China / Hong Kong Industry Focus China Property Sector GFA sold, while in 2015, China’s GFA new start was 5% lower than GFA sold. If there is no strong recovery in land sales, GFA

ed-JS / sa- AH

Wait for a good entry point

Demand from shanty town relocation and migrant workers to help sales growth in 2016

Inventory is lower than market estimate and will continue to go down

Yet, margin recovery is not imminent. Tier 2 city players to see higher margin pressure than tier 1 city plays

Upcoming results may drive valuations lower. Wait for a better entry point to accumulate high quality players: COLI, CR Land, Country Garden, and CIFI

Policies to boost mass market demand from migrant workers and relocations. China has set the direction for the property sector, which is to (1) accelerate citizenization of migrant workers to enhance effective demand; (2) increase cash compensation for shanty town redevelopment; and (3) establish a housing system with dual sales/lease markets. With policy supports, we estimated that sales contribution from shanty town relocation and migrant workers is likely to head higher from 8% to 12%, This, coupled with higher affordability and rising upgrade demand shall allow property sales to grow at c.10% in 2016 Falling inventory to drive ASP growth. The widely quoted inventory level includes non-residential spaces. Our estimate shows residential supply including completed but unsold, under construction and undeveloped land represents 3.99 years of GFA sales, which is lower than 2014’s 4.11 years and market estimate of 5.29 years. This is expected to decline further in 2016 due to lower land supply and new starts in 2015. Potential ASP upside may help to mitigate margin pressure nationwide. Yet, tier 1/2 city players may still see their land price as a percentage of ASP heading higher, which imply margin recovery is not yet on the card. Tier 3 city plays shall see stable margin outlook. Some developers will be able to maintain their margins going forward, such as COLI, Vanke, CR Land, COGO, and CIFI.

Shopping opportunity may emerge during the result season. Forex losses and lower IP revaluation gains may lead to many developers reporting y-o-y declines in earnings. Although core earnings may still see decent growth and physical market outlook is solid, share price may face some downward pressure. This may provide a better entry point to buy mega-sized developers with lower margin pressure and small developers with strong operations. Our picks are COLI, CR Land, Country Garden, and CIFI.

HSI: 19,196

ANALYST Carol WU +852 2863 8841 [email protected] Danielle WANG CFA, +852 2820 4915 [email protected] Ken HE CFA, +86 21 6888 3375 [email protected] Andy YEE CFA, +852 2971 1773 [email protected]

Top picks

F Y 16F

PEHK $ HK $ US$bn x

China Ov erseas(688 HK)

21.50 30.30 Buy 27 6.3

CR Land(1109 HK)

18.08 26.01 Buy 16 8.2

Country Garden(2007 HK)

2.94 3.66 Buy 9 5.3

Company Pric eM k tCapRec

T argetPric e

Source: Thomson Reuters, DBS Vickers

DBS Group Research . Equity 29 January 2016

China / Hong Kong Industry Focus

China Property Sector Refer to important disclosures at the end of this report

Industry Focus

China Property Sector

Page 2

Table of Contents

Executive summary 3

Potential supportive policies to release demand 5

Growth in both GFA and ASP likely in 2016 10

Is inventory level really worse off? 11

Developers may target double digit y-o-y growth for 2016 contracted sales 16

Focus on tier 1/2 cities is still the preferred route, but prospects may not be better 18

Margin trends 23

Faster than expected RMB depreciation may cloud the upcoming result season and create buying opportunities 28

Panda Bonds may be a new trend for HK listed developers to adjust debt structure and funding cost 35

Industry Focus


Page 3

Executive summary

Policies may help to meet mass market demand from migrant workers and relocations. We expect Chinese government to make more efforts to (1) accelerate citizenization of migrant workers to enhance effective demand; (2) to encourage cash compensations to be given to shanty town villagers for relocation and (3) to establish a housing system with dual sales/lease markets. In our estimate, these efforts will likely increase contribution from migrant workers and shanty town relocation to 4% and 8% of national sales, respectively in 2016 (vs. 1% and 7% in 2015). Demand from upgraders or long-term investors may also grow if 3rd mortgage is on offer.

Single digit growth in GFA sold is still possible in 2016. The affordability (national monthly mortgage payment over income) is at a historical low of 34% now. We expect genuine demand, which is highly correlated to population, will remain stable in 2016. As such, we maintain our view that annual demand is sustainable at c. 1.2bn sm up to 2020. Additional demand from the shanty town redevelopments and migrant workers along with the genuine demand may lead to GFA sold rising by single digits in 2016.

ASP still has upside. In 2015, national blended ASP increased c. 9% y-o-y. We believe this was partially due to higher percentage of sales from cities with higher ASP during the year. Most of the cities saw stable ASPs. In 2016, due to lower supply, we believe ASP is still on an upward trend and may rise up to 5% y-o-y. This would translate into a sales value growth of c. 10%.

Less focus on tier 1 cities. GFA sales growth in tier 1 cities may moderate in 2016. Tier 1 cities may still see price increase but the pace will be slower than in 2015 may not be repeated in 2016, challenged by affordability. Increasing supply in tier 2 cities may drive volume growth. ASP may see growth but the pace is not likely to catch their fast growing land price. Tier 2 cities are likely to see higher margin pressure. Tier 3 cities may see relatively stable ASP but higher volume growth which leads to stable margins.

Developers may target 10%-15% presales growth on average in 2016. Although most developers believe 2016 will see a better credit and policy environment than 2015, they tend to be prudent on growth expectations. On average, we estimate that developers may target 10% to 15% growth from 2015’s high base. Country Garden and CIFI could target over 20%-30% growth, while expectations from others are mainly c.

