已完结分析师报告cicc

EquityFebruary17,Sunshine PoisedtoshinewithvisiblegrowthandmarginEricYuEricYuSFCCERef:: WebelieveSunshine100(“SS100”)isakeybeneficiaryofthenewurbanizationandemergingcommercialspacedemandintier-2/-3cities.Itsdistinctivestrategyinproductpositioningandcityselectionshouldheraldanewexpansioncycle,reflectedbyanexpected73%CAGRincontractedsalesthrough2015andanuptrendinprofitability.LedbypropertyvenYiXiaodi,SS100’sexperiencedmanagementteamshouldfacilitatesolidexecutionandeventuallyunlockitshiddenvalue.Dual-enginebusinessmodel(businesscomplexes+residentialcommunities)withuniquepositioningincommercialproperty.SS100blazedatrailintofast-growingtier-2/-3citieswithauniquestrategydevelolarge-scalemixed-usebusinesscomplexescenteredonofficeproperties.Itsearlymoveradvantagehasyieldedprimelocationsandpricingpremiumsovercompetingprojects.GPMofthisbusinessshouldremainlightofSS100’sprojectpipelineanditsstrategytofocusmoreoncommercialmarginsqueezeontheresidentialfront.Contractedsalestosurgewith73%2-yearCAGRthrough2015ondemandprospectsamongitsninetier-2cities,drivenbysizablegenuinetailwindsinYantaiandLiuzhou.Weestimateitsattributablelandbankof11.7mnsqmisadequatefor5~6yearsofdevelopmentandlong-termgrowthpotentialisrootedinalargepoolofprospectivecities.SS100’slowaveragecomingyears.Onthebackofmoredeliveryofprojectsatamaturestageandalargercontributionfromcommercialproperties,GPMlookssettostayinrecoverymodeatanestimated30.8%/31.1%/33.2%in2013/14/15.EarningsandEarnings:WeexpectSS100’scorenetprofittobeRmb471mn,Rmb914mn,andRmb1,395mnfor2013/14/15,witha3-yearCAGRof92%.Valuation:OurestimateofSS100’sNAVisbetweenRmb13.7~16.6bn,orHK$17.8~21.6bn.SS100’sfairvaluerangeisestimatedatHK$7.1bn~HK$8.9bn,derivedfrom:1)P/Emultiple:Webelieve6x~7.5x2014eP/Eisreasonable,givingrisetoafairvalueofHK$7.1bn~HK$8.9bn;and2)NAVapproach:FairvalueisestimatedatHK$7.1bn~HK$8.6bn,a60%discounttoNAV.Keyrisksinclude:1)Amaterialslowdownin’seconomyand/orasubstantialcontractioninmonetarysupply;2)limitedimprovementinnetprofitmargin;3)slowassetchurndraggedbydevelopmentoflarge-scaleprojects;4)capitalshortfallinbusinesscomplexdevelopment;and5)highrefinancingneedsinthenear-mediumterm.ThishasbeenpreparedbyitsauthorsindependentlyofSunshine100Holdings(the“”).InternationalCapitalCorporationHongKongSecuritiesLimited(“CICCHKS”)hasnoauthoritywhatsoevertogiveanyinformationormakeanyrepresentationorwarrantyonbehalfofthe,itsshareholders,GlobalMarketsAsiaLimited(togetherwithCICCHKS,the“JointSponsors”),therespectiveadvisorstoCICCHKS,orunderwriters,oranyotherinconnectiontherewith.Inparticular,theopinions,estimatesandprojectionsexpressedinitareentirelythoseoftheauthorshereofandarenotgivenasanagentofthe,itsshareholders,theJointSponsors,theadvisorstoCICCHKS,orunderwriters,oranyotherorinitscapacityasamanagerorunderwriterofanyoffering.CICCHKSand/oroneormoreofitsaffiliatesisactingasJointGlobalCoordinator,JointSponsor,JointBookrunnerandJointLeadManagerina