.91 2.42 1.74 0.71 0.60 2.42 0.67 0.31 0.25 0.31 2.82 0.46 0.97 1.67 0.56 1.06 0.58 0.50,12.2 16.7 11.7 9.0 6.1 6.8 7.6 17.1 12.1 6.8 9.8 11.6 19.2 7.5 9.9 9.9 11.6 6.0 20.2 6.3 6.1 11.1,8.6 14.7 9.4 7.9 4.9 6.5 6.1 15.4 10.6 5.6 8.6 9.7 17.4 7.3 5.3 6.3 7.8 4.6 16.2 6.2 4.4 7.5,7.0 11.3 7.8 6.9 4.0 4.8 5.3 13.1 8.0 5.2 7.7 9.5 16.3 7.0 3.6 6.8 6.6 3.2 14.5 4.7 3.7 5.9,central china minmetals e-house far east global,832 hk 230 hk ej us 830 hk,buy buy buy buy,hkd hkd usd hkd,cny hkd usd hkd,893 728 561 514,0.34 0.64 1.43 1.52,2.85 1.69 4.75 1.85,4.13 2.00 9.50 2.91,45% 18% 100% 57%,6.9 3.4 0.0 2.9,-59% -50% na -36%,0.35 0.18 0.50 (0.07),0.63 0.28 0.84 0.06,0.81 0.32 1.26 0.09,6.5 9.1 9.4 na,3.6 6.0 5.6 33.4,2.8 5.3 3.8 21.0,not rated,china vanke - a china vanke - b shimao nwcl hopson renhe mingfa shenzhen inv glorious,000002 ch 200002 ch 813 hk 917 hk 754 hk 1387 hk 846 hk 604 hk 845 hk,nr nr nr nr nr nr nr nr nr,cny hkd hkd hkd hkd hkd hkd hkd hkd,cny 17,857 77.68 cny 17,857 3.24 cny 7,544 18.17 hkd 4,246 1.42 hkd 3,722 2.46 cny 2,101 5.66 cny 1,808 0.51 hkd 1,636 3.24 cny 1,629 2.43,10.12 12.50 16.84 3.80 16.62 0.77 2.30 3.40 1.62,na na na na na na na na na,na na na na na na na na na,na na na na na na na na na,na na na na na na na na na,1.09 1.09 1.3 0.3 0.9 0.2 0.4 0.2,1.30 1.30 1.58 0.42 1.34 0.12 0.44 0.24,1.50 1.50 1.87 0.52 2.25 0.06 0.52 0.31,9.3 9.2 10.2 13.3 17.5 na 12.3 8.7 6.8,7.8 7.7 8.6 9.1 12.4 na 15.4 7.8 5.4,6.7 6.7 7.2 7.4 7.4 11.0 na 6.6 4.2,powerlong bj north star fantasia yuzhou,1238 hk 588 hk 1777 hk 1628 hk,nr nr nr nr,hkd hkd hkd hkd,cny cny cny cny,971 916 893 866,0.72 0.20 0.50 0.19,1.86 2.11 1.33 2.33,na na na na,na na na na,na na na na,na na na na,0.2 0.2 0.2 0.3,0.26 0.26 0.21 0.38,0.30 0.22 0.55,6.2 8.9 5.6 6.2,5.7 6.5 5.0 4.9,4.9 na 4.9 3.4,aoyuan,3883 hk,nr,hkd,cny,553,0.27,1.64,na,na,na,na,na,na,na,bc land,2868 hk,nr,hkd,cny,452,1.26,3.43,na,na,na,na,0.6,0.57,0.58,4.9,4.9,4.7,zhong an,672 hk,nr,hkd,cny,397,0.19,1.30,na,na,na,na,na,na,na,spg land,337 hk,nr,hkd,cny,342,0.26,2.52,na,na,na,na,0.1,0.24,0.25,15.0,8.6,8.1,overall average,-38%,10.1,8.7,7.2,source: company data, deutsche bank estimates, bloomberg finance lp page 6,consensus estimates for companies nr,deutsche bank ag/hong kong,-,-,-,-,-,11 january 2013 property china property figure 15: china property valuation table (contd),eps growth %,bvps,pb(x),dps,dividends yield %,net gearing %,company,ticker,12e,13e,14e,12e,13e,14e,12e,13e,14e,12e,13e,14e,12e,13e,14e,12e,13e,14e,covered,coli,688 hk,28,42,23,10.5,13.0,16.1,2.4,1.9,1.5,0.4,0.4,0.4,1.4,1.7,1.7,22.1 2.7,-0.7,cr land longfor country garden,1109 hk 960 hk 2007 hk