10%. CR Land, China Jinmao, Yanlord, CIFI, CCRE, and GLHK are likely to record strong 1Q16 sales. The former four’s earlier achievement of sales targets may allow them to conserve resources in 2016. CCRE and GLHK missed 2015 sales target due to delays in launches of key projects. These projects are likely to record strong sales in 1Q16.

Market has over-estimated residential supply. Our analysis shows that the data that is most frequently quoted for completed but unsold inventory includes 40% of non-residential inventory. According to NBS (National Bureau of Statistics), completed inventory for total commodity properties continued to build up to 719m sm by end-2015. Among which, 452m sm were residential properties. The period required to clear up completed residential properties was 0.41 years or 5 month as at end-2015, based on the average GFA sold in the past three years.

Clearance period for residential inventory has shortened. Based on our calculation, the clearance period for total residential inventory, which include completed unsold and land reserves, had also decreased to 3.76-3.99 years by end-2015 from 3.84-4.11 years as at end-2014, assuming a plot ratio of 2 to 4 for undeveloped land bank. The growth rate for completed but unsold inventory has slowed down significantly to 11% (from 25.6% in 2014).

Absolute inventory level is to decline. GFA new starts were lower than GFA sold for the first time ever in 2015. During 2009~2014, GFA new starts were 8% to 34% higher than GFA sold, while in 2015, China’s GFA new start was 5% lower than GFA sold. If there is no strong recovery in land sales, GFA new starts in 2016 may post double digit y-o-y decline, based on our estimate. This makes us more confident that inventory levels will decline.

Developers’ land bank is declining, but large developers are acquiring more land. Total GFA acquired by major developers in 2015 grew 18% y-o-y mainly driven by large developers. However, 15 out of 22 developers we tracked bought less land in 2015 than in 2014. Evergrande, Country Garden, and Vanke purchased the largest amount of new land. COLI, including asset injection, also made significantly higher new land acquisitions than in 2014. Among smaller developers, CIFI and Longfor accelerated land acquisition pace during the year. However, the ratio of land bank over GFA sold declined from 7.7 years as at end-14 to 6.5 years as at end-15. COLI, Vanke, and Country Garden’s ratio dropped to below 4 years.

Industry Focus


Page 4

Major developers’ AV trended up faster than ASP mainly due to larger proportion of new land acquired in higher tier cities. In 2015, developers acquired 13% less new land than GFA sold and new land accounted for c. 17% of their landbank by year-end. However, major developers’ AV for newly acquired land increased 27% while contracted ASP increased 4% on average.

Developers who bought more lands in tier I/II cities in recent years may see higher margin pressure. 2014’s AV for newly acquired land as percentage of 2015’s ASP for CR Land and COGO declined, which will likely lead to gross margin improvement in 2016. However, land acquisitions in 2015 were generally more expensive as developers shift to focus on tier I/II cities. If new land acquisitions in 2015 accounted for a large portion of a developer’s total landbank, it may mean that the developer would need to increase ASP faster in order to maintain margins or it would face higher margin pressure. In our analysis, we found that COLI, CIFI, and Vanke will have lower margin pressure as their AV as % of ASP in 2015 was lower than in 2014, and new land acquired accounted for a higher portion of their land bank. CR Land, Yuzhou, and Sino-Ocean will need ASPs to increase by a larger percentage to maintain margins. Among them, we believe CR Land should be able increase ASP due to its Shenzhen exposure.

Mega players (annual sales > Rmb100bn) were benefitting from market consolidation, while large players (annual sales of Rmb40bn-100bn) were generally dragged by their new strategy. Mega players registered 26% y-o-y growth in contracted sales in 2015, benefitting from market consolidation and their wider geographic coverage. However, large players generally underperformed. We believe this was

due to (i) some players adjusting/optimising their land bank exposure and management structure after posting faster growth in previous years; (ii) most of them returning to tier 1/2 cities, thereby growth was contained by a smaller geographical exposure. We expect mega players to grow bigger in 2016, while others may need to break operational/regional exposure bottleneck before growth re-accelerate.

FY15 reporting earnings may show y-o-y decline for many companies due to unrealised exchange loss. The impact of RMB depreciation on core earnings is not likely to be significant. But watch out for impact of unrealised exchange losses on FY15 reporting earnings. Based on a 4.4% RMB depreciation last year, our analysis shows converting offshore debts to RMB will result in significant unrealised exchange losses, which accounts for c. 20% of major developers' core earnings, on average.

Valuation may go lower during the upcoming results season, which will see opportunities to buy quality names. Since the market is gradually forming the view that RMB depreciation is on a downtrend that will not be reversed in the near term, investors are expressing concerns over the impact from the provision of unrealised exchange loss on reported earnings. Therefore, market sentiment during the upcoming reporting season may be weak and potentially lead to share price volatility, which should present opportunities to buy quality names. Mega-sized developers with lower margin pressure and small developers with strong operations are likely to outperform: COLI (688 HK), CR Land (1109 HK), Country Garden (2007 HK), and CIFI (884 HK).

Industry Focus


Page 5

Potential supportive policies to release demand

Demand from migrant workers has great potential to grow with supportive policies

Is property affordable for migrant workers? National figures show that migrant workers’ monthly income was Rmb2,864, 40% lower than urban citizen’s Rmb4,697. Assuming that there are two people working in one family, this group can afford to buy a unit that is 35% to 40% smaller than the current size of an urban unit.