ingequityfund-raisingexercisebythe.Thisdoesnotconstituteorformpartofanyoffer,solicitationorinvitationtosubscribeorpurchaseanysecuritiesnorshallitoranypartofitformthebasisoforberelieduponinconnectionwithanycontractorcommitmentwhatsoever.Anydecisiontopurchaseorsubscribeforsecuritiesinanyofferingmustbemadesolelyonthebasisoftheinformationcontainedintheprospectusoroherofferingcircularissuedbytheinconnectionwithsuchoffering.Thisisbaseduponinformationthatweconsiderreliable,butCICCHKShasnotindependentlyverifiedthecontentshereof.Thefactsdescribedinthisreport,aswellastheopinions,estimates,forecastsandprojectionsexpressedinit,areasofthedatehereofandaresubjecttochangewithoutnotice.Norepresentationorwarranty,expressorimplied,ismadeastoandnorelianceshouldbecedonthefairness,accuracy,completenessorreasonablenessoftheinformation,opinions,esimates,forecastsandprojectionscontainedinthis,andnoneofCICCHKS,the ,itsshareholders,theJointSponsors,therespectiveadvisorstoCICCHKS,the ,itsshareholders,theJointSponsorsorunderwritersnoranyother acceptsanyliabilitywhatsoeverforanylosshowsoeverarisingfromanyuseofthis oritscontentsorotherwisearisinginconnectionherewith.THISISSTRICTLYTOTHERECIPIENT.ITISBEINGDTOYOUSOLELYFORYOURINFORMATIONANDMAYNOTBEREPRODUCED,REDISTRIBUTEDORPASSEDON,DIRECTLYORINDIRECTLY,TOANYOTHERORPUBLISHED,INWHOLEORINPART,FORANYPURPOSE.NEITHERTHISNORANYCOPYOFITMAYBETAKENORTRANSMITTEDINTOTHEUNITEDSTATES,CANADAORJAPAN,ORDISTRIBUTED,DIRECTLYORINDIRECTLY,INTHEUNITEDSTATES,CANADAORJAPAN.THEDISTRIBUTIONOFTHISINOTHERJURISDICTIONSMAYBERESTRICTEDBYLAW,ANDSINTOWHOSEPOSSESSIONTHISCOMESSHOULDINFORMTHEMSELVESABOUT,ANDOBSERVE,ANYSUCHRESTRICTIONS.BYACCEPTINGTHISREPORTYOUAGREETOBEBOUNDBYTHEFOREGOINGINSTRUCTIONS.HONGTHISISFORDISTRIBUTIONINHONGKONGONLYTOPROFESSIONALINVESTORS(ASDEFINEDINTHESECURITIESANDFUTURESORDINANCE(CHAPTER571OFTHELAWSOFHONGKONG)ANDANYRULESPROMULGATEDTHEREUNDER).THISISFORDISTRIBUTIONINTHEPEOPLE’SREPUBLICOF(THE“PRC”,FORTHEPURPOSEOFTHIS,EXCLUDINGHONGKONGSPECIALADMINISTRATIVEREGION,MACAUSPECIALADMINISTRATIVEREGIONAND)ONLYTONOTMORETHAN200SPECIFICQUALIFIEDDOMESTICINSTITUTIONALINVESTORSASDEFINEDINTHETRIALMEASURESFORTHEADMINISTRATIONOFSECURITIESINVESTMENTOUTSIDETHEPRCBYQUALIFIEDDOMESTICINSTITUTIONALINVESTORS(《合格境内机构投资者投资管理试行办法》)PROMULGATEDBYTHESECURITIESREGULATORYCOMMISSION(“CSRC”)ON18JUNE2007,FUNDMANAGEMENTCOMPANIESANDSECURITYCOMPANIES(COLLECTIVELY,THE“QUALIFIEDDOMESTICINVESTORS”),WHICHHAVEBEENAPPROVEDBYRELEVANTPRC ERNMENTTOINVESTINTHEOFFSHORESTOCKMARKETS.OTHERSSHOULDNOTACTORRELYONTHIS ORANYOFITSCONTENTS.NOADVERTISEMENT,PUBLICINDUCEMENTORPUBLICISSUANCEINANYDISGUISEDFORMWILLBEUSEDWITHINTHEPRCINCONNECTIONWITHTHEDELIVERYORDISTRIBUTIONOFTHIS.THISISANDISBEINGDTOYOUSOLELYFORYOURINFORMATIONANDMAYNOTBEREPRODUCED,REDISTRIBUTED,DISCLOSEDORPASSEDON,INANYWAY,TOANYOTHERORPUBLISHED,INWHOLEORINPART,FORANYOTHERPURPOSE.NEITHERTHISNORANYPARTOFITISINTENDEDAS,ORCONSTITUTEPROVISIONOFANYCONSULTANCYORADVISORYSERVICEOFSECURITIESINVESTMENT.SUBJECTTOTHEFOREGOING,THEDISTRIBUTIONOFTHISDOESNOTCONSTITUTEAPUBLICOFFEROFTHESHARESWITHINPRCASPRESCRIBEDINARTICLE10OFTHEPRCSECURITIESLAW(《中民法》PROMULGATEDON29DECEMBER1998AMENDEDON27OCTOBER2005ANDEFFECTIVEON1JANUARY2006ANDISNOTINTENDEDAS,ANDDOESNOTCONSTITUTE,PROVIDINGCONSULTINGORADVISORYSERVICEOFSECURITIESINVESTMENTASDEFINEDUNDERTHEPRCLAWS.本文件仅给中民（下称“中国”，就本文件目的而言，不包括特别行政区、特别行政区和）符合《合格境内机构投资者投资管理试行办法》（中国监督管理2007年6月18日颁布）定义的不超过200名的特定合格境内机构投资者，即经相关中国机构批准可在市场投资的基金管理公司、公司（并称为“合格境内投资者”）。其他不得就本文件或其中任何内容采取行动，也不得依赖本文件或其中任何内容。不得境内采用、公月29日颁布、2005年10月27日修订并于2006年1月1日实施）所规定的境内的公开发售，且不得用作或构成中国法律所定义的投资咨询服务INTHEUNITEDKINGDOM,THISISFORDISTRIBUTIONONLYTOSWHO:(I)ARESFALLINGWITHINTHEDEFINITIONOF"INVESTMENTPROFESSIONALS"PURSUANTTOARTICLE19(5)OFTHEFINANCIALSERVICESANDMARKETSACT2000(FINANCIALPROMOTION)ORDER2005(ASAMENDED,THE“FINANCIALPROMOTIONORDER”);(II)ARESFALLINGWITHINARTICLE49(2)(a)TO(d)("HIGHNETWORTHCOMPANIES,UNINCORPORATEDASSOCIATIONSETC")OFTHEFINANCIALPROMOTIONORDER;OR(III)ARESTOWHOMANINVITATIONORINDUCEMENTTOENGAGEININVESTMENTACTIVITY(WITHINTHEMEANINGOFSECTION21OFTHEFINANCIALSERVICESANDMARKETSACT2000)MAYOTHERWISELAWFULLYBECOMMUNICATEDORCAUSEDTOBECOMMUNICATED(ALLSUCHSTOGETHERBEINGREFERREDTOAS"RELEVANTS").THIS ISDIRECTEDONLYATRELEVANTSANDMUSTNOTBEACTEDONORRELIEDONBYSWHOARENOTRELEVANT S.ANYINVESTMENTORINVESTMENTACTIVITYTOWHICHTHISRELATESISAVAILABLEONLYTORELEVANTSANDWILLBEENGAGEDINONLYWITHRELEVANTS.FORNON-INDEPENDENTRESEARCHCOMMISSIONEDORPRODUCEDBYSAUTHORISEDINTHEUKBYTHEFSA:THISDOESNOTPROVIDEANIMPARTIALOROBJECTIVEASSESSMENTOFTHESUBJECTMATTERANDDOESNOTCONSTITUTEINDEPENDENT"INVESTMENTRESEARCH"UNDERTHEAPPLICABLERULESOFTHEFINANCIALCONDUCTAUTHORITYINTHEUK.CONSEQUENTLY,THISHASNOTBEENPREPAREDINACCORDANCEWITHLEGALREQUIREMENTSDESIGNEDTOPROMOTETHEINDEPENDENCEOFINVESTMENTRESEARCHANDISNOTSUBJECTTOANYPROHIBITIONONDEALINGAHEADOFTHEDISSEMINATIONOFINVESTMENTRESEARCH.:TheEquitySecuritiesofThe("theSecurities")havenotbeenandwillnotberegisteredwiththeFinancialSupervisoryCommissionofpursuanttorelevantsecuritieslawsandregulationsandmaynotbeofferedorsoldinthroughapublicofferingorincircumstancewhichconstitutesanofferwithinthemeaningoftheSecuritiesandExchangeActofthatrequiresaregistrationorapprovaloftheFinancialSupervisoryCommissionof.NoorentityinhasbeenauthorizedtoofferorselltheSecuritiesin.Italy:Thesesareprovidedforinformationpurposesonly.Theinformationcontainedinthesereportshasbeenobtainedfromsourcesbelievedtobereliableanditsaccuracyandcompletenessisnotguaranteed.Theinformationprovidedissubjecttochangewithoutnotice.Thesesdonotconstituteinvestmentadviceanddonotcontainal