Mortgage availability is the key to encourage migrant workers to buy. In our view, migrant workers are incentivised to settle down in cities where they are able to give a better education for the next generation, have better living conditions, and healthcare. The key factors constraining their affordability level is mortgage availability. At present, migrant workers in general are unable to obtain mortgages from banks due to lack of income approvals and other required documents for commercial mortgages. They are not well covered by social security or have no access to housing provident fund. We currently see some city governments providing subsidies and tax breaks for migrant workers. We believe that supportive policies to enhance migrant workers’ access to mortgages will be effective.

Home ownership of migrant workers has big upside potential. As at end-2014, migrant workers’ homeownership rate was only 1%, up from 0.9% in 2013. In 2015, the ratio may have increased slightly to 1.2%. In 2016, if supportive policies towards migrant workers are effective, we estimate 2% of migrant couples between 21 and 40 will be able to buy one unit in 2016, thereby generating 53m sm of additional demand. This would then bring homeownership of migrant workers up to 2.3% by end-16 from 1.2% as at end-15, accounting for 4% of national GFA sold or compared with c. 10mn sm bought by migrant workers in 2015E.

Cash compensation for shanty town redevelopment can have some impact too, even based on conservative assumptions

Shanty town redevelopment growth may slow down. China redeveloped 3m units in shanty towns in 2012, and the scale picked up to 5.8m units in 2015. In 2016, the target for shanty

town redevelopment is set at 6m sm, which is a significant slowdown from 25% CAGR during 2011-2015.

The percentage of cash compensation may be constrained by government’s funding ability. In 2015, China relocated 5.8m units, of which 28% were compensated with cash. We estimate this may translate into c. 78m sm demand for commodity housing. The target is to raise the cash compensation percentage to 50% in 2016. Assuming compensation is based on the national average ASP, this means government spending on compensation will nearly double from 2015, which we believe is beyond the amount that local governments can afford.

But, even conservative assumptions can have some impact on national GFA sales. Since China Development Bank is offering provincial government special loans, we assume cash compensation ratio can reach 35%, implying 60sm for each relocated family. We estimate that 80% of them will buy units from the market, this will translate into c. 101m sm of demand, and accounting for c. 8% of national GFA sales.

Investment demand’s contribution may increase as well

Investment demand may continue to increase. Based on Vanke’s GFA breakdown by buyer profile, investment demand had picked up to 20% in 2015, slightly higher than 2009’s 19% before the introduction of HPR in 2010 (13%). Meanwhile, the percentage of first time upgraders has kept trending up during the past seven years (from 23% to 39%). If the government takes out the “no mortgage” policy for purchase of a third unit, it may be able to help boost re-upgrader and investment demand further in 2016.

Other potential policies may help developers to enhance efficiency and boost demand further

More to follow Chongqing’s example. Chongqing has issued policies to reduce developers’ tax burden by (1) adjusting down taxable gross margin from 20% to 15%, (2) reducing the prepayment rate for LAT to 2% of contracted sales from 3.5% for uncommon residential, commercial, and parking slots or to 1% for common residential, and (3) giving a refund of the land auction deposit within one working day compared with three previously. We believe other local governments will gradually lower developers’ tax burden and encourage them to buy land and increase property investment in 2016.

Industry Focus


Page 6

Credit environment is likely to ease further. Potential policies may include lower downpayment requirements, resume giving mortgages for third units, mortgage rate cuts, RRR cuts, etc.

We believe this will help enhance buyers’ affordability and support demand.

2016 presales growth expectations

2016E 2015E y oy growth % in 2016 % in 2015

Demand from shanty town redevelopment 100,800 77,952 29% 8% 7%Demand from migrant workers 53,448 10,089 430% 4% 1%

Demand from others 1,046,108 1,046,108 0% 87% 93%

GF A t ransact ion 1,200,356 1,124,060 7% 100% 101%

Source: DBS Vickers, NBS

Potential demand from shanty town redevelopment

2016E 2015E

Targeted redev elopment of shanty v illagers (2012-2020) ( '000 unit s)

Central gov's target redevelopment of shanty v illagers ('000 units) 6,000 5,800

% of shanty v illagers who receive cash compensation instead of new house 35% 28%

% of those receive cash who may buy new home 80% 80%

Additional demand from shanty v illagers 1,680 1,299

Average sm per head 60 60

Additional demand from shanty v illagers ('000 sm) 100,800 77,952


Demand from migrant workers

Demand f rom migrant w ork ers 2016E 2015E

Total no. of migrant workers in China (million)* 168 168

% of migrant who live in self-owned house 2.26% 1.20%

% of migrant aged between 21 and 40 53% 53%

% of migrant workers to buy apartment in the year 2.0% 0.2%

Number of migrant workers to purchase apartments 1.78 0.34

Average sm per head 30.00 30.00

Additional demand from migrant workers ('000 sm) 53,448 10,089

* As at end-14


Industry Focus


Page 7

Affordability comparison for migrant workers and current citizens

Case study : migrant w ork ers buy ing a house under a 30- y ear mort gage

ASP (Rmb/sm) 6,821

Unit size (sm) 65

Total property price (Rmb) 443,458

Downpayment 110,865

Mortgage loan 332,594

Mortgage rate 4.90%

Mortgage term (y rs) 20

Monthly mortgage payment 2,177

Monthly disposable income per person (Rmb) 2,864

No. of member per household 2

Household disposable income (Rmb) 5,728

Monthly payment to disposable income 38%

Property price to annual income 6.5

Case study : Cit izens buy ing a house under a 30-y ear mortgage

ASP (Rmb/sm) 6,821

Unit size (sm) 100

Total property price (Rmb) 682,100

Downpayment 170,525

Mortgage loan 511,575

Mortgage rate 4.90%

Mortgage term (yrs) 20

Monthly mortgage payment 3,348

Monthly disposable income per person (Rmb) 4,697

No. of member per household 2

Household disposable income (Rmb) 9,393

Monthly payment to disposable income 36%

Property price to annual income 6.1


Industry Focus


Page 8

No. of migrant workers and growth Age profile of migrant workers

145 153159 163 166 168 176

0%

1%

2%

3%

4%

5%

6%

020406080

100120140160180200

2009 2010 2011 2012 2013 2014 Sep-15

No of migrant workers (LHS) y-o-y (RHS)

m

11.4 12.2 12.9 14.3 15.1 15.2 17.1

18.6 19.9 21.2 24 25.6 26.4 26.4

24 23.6 23.522.7 22.5 22.9 22.8

35.3 35.8 35.9 32.7 31.9 30.8 30.2

10.7 8.5 6.5 6.3 4.9 4.7 3.50%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014