mendationstoinvestment.Finland:ThisdoesnotconstituteanoffertothepublicinFinland.Thismaynotandshallnotbedeemedtobeusedforthemarketing,issuanceorofferingofsecuritiestothepublicinFinland.theSecuritiescannotandwillnotbeofferedorsoldinFinlandbymeansofanyinanywayotherthanundertheexemptionsoftheProspectusDirective2003/71/ECasimplementedinFinland.NoactionhasbeentakentoauthoriseanofferingoftheSecuritiestothepublicinFinlandandthedistributionofthisisnotauthorisedbytheFinnishFinancialSupervisoryAuthority.Thisisstrictlyforprivateusebyitsholderandmaynotbepassedontothirdpartiesorotherwisepubliclydistributed.Subscriptionswillnotbeacceptedfromanysotherthanthetowhomthishasbeendeliveredbytheoritsrepresentative.Thismaynotincludealltheinformationthatisrequiredtobeincludedinaprospectusinconnectionwithanofferingtothepublic.Austria:Thisisnotintendedtoconstituteanofferorsolicitationtopurchaseorinvestinhesecuriiesdescribedherein.ThesecuriiesmayonlybeofferedintheRepublicofAustriainaccordancewiththeprovisionsoftheAustrianCapitalMarketAct(Kapitalmarktgesetz)andotherapplicablelawsoftheRepublicofAustria.Therecipientsofthis(whichhasnotbeenapprovedinaccordancewiththeCapitalMarketAct)andotherinformationwithrespecttothesecuritiespresent'qualifiedinvestors'(qualifizierteAnleger)accordingtoSection1paragraph5aCapitalMarketActandeachrecipientagreesbyacceptingthisthatheisaqualifiedinvestorinthemeaningofheCapitalMarketAct.Accordingly,thesecuritiesmaynotbe,andarenotbeing,offeredoradvertisedpubliclyorofferedsimilarlyundertheCapitalMarketActandnodistributionorpublicationofthisismadetosotherthanthequalifiedinvestorstowhomtheisallyaddressed."France:CICCHKShasnotofferedorsoldandwillnotofferorsell,directlyorindirecly,SecuritiestothepublicinFrance,andhasnotdistributedorcausedtobedistributedandwillnotdistributeorcausetobedistributedtothepublicinFrance,thisoranyotherofferingmaterialrelatingtotheSecurities.Offers,salesanddistributionsthathavebeenandwillbemadeinFrancehavebeenandwillbemadeonlyto(a)providersoftheinvestmentservicesofportfoliomanagementfortheaccountofthirdparies,and(b)qualifiedinvestors(investisseursqualifiés),otherthanindividuals,allasdefinedin,andinaccordancewith,AriclesL.411-1,L.411-2,andD.411-1oftheFrenchCodemonétaireetfinancier.SecuritiesmayberesolddirectlyorindirectlyonlyincompliancewithArticleL.411-1,L.411-2,L.412-1andL.621-8toL.621-8-3oftheFrenchCodemonétaireetNeitherthispreparedinconnectionwiththeSecuritiesnoranyotherofferingmaterialrelaingtotheSecuritieshasbeensubmittedtotheclearanceproceduresofheAutoritédesmarchésfinanciersornotifiedtotheAutoritédesmarchésfinanciersbythecompetentauthorityofanothermemberstateoftheEuropeanEconomicArea."Ireland:Thisdoesnotconstituteanofferoraninvitationtothepublictosubscribeforortopurchaseanysharesandeach