50+

41-50

31-40

21-30

16-20

Source: DBS Vickers, CEIC Source: DBS Vickers, CEIC

Income gap is narrowing Percentage of migrant workers in various cities

Mirgant Local Gap

Rmb/month Rmb/month

2010 1,690 3,045 1.80

2011 2,049 3,483 1.70

2012 2,290 3,897 1.70

2013 2,609 4,290 1.64

2014 2,864 4,697 1.64

%Munic ipal

c it iesProv inc ial

c it iesPrefectural-lev el c it ies

Otherc it ies

T otal

2012 10% 20% 35% 35% 100%

2013 8% 22% 33% 36% 100%

2014 8% 22% 34% 35% 100%

Source: DBS Vickers, CEIC Source: DBS Vickers, CEIC

Industry Focus


Page 9

Vanke’s GFA sales breakdown by buyers’ profile

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2008 2009 2010 2011 2012 2013 2014 2015

First time First time upgrader Re-upgrader Others

Source: Vanke; DBS Vickers

Industry Focus


Page 10

Growth in both GFA and ASP likely in 2016

Single digit growth in GFA sold is still possible in 2016. We expect genuine demand which is highly correlated to population growth will remain stable in 2016 and maintain our view that demand is sustainable at current levels up to 2020. Additional demand from the shanty town redevelopment and migrant workers along with genuine demand may trigger a single digit growth in GFA sold in 2016.

ASP still has upside. In 2015, national blended ASP increased c. 9% y-o-y. We believe this was partially due to a higher percentage of units sold in high priced cities during the year. Most of the cities are still seeing stable ASP. The national monthly mortgage payment over income ratio is still at a comfortable level of 34%. In 2016, due to lower supply, we believe ASP is still on an upward trend and may rise by c. 5% y-o-y. This shall translate into c. 10% national sales value growth.

Residential GFA sold

Residential new starts

862934 965 985

1,1571,052

1,124

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

200

400

600

800

1,000

1,200

1,400

2009 2010 2011 2012 2013 2014 2015

GFA sold y-o-y (RHS)

m sm

933

1,294

1,472

1,3071,458

1,249

1,067

-20%

-10%

0%

10%

20%

30%

40%

50%

0

200

400

600

800

1,000

1,200

1,400

1,600

2009 2010 2011 2012 2013 2014 2015

Residential new start (LHS) y-o-y (RHS)

m sm

Residential GFA under construction

Residential GFA completions

Source: CEIC

Industry Focus


Page 11

Is inventory level really worse off?

The potential inventory problem in China has been widely discussed and there are various definitions of inventory. We have classified the various definitions into three categories, namely completed but unsold inventory, saleable under development (PUD inventory) and land inventory (see the following table for more details on different definitions of inventory).

Most frequently quoted “completed but unsold inventory” data includes 40% non-residential inventory. Accordingly to NBS (National Bureau of Statistics), completed inventory of total commodity properties continued to build up to 719m sm as at end-2015. However, out of this, completed inventory for residential properties was 452m sm. The clearance period for completed residential properties was 0.41 years or 5 months as at end-2015, based on average residential GFA sold in the past three years.

Total commodity property: clearance period has started to improve. While completed inventory for total commodity properties continued to build up in 2015, land inventory in absolute level posted a large decline after two years of a falling number of land transactions. The period to digest both PUD inventory and land inventory have dropped from the 2014 peak. The clearance period for total commodity property inventory decreased to 4.71-5.29 years, assuming a plot ratio ranging from 2.0-4.0 for land sold but yet to be developed.

Residential commodity property: better picture. We are using the same methodology to analyse inventory level for residential commodity properties. We have estimated the residential land inventory accounted for 33.9% of total land inventory based on Soufun’s residential land area transacted as % of total land area transacted in 300 cities in 2012-2015. The clearance period of total inventory for residential properties also decreased to 3.76-3.99 years by end-2015 from 3.84-4.11 years as at end-2014.

For the first time ever, GFA new starts were lower than GFA sold in 2015. During 2009~2014, GFA new starts was 8% to 34% higher than GFA sold, while in 2015, China’s GFA new starts was 5% lower than GFA sold. If there is no strong recovery in land sales in 2016, GFA new starts may record a double digit y-o-y decline based on our estimate. This makes us more confident that inventory levels may decline.

Developers’ land bank is declining, while mega developers are acquiring more land. Major developers’ total GFA acquired in 2015 grew 18% y-o-y from the low base in 2014. Only 7 out of 22 developers we tracked have sped up their land acquisition pace. Evergrande, Country Garden, and Vanke bought the largest amount of land. COLI, including asset injection, also made significantly higher new land acquisitions than in 2014. Among smaller developers, CIFI and Longfor accelerated land acquisition pace during the year. However, the ratio of land bank over GFA sold declined from 7.7 years as at end-14 to 6.5 years as at end-15. COLI, Vanke, and Country Garden’s ratio dropped to below 4 years.