towhomthisoffermemorandumisdeliveredshalltreatthis andshallnotdistributeorpassonacopyofthis toany withoutthepriorconsentinwritingofThe.Neiherthis noranyothermarketingmaterialconstituteaprospectus.This hasnotbeenfiledwithorapprovedbytheCentralBankofIreland.Luxembourg:TheSecuritiesmaynotbeofferedorsoldtothepublicintheGrandDuchyofLuxembourg,directlyorindirectly,and,neitherthisnoranycircular,prospectus,formofapplicaion,advertisement,communicationorothermaterialmaybedistributed,orotherwisemadeavailablein,orfromorpublishedin,theGrandDuchyofLuxembourg,exceptincircumstanceswhichdonotconstituteanofferofsecuritiestothepublic.SWITZERLAND:ThisreportisnotintendedtoconstituteanofferorsolicitationtopurchaseorinvestinheSharesdescribedherein.TheSharesmaynotbepubliclyoffered,soldoradverised,directlyorindirectly,inorfromSwitzerland.NeitherthisreportnoranyotherofferingormarketingmaterialrelatingtotheSharesconstitutesaprospectusassuchtermisunderstoodpursuanttoarticle652aoftheSwissCodeofObligationsoralistingprospectuswithinthemeaningofthelistingrulesoftheSIXSwissExchange.oranyotherregulatedtradingfacility,andneitherhis noranyotherofferingormarketingmaterialrelatingtotheSharesmaybepubliclydistributedorotherwisemadepubliclyavailableinSwitzerland.HOLLAND:Thesecuritiesmaynotandwillnotbeofferedorsold,directlyorindirectly,orpubliclypromotedoradvertised,intheNetherlandsotherthansolelytoqualifiedinvestors(gekwalificeerdebeleggers)asdefinedinarticle1:1oftheActonFinancialSupervision(Wetophetfinancieeltoezicht,AFS),allwithinthemeaningofarticle1:12andarticle5:3oftheAFS.Qatar:thisisnotintendedtoconstituteanoffer,saleordeliveryofsharesorothersecuritiesunderthelawsofhestateofqatarincludingtherulesandregulationsofQatarFinancialCentreAuhority("QFCA")ortheQatarFinancialCentreRegulatoryAuthority("QFCRA")orequivalentlawsoftheQatarCentralBank("QCB").Thishasnotbeenlodgedorregisteredwith,orreviewedorapprovedbytheQFCA,theQFCRA,theQCBortheQatarFinancialMarketsAuthority("QFMA")andisnototherwiseauthorisedorlicensedfordistributioninthestateofQatar.Theinformationcontainedinthisdoesnot,andisnotintendedto,constituteapublicorgeneralofferorotherinvitationinrespectofsharesorothersecuritiesinthestateofQatarortheQatarfinancialcentre.ThisoriginatesfromoutsideofthejurisdictionofQatarandisdistributedtoalimitednumberofsophisticatedpotentialinvestorswhoarewillingandabletoconductanindependentinvestigationoftherisksinvolvedinaninvestment.CICCHKSisnotregulatedorauthorisedbytheQCB,QFMA,QFCauthority,QFCRegulatoryAuthorityoranyotherernmentauthorityinhestateofQatar.CICCHKSisnot,byvirtueofthedistributionofthis,conductinganybanking,investmentorothercommercialbusinessinthestateofQatarortheQatarFinancialCentre.CICCHKSisanentityregulatedunderlawsoutsidethestateofQatar.Opinions,estimates,forecastsandprojecions,ifany,containedinthisreportareourcurrentopinionsasofthedateappearingonthisreportonly,basedoninformationthatmaynotbeaccurateorcomplete.Beforeactingonanyopinioninthisreport,sshouldconsiderwhetheritissuitablefortheirparticularcircumstancesand,ifnecessary,seekprofessionaladvice.Forecasts,projectionsandvaluationsareinherentlyspeculativeinnatureandmaybebasedonanumberofcontingencies.sshouldnotregardtheinclusionofanyforecasts,projectionsandvaluationsinthisreportasarepresentationorwarrantybyanythattheseforecasts,projectionsorvaluationsortheirunderlyingassumptionswillbeachieved.Businesscomplexes+residentialcommunities=dual-enginebusiness Distinctivestrategyindevelobusiness AcasestudyonLiuzhouSunshine100City Residentialcommunitiestoridethewaveofthenew Contractedsalesexpectedtosurgewith73%2-yearCAGRin Corenetprofitexpectedtogrowata92%3-yearCAGRin GPMexpectedtoedgedownin2013andrecoverin2014and Netgearingratioexpectedto Fairvaluerangeestimatedat Figure2:SS100has25consolidatedprojectsacross15citiesasofNovember30, Figure4:SS100’sbusinesscomplexesarecenteredonoffice Figure5:PricingpremiumofWeifangSunshine100City Figure6:BusinesscomplexesGPMlargelyhigherthan Figure7:Businesscomplexeswithhighermargintocontributeincreasingshareofcontracted Figure8:SnapshotofLiuzhou’seconomyandproperty Figure9:LiuzhouSunshine100Cityzaisfocusedontheneedsofbusiness Figure10:SS100’stier-2citieshavegrownfasterinGDPandpercapita ethan Figure11:AveragehomepricesinSS100’stier-2citiesaremore Figure12:SupplyinSS100’stier-2citiestorebound,partlyeasingupwardpressureon Figure13:PotentialhousingsupplyinSS100’stier-3citiesmuchlowerthan Figure15:Weexpectcontractedsalestoposta73%CAGRwithalargercontributionfrombusiness Figure16:SS100hasbeenabletosecurelandparcelsatattractive Figure17:Directorswithrich Figure18:Earnings Figure19:Margin Figure20:MarginsofSS100’stwodevelopmenttypesandtheirpercentagein Figure21:Netgearingratioexpectedtotrend Figure22:Historicalandforecastedfinancial Figure23:WACC Figure24:NAV Figure25:Sensitivityysison Figure26:SS100’s Figure27:Valuationsoflisted Businesscomplexes+residentialcommunities=dual-enginebusinessmodelDistinctivestrategyindevelobusinessAnationwidepropertydeveloperinthemaking.Sinceitsinceptionin1994,SS100hasextendeditsfootprintto16citiesin ,includingninetier-2cities(Tianjin,Chongqing,Wuhan,Changsha,Jinan,Nanning,Shenyang,ChengduandWuxi)whichareregionaleconomiccenterswithresilientend-userdemandandrisingconsumerism,andseventier-3cities(Yantai,Dongying,Liuzhou,Guilin,Weifang,Dongguan[viaanassociated andQingyuan)thathavepromisinggrowthprospectsintheirrespectiveprovinces.Benefitingfromcontinuousurbanizationin ,SS100’sbalancedmixoftier-2/-3citiesshouldnotonlyreducerelianceonanyparticulargeographicregionbutalsopresentabove-averagegrowthpotential.Figure1:TimelineofSS100’sgeographicFirstproperty