Definitions of inventory

Inventory Summary Estimate or calculation

Completed but unsold inventory completed but unsold areas, which is NBS's definition of inventory

directly from NBS

Saleable under development potential inventory coming from property under development

property under development - presold area in the past 1.5 years

Land inventory potential supply coming from land sold but yet to be developed

land held for development x estimated plot ratio

Total inventory sum of the three abovementioned completed inventory + PUD inventory + land inventory

Source: DBS Vickers

Industry Focus


Page 12

National inventory level (total commodity property) analysis (2007-2015): While completed inventory continued to build up, saleable inventory and land inventory started to improve

2.0 3.0 4.0 2.0 3.0 4.0

2007 135 1,263 415 830 1,245 1,659 2,228 2,642 3,057 2008 186 1,423 482 963 1,445 1,926 2,573 3,054 3,536

2009 199 1,621 328 656 984 1,313 2,476 2,805 3,133

2010 216 2,048 315 629 944 1,258 2,893 3,207 3,522

2011 287 2,735 402 804 1,207 1,609 3,826 4,228 4,631

2012 365 3,260 402 804 1,206 1,608 4,428 4,830 5,232

2013 493 3,979 423 846 1,268 1,691 5,318 5,741 6,163 2014 622 4,431 421 843 1,264 1,685 5,896 6,317 6,738

2015 719 4,515 366 733 1,099 1,466 5,966 6,332 6,699

PUDinv entory

mn smIf plot rat io of land held for dev is If plot rat io of land held for dev isLand held

for dev

Land supply inv entory Total inv entoryCompletedinv entory

2.0 3.0 4.0 2.0 3.0 4.0

2007 0.21 1.95 1.28 1.92 2.56 3.43 4.07 4.71 2008 0.27 2.08 1.41 2.11 2.82 3.76 4.47 5.17

2009 0.25 2.04 0.83 1.24 1.65 3.12 3.53 3.95

2010 0.24 2.31 0.71 1.07 1.42 3.27 3.62 3.98

2011 0.28 2.66 0.78 1.17 1.56 3.72 4.11 4.50

2012 0.34 3.00 0.74 1.11 1.48 4.08 4.45 4.82

2013 0.42 3.40 0.72 1.08 1.44 4.54 4.90 5.26 2014 0.51 3.67 0.70 1.05 1.39 4.88 5.23 5.58

2015 0.57 3.57 0.58 0.87 1.16 4.71 5.00 5.29

If plot rat io of land held for dev is

No. ofy ears

Completedinv entory

PUDinv entory

Land supply inv entory

If plot rat io of land held for dev is

Total inv entory

Source: NBS, CEIC, DBS Vickers

Digest period = inventory / average sales volume of the past three years

Industry Focus


Page 13

National inventory level (residential commodity property) analysis (2007-2015): While completed inventory continued to build up, saleable inventory and land inventory started to improve

2.0 3.0 4.0 2.0 3.0 4.0

2007 69 931 141 281 422 563 1,281 1,422 1,563 2008 107 1,226 163 327 490 653 1,659 1,823 1,986

2009 115 1,420 111 223 334 445 1,757 1,869 1,980

2010 124 1,626 107 213 320 427 1,964 2,070 2,177

2011 181 2,235 136 273 409 546 2,689 2,826 2,962

2012 236 2,634 136 273 409 545 3,143 3,280 3,416

2013 324 3,143 143 287 430 574 3,753 3,897 4,040 2014 407 3,394 143 286 429 572 4,087 4,230 4,373

2015 452 3,481 124 249 373 497 4,182 4,306 4,431

mn sm Completedinv entory

PUDinv entory

Land supply inv entory Total inv entory

Land heldfor dev

If plot rat io of land held for dev is If plot rat io of land held for dev is

2.0 3.0 4.0 2.0 3.0 4.0

2007 0.12 1.61 0.49 0.73 0.97 2.22 2.46 2.71 2008 0.18 2.05 0.55 0.82 1.09 2.78 3.05 3.32

2009 0.16 2.02 0.32 0.47 0.63 2.50 2.65 2.81

2010 0.16 2.07 0.27 0.41 0.54 2.51 2.64 2.78

2011 0.20 2.43 0.30 0.44 0.59 2.92 3.07 3.22

2012 0.25 2.74 0.28 0.43 0.57 3.27 3.41 3.55

2013 0.31 3.03 0.28 0.41 0.55 3.62 3.76 3.89 2014 0.38 3.19 0.27 0.40 0.54 3.84 3.97 4.11

2015 0.41 3.13 0.22 0.34 0.45 3.76 3.88 3.99

Land supply inv entoryNo. ofy ears

Completedinv entory

PUDinv entory

Total inv entory

If plot rat io of land held for dev isIf plot rat io of land held for dev is

Source: NBS, CEIC, DBS Vickers

Digest period = inventory / average sales volume of the past three years

Industry Focus


Page 14

Completed but unsold residential properties

Land transactions

0%5%10%15%20%25%30%35%40%45%50%

0 50

100 150 200 250 300 350 400 450 500

Jan-

13

Apr

-13

Jul-1

3

Oct

-13

Jan-

14

Apr

-14

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Jul-1

5

Oct

-15

Unsold residential properties (LHS) y-o-y (RHS)