Developmentof100Classical

ExpandedintoChangsha,GuilinandChongqing

ExpandedintoDongyingand

DevelopmentofWeifangSunshine100Cityza

49%stakeSunshine100 DevelopmentBeijingSunshine

DevelopmentTianjinSunshine100Int'lNewTown

Commencedand

Developmentof100GreatLake

DevelopmentofDongguanSongshanFigure2:SS100has25consolidatedprojectsacross15citiesasofNovember30,Figure3:SS100’s25consolidatedprojectshave11.7mnsqmattributablelandbankasofNovember30,GFAunderForfutureTotalSaleableGFAGFAheldforLandusenotMix-usedbusinessNanningSunshine100 00NanningSunshine100UpperEastSide0000VantoneAir000YantaiSunshine100 0YangshuoSunshine100WestStreet0000LiuzhouSunshine100 00WeifangSunshine100City000ChongqingSunshine100InternationalNewTowShenyangSunshine100InternationalNewTown(Phase000JinanSunshine100InternationalNewTowMulti-functionalresidentialTianjinSunshine100InternationalNewTow000NanningSunshine100Mountainside000NanningSunshine100Australian000NanningSunshine100European0000LiuzhouSunshine100Classic000ShenyangSunshine100InternationalNewTown(PhaseI&00ShenyangSunshine100Golf0000ChengduSunshine100Mia000WuxiSunshine100InternationalNewTow00ChangshaSunshine100InternationalNewTow00WuhanSunshine100Lakeside00DongyingSunshine100City0QingyuanMangoTow00000000ChengduXinShengYuan00000TotalGFAAttributableGFACateringtoincreasingcommercialspacedemand.Urbancomplexes,especiallythosecenteredonshop malls,havemushroomedin asaresultofrapidurbanizationandtheretailboom.As isadvancingintoanewconsumptionmode,oversupplyoftheseprojectswillbearealconcernin ingyears.SS100,however,blazedatrailintofast-growingtier-2/-3citiesandtookauniquestrategyofdevelolarge-scalemixed-usebusinesscomplexes,withofficepropertiesasthecenterpieceandsupplementedbyretailshops,ho sandapartments.Asa“build-to-sell”developer,the sellsratherthanholdingmostofthecommercialproperties.Itsapproachtocateringtoincreasingcommercialspacedemandhasabetterrisk-rewardprofile,inourview,given:1)Supportivebusinessenvironmentprovidedbylocalernmentsshouldattractinflowsofcompaniesandindividualcitizens;2)officepropertiesareeasiertoreplicatethanretailshopsandho whichrequiremorelocalinsight;and3)“build-to-sell”isabetterstrategythan“build-to-hold”inlower-tiercities.Figure4:SS100’sbusinesscomplexesarecenteredonofficeCenteredonretail,especially SuchasCenteredonhosandservicedapartmentsSuchasShanghaiCentreCenteredonofficepropertiesandsupplementedbyretailshops,hosandSuchasSunshineEqualfocusonho,office,retail,andservicedSuchasHKPacific ceandBeijing Primelocationssecuredbyearlymoveradvantage.AsSS100entereditstargetcitiesearly,itwasoftenabletoacquireprojectsinprimelocations.Basedonourcalculation,SS100’smixed-usebusinesscomplexesareonaverage2.2kmfromcitycenters.AgoodcombinationoflocationandbrandhasresultedinSS100’sachievingapricingpremiumoverpeers.Asper IndexAcademy(CIA),theASPofcommercialpropertiesinSS100’smixed-usecomplexespre-soldin2012was>10%higherthanthatinneighboringprojects.Inaddition,webelievetheprime-locationofficeportionenhancesthevalueofadjacentresidentialpropertiesandcreatesroomforpriceappreciationonsubsequentlaunches.FigureFigure5:PricingpremiumofWeifangSunshine100 PropertyASPinWeifangASPofcompetingSource:CREIS,CICC45%oflandbank,57%ofGAV,GPMtostayhigherthan40%.AsofNovember30,2013,mixed-usebusinesscomplexesconstitute45.3%ofSS100’slandbank,equivalentto5.3mnsqmofattributableGFA.GiventheirhigherASPandbettermargins,57%ofconsolidateddevelopmentprojects’GAVcomesfromthisproducttype.Asareference,theirASP(excludingcarparks)surged76%toRmb11,241/sqmin9M13fromRmb6,397/sqmin2010,withGPMimproving5.4pptto45.0%.InlightofSS100’sprojectpipelineanditsstrategytofocusmoreoncommercialdevelopment(toraisetheproportionofbusinesscomplexesto50%oflandbank),weexpectcontributionfrombusinesscomplexestoaccountfor41%ofcontractedsalesin2015,protectingprofitabilityagainstindustry-widemarginsqueezeontheresidentialfront.StakeGPMFigure6:BusinesscomplexesStakeGPM 0VantoneAir0 100% data,CREIS,CICCNote:WeexcludetheYangshuoSunshine100WestStreetSquareprojectasithasdeliveredallareasforandwillnotaffectfuturepropertydevelopmentsector*TotallandbankequalscompletedsaleableGFAremainingunsold,plusGFAunderdevelopmentandnned**NanningSunshine100UpperEastInternationalprojectandNanningVantoneAirGardenproject’slandbankareallcarparks,resultinginlowGPM.Figure7:Businesscomplexeswithhighermargintocontributeincreasingshareofcontracted

GPMofbusinesscomplexesGPMofbusinesscomplexesGPMofresidentialcommunities%ofcontractedsalesfrombusiness42%12

BookedASPofbusinesscomplexesBookedASPofresidentialcommunitiesBookedASPofwhole

0--

AcasestudyonLiuzhouSunshine100CityLiuzhouisthesecond-largestcityintheGuangxiZhuangAutonomousRegionandlocatedattheintersectionoftheASEAN,Pan-PearlRiverDeltaandWest economiczones.Asanadvancedindustrialbaseoftheauto ,metallurgyandmachineryindustries,Liuzhouhasexperiencedrapideconomicgrowth,withGDPandpercapitadisposable egrowingataCAGRof19%and12%over2007~2012.Thefavorableeconomicenvironmenthasfuelledthegrowthofpropertymarket.RealestateinvestmentmorethantripledtoRmb23bnin2012fromRmb7bnin2007,witha17%CAGRinpropertysales.Figure8:SnapshotofLiuzhou’seconomyandproperty (Rmb(Rmbbn)(Rmbbn) 8 6 20

0

0

0

Source:NBS,CICCLiuzhouSunshine100CityzaislocatedinaprimelocationinChengzhongDistrictadjacenttothecityernmentcomplexandis inganintegralpartofLiuzhou’scentralbusinessdistrict.Distinguishablefromcommercialprojectsofotherdevelopers,thedesignofthismixed-usecomplexisfocusedontheneedsofbusinessusers,featuringhigh-endofficebuildingsof186,267sqm,retailspaceof132,805sqm,ahoof27,756sqmand283,157sqmofresidential.FigureFigure9:LiuzhouSunshine100 zaisfocusedontheneedsofbusinessHo RetailThisprojectwentonpre-saleinApril2007andhasfetchedRmb3.6bnsofar,morethanfivetimesitstotaldevelopmentbudget(includingRmb602mnalreadyspentonlandacquisition,constructionandcapitalizedintereststogetherwithRmb98mntobeincurred).Profitabilityalsolooksveryappealing,withcurrentGPM/NPMestimatedat59%/24%,mostlyattributabletolowaveragelandcost(onlyRmb246/sqm)andsteadygrowthofASP(3-yearCAGRof24%toRmb13,576/sqmin9M13).ResidentialcommunitiestoridethewaveofthenewProductlinetofitwellwithtier-2/-3exposure.SS100’smulti-functionalresidentialcommunitiesareprimarilylocatedinclosesuburbsoflargeandkeycities.Althoughtheirlocationsareatadistancefromcitycenters,fastdevelopmentofsuburbantransportationhasgreatlyenhancedaccessibility.Theyarethereforewell-positionedtocapturethegrowingpopulationgeneratedbythenewurbanization.Indevelothisproductline,SS100aimstosatisfytheconsumptionneedsoftargetcustomersbyintegratingcomplementarycommercialproperties.Ofthe11multi-functional