m sm

0

10

20

30

40

50

60

70

80

90

Jan-

12

Apr

-12

Jul-1

2

Oct

-12

Jan-

13

Apr

-13

Jul-1

3

Oct

-13

Jan-

14

Apr

-14

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Jul-1

5

Oct

-15

Source: NBS Source: NBS

New starts vs. GFA sold

0

200

400

600

800

1,000

1,200

1,400

1,600

2009 2010 2011 2012 2013 2014 2015

GFA new start GFA sold

mn sm

Source: NBS; DBS Vickers

Industry Focus


Page 15

Developers’ land acquisitions

Developers’ landbank over GFA sales

m sm 2014 2015 Change3383 HK Agile 2.3 0.2 -90%

1813 HK KWG 2.1 0.2 -90%

3900 HK Greentown 3.3 1.1 -67%3377 HK Sino-Ocean 6.4 2.3 -64%

832 HK Central China 4.9 2.3 -53%2777 HK R&F 2.9 1.4 -52%

1109 HK CR Land 8.4 4.7 -44%

81 HK COGO 2.7 1.7 -39%1918 HK Sunac 2.5 1.6 -37%

817 HK China J inmao 2.9 2.1 -30%1628 HK Yuzhou 1.0 0.8 -18%

688 HK COLI* 9.0 16.9 87%

2007 HK Country Garden 19.2 23.7 24%960 HK Longfor 2.9 4.4 50%

2202 HK V anke 9.0 17.1 90%123 HK Yuexiu 0.8 1.7 103%

3333 HK Evergrande 8.4 20.0 138%884 HK CIF I 1.3 4.4 239%

272 HK Shui On Land 0.0 0.0 n.a

YLLG SP Yanlord 0.2 0.0 n.a1238 HK Powerlong 0.0 0.0 n.a

1777 HK Fantasia 0.0 0.0 n.aT otal 90.3 106.5 18%

No. of y ears' sales 2014 2015 Change

YLLG SP Yanlord 10.1 4.2 -5.9

1238 HK Powerlong 10.9 7.6 -3.33333 HK Evergrande 8.1 5.5 -2.5

832 HK Central China 9.2 7.1 -2.0

3383 HK Agile 8.8 7.0 -1.8

817 HK China J inmao 12.3 10.8 -1.6

123 HK Yuexiu 7.6 6.0 -1.5

81 HK COGO 7.1 5.6 -1.5

1628 HK Yuzhou 7.2 5.8 -1.4

688 HK COLI 4.0 3.3 -0.7

1813 HK KWG 6.8 5.8 -1.0

3377 HK Sino-Ocean 6.8 6.0 -0.9

2777 HK R&F 9.9 9.1 -0.8

2202 HK Vanke* 4.4 3.7 -0.7

3900 HK Greentown 8.9 8.2 -0.71109 HK CR Land 6.1 5.6 -0.4

2007 HK Country Garden 4.1 3.8 -0.3

1777 HK Fantasia 10.5 10.3 -0.3

1918 HK Sunac 6.4 6.2 -0.2

884 HK CIF I 5.5 5.8 0.3

960 HK Longfor 7.7 8.3 0.6

A v erage 7.7 6.5 -1.3

* including asset injections and COGO

Source: Company; DBS Vickers.

* DBS adjusted landbank

Source: Company; DBS Vickers.

Industry Focus


Page 16

Developers may target double digit y-o-y growth for 2016 contracted sales

Developers may target 10-15% presales growth on average in 2016. Although most developers believe 2016 will see a better credit and policy environment than in 2015, they tend to be prudent when talking about growth. We estimate that on average they may target 10%-15% growth from 2015’s high base. Country Garden and CIFI may target 20%-30% growth, while others are likely to be c. 10%. CR Land, China Jinmao, Yanlord, CIFI, CCRE, and GLHK are likely to record strong 1Q16 sales. The earlier achievement of 2015 sales targets by CR Land, China Jinmao, Yanlord, CIFI may have enabled them to conserve resources for 2016. CCRE and GLHK missed 2015 sales targets due to delays of launches of key projects. These projects are likely to record strong sales in 1Q16.

Listed developers managed to gain market share in 2015 but the pace was slower than in 2014. Major developers gained 0.5 ppts in market share in 2015, which is slower than 4.5 ppts gain in 2014 when the market was weaker. In 2015, major developers’ contracted sales grew by 19% y-o-y compared with 17% nation-wide, while in 2014, the growth rates were 15% and -8% respectively. Developers that achieved the largest market share gains are Evergrande and COLI. Although the market expected market consolidation to accelerate in 2015, the slower pace of market share gains may be due to credit easing which makes life easier for small scale developers.

Mega players (annual sales > Rmb100bn) benefitted from market consolidation, while large players (annual sales from Rmb40bn-100bn) were generally dragged by their strategy change. Mega players registered 26% y-o-y growth in contracted sales in 2015, benefitting from market consolidation and their wider geographic coverage. However, large players (annual sales from Rmb40bn-100bn) generally underperformed. We believe this was due to (i) some players adjusting/optimising their land bank exposure and management structure after faster growth in previous years; (ii) a large number of them refocusing back to tier 1/2 cities, and growth was contained by a smaller geographical exposure. We expect mega players’ growth trends to be higher than the sector average in 2016.

2016 presales growth expectations

Pot ent ial2016

presalesgrow t h

2015t arget ed

grow t h

2015ac t ual

grow t h

COLI 10% 33% 33%

Country Garden 40% 5% 9%

Sino-Ocean 10% 5% 1%

Beijing Capital Land 25% 41% 31%

CR Land 15% 13% 23%

Shimao 0% 3% -5%

Agile 0% 2% 0%

Central China 15% 12% 1%

Shui On Land 0% 85% 121%

Yuexiu Property 10% 13% 9%

V anke >10% n.a 22%

Evergrande 0% 37% 53%

Longfor 10% 10% 11%

SZI 20% 53% 122%

China J inmao 20% 34% 50%

Yanlord 15% 39% 125%

Yuzhou 10-15% 12% 17%

CIF I 20-30% 18% 43%

Simple av erage > 13% 24% 37%

Source: DBS Vickers, Company

Industry Focus


Page 17

2015 contracted sales, yoy growth and market share gain

CompanyCont rac t ed sales in

2015 (Rmb mn)Y oy grow th

(% )M ark et share gain

2014M ark et share

gain 2015V anke 261,470 22% 3.4% 3.6%

Evergrande 201,340 53% 2.1% 2.8%Poly CN 154,104 13% 2.2% 2.1%

COLI 144,505 33% 1.7% 2.0%Country Garden 140,160 9% 2.1% 1.9%M ega p lay er av erage 26% 2.3% 2.5%

CR Land 85,150 23% 1.1% 1.2%

Greentown 71,900 -9% 1.3% 1.0%Sunac 68,220 4% 1.1% 0.9%

Shimao 67,039 -5% 1.1% 0.9%Longfor 54,540 11% 0.8% 0.7%

R&F 54,377 0% 0.9% 0.7%Agile 44,300 0% 0.7% 0.6%

Sino Ocean 40,517 1% 0.6% 0.6%Large p lay er av erage 3% 0.9% 0.8%

CIF I 30,220 43% 0.3% 0.4%Poly (HK) 30,000 24% 0.4% 0.4%

Yanlord 29,070 125% 0.2% 0.4%China J inmao 27,806 50% 0.3% 0.4%

Yuexiu 24,853 13% 0.4% 0.3%Shui On Land 21,513 121% 0.2% 0.3%

KWG 20,200 -1% 0.3% 0.3%COGO 17,606 27% 0.2% 0.2%

Greenland HK 17,388 35% 0.2% 0.2%Shenzhen Investment 15,978 122% 0.1% 0.2%

Central China 15,744 0% 0.3% 0.2%Yuzhou 14,018 17% 0.2% 0.2%

Fantasia 11,272 10% 0.2% 0.2%C C Land 5,089 -12% 0.1% 0.1%M id- t o- small p lay er 41% 0.2% 0.3%

Sec t or av erage 19% + 4.47ppt s + 0.50ppt s


Industry Focus


Page 18

Focus on tier 1/2 cities is still the preferred route, but prospects may not be better

GFA sales growth in tier 1 cities may moderate in 2016.

Our data shows that GFA sales growth rates in tier 1 cities had started to slow down y-o-y since Sep 15. New starts in tier 1 cities declined the least among the three city tiers, while land supply declined nearly 20% y-o-y. We believe land supply will constrain sales volume and continue to keep inventory level low.

Strong ASP growth in tier 1 cities in 2015 may not be

repeated in 2016, challenged by affordability. ASPs may still increase in tier 1 cities in 2016, but the pace will be much slower than last year given the high base. Affordability in tier 1 cities worsened significantly after ASPs increased by an average of 24.4% in 2015. Property prices to annual income rose to 13.6x (the second highest level after 2010) and monthly payment to disposable income had also increased to 75% by end-2015. Therefore, we expect residential ASP growth in tier 1 cities to moderate to 5% in 2016, while volume to stay flat vs. a 14.0% volume growth in 2015.

Tier 2 cities: Increasing supply to drive volume growth

but ASP growth is limited. As inventory as at end-2009 was relatively low, we have made an estimate for the potential inventory level for tier 1/2 city based on total land supply (in GFA terms) during 2010-2015 after deducting total property sales (in GFA terms) over the same period. Based on our estimate, we found that the inventory digestion period in tier 2 cities as at end-2015 (5.04 years) was similar to the national

level of 4.71-5.29 years. We think this could be attributable to major developers returning to tier 1/2 cities since late-2013 which has led to a larger decrease in land transactions in the rest of China. Supply-driven volume growth is likely in tier 2 cities. Although affordability in tier 2 cities improved in 2015 with monthly payments to disposable income improving to 37% and property price to annual income fell to 6.8x, increasing inventory levels may cap ASP upside.

Tier 2 cities likely to see higher margin pressure. Land cost in tier 2 cities increased substantially by 18% in 2015, similar to tier 1 cities’ 19%, despite a modest fall in ASPs in tier 2 cities. New home sales ASP CAGR in tier 2 cities in the past two years was -6%, vs. 13% increase in land cost during the same period. By comparison, land prices have been rather rational in tier 3 cities, rising by a marginal 1% in 2015. As such, we expect tier 2 cities to see higher margin pressure.

Relatively stable ASP but higher volume growth in tier 3

cities expected. In Dec-15, y-o-y growth in GFA sold in tier 2 cities and the rest of China exceeded that of tier 1 cities. We believe this trend will continue. While inventory level remains high in tier 3 cities, supply-demand dynamics had improved in tier 3 cities in 2015; among the three city tiers, tier 3 cities recorded the sharpest decline in new starts and land supply. Tier 3/4 cities are likely to benefit the most from any potential supportive measures from governments for destocking. ASP upside is limited but volume growth could be higher than tier 1/2 cities. Due to similar growth rates in ASP and land prices during the last two years, margin pressure is lower than tier 2 cities.

Summary of performance by city tier in 2016

V olumegrow t h

Pric e grow t h V alue M arg ins

Tier 1 F lat Up, but slower than2015

Up Slightlydown

Tier 2 Up Slight growth Up Down

Tier 3/4 Up Stable Up Stable

Source: DBS Vickers

Industry Focus


Page 19

GFA new starts growth Land supply by city tier

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Tier 1 Tier 2 Rest

0 14 28 42 56 70 84 98

112 126 140 154

Jan-

05Ju

n-05

Nov

-05

Apr

-06

Sep-

06Fe

b-07

Jul-0

7D

ec-0

7M

ay-0

8O

ct-0

8M

ar-0

9A

ug-0

9Ja

n-10

Jun-

10N

ov-1

0A

pr-1

1Se

p-11

Feb-

12Ju

l-12

Dec

-12

May

-13

Oct

-13

Mar

-14

Aug

-14

Jan-

15Ju

n-15

Nov

-15

6 per. Mov. Avg. (Tier 2) 6 per. Mov. Avg. (Tier 3)

6 per. Mov. Avg. (Tier 1)

mn sm

Source: DBS Vickers, NBS Source: CRIC, DBS Vickers

Total inventory* breakdown (total commodity property) Property volume y-o-y growth

No. of cities

Total inventory*

Digest period

m sm years Tier 1 cities 4 163 2.61 Tier 2 cities 27 1,823 5.04

-50%-40%-30%-20%-10%

0%10%20%30%40%50%60%

Apr

/13

Jul/1

3

Oct

/13

Jan/

14

Apr

/14

Jul/1

4

Oct

/14

Jan/

15

Apr

/15

Jul/1

5

Oct

/15

Rest Tier 2 Tier 1

Source: CRIC, NBS, CEIC, DBS Vickers

Tier 2 cities are mainly from the key 35 cities in the statistics of NBS, including Tianjin, Chongqing and provincial capital cities

* Pls note: Our estimate of total inventory of tier 1/2 cities is based on total land transacted in GFA terms – total GFA sold in 2010-2015.

Source: DBS Vickers, CEIC

Industry Focus


Page 20

Average land cost in 300 cities Average property selling prices in 100 cities

Tier Average land cost (y-o-y, chg) 2 yrs'

compound 2014 2015 1 41% 19% 68% 2 -4% 18% 13% 3 -2% 1% -1%

2014 2015 2 yrs' compound y-o-y, chg y-o-y, chg

Tier 1 0.6% 17.2% 17.9% Tier 2 -5.5% -0.5% -6.0% Tier 3 -4.9% -1.1% -5.9%

Source: Soufun, DBS Vickers

Source: Soufun, DBS Vickers

Property price to annual income by city tier Monthly mortgage payment to income ratio by city tier

0

2

4

6

8

10

12

14

16

2007

2008

2009

2010

2011

2012

2013

2014

2015

Nation Tier 1 Tier 2

0%10%20%30%40%50%60%70%80%90%

100%

2007

2008

2009

2010

2011

2012

2013

2014

2015

Nation Tier 1 Tier 2

Source: CRIC, NBS, CEIC, DBS Vickers Source: CRIC, NBS, CEIC, DBS Vickers

Industry Focus


Page 21

Monthly payment to income ratio by city

2 007 2008 20 09 2010 201 1 2012 201 3 2 014 2015

Shenzhen 105% 74% 76% 99% 119% 83% 99% 90% 105%

Beijing 88% 69% 73% 95% 98% 81% 84% 77% 76%

Xiamen 79% 58% 53% 67% 83% 62% 66% 82% 73%

Shanghai 66% 47% 66% 76% 77% 62% 70% 63% 67%

F uzhou 56% 42% 48% 59% 76% 65% 59% 57% 53%

Shijiazhuang 34% 27% 34% 35% 44% 37% 39% 39% 52%

Hangzhou 65% 53% 61% 80% 81% 67% 70% 57% 50%

Guangzhou 71% 54% 50% 59% 66% 56% 63% 63% 50%

Tianjin 65% 45% 48% 53% 66% 48% 48% 51% 48%

Haikou 53% 49% 54% 82% 70% 52% 57% 51% 44%

Taiy uan 49% 38% 45% 70% 67% 51% 52% 51% 43%

Lanzhou 54% 41% 42% 49% 55% 53% 50% 47% 40%

Nanjing 47% 32% 42% 55% 56% 48% 54% 47% 40%

Dalian 68% 50% 50% 54% 68% 49% 49% 49% 40%

Hefei 45% 34% 37% 49% 52% 41% 41% 43% 39%

Zhengzhou 45% 35% 36% 40% 43% 42% 47% 41% 39%

Wuhan 60% 43% 44% 45% 58% 46% 46% 41% 38%

Ningbo 52% 42% 51% 66% 68% 54% 52% 45% 38%

Urumqi 42% 38% 39% 50% 64% 50% 52% 45% 38%

Nanchang 50% 34% 34% 40% 53% 45% 48% 39% 36%

Nanning 48% 38% 42% 47% 52% 45% 47% 41% 35%

Kunming 47% 37% 35% 32% 43% 38% 37% 35% 35%

Changchun 46% 35% 39% 48% 60% 41% 42% 38% 35%

Harbin 44% 37% 40% 50% 54% 41% 44% 38% 34%

Qingdao 54% 36% 37% 44% 52% 42% 43% 37% 34%

Chengdu 54% 44% 40% 47% 55% 45% 42% 37% 32%

Chongqing 36% 26% 30% 36% 42% 36% 39% 37% 30%

Guiy ang 39% 32% 36% 43% 49% 37% 36% 36% 30%

J inan 39% 31% 33% 41% 48% 37% 37% 34% 30%

Xining 41% 37% 34% 38% 45% 44% 42% 41% 29%

Xi'an 48% 39% 35% 40% 57% 37% 37% 31% 27%

Sheny ang 46% 35% 35% 42% 50% 41% 39% 31% 27%

Yinchuan 35% 28% 32% 36% 42% 34% 36% 29% 26%

Changsha 38% 27% 27% 33% 45% 33% 32% 27% 22%

Hohhot 27% 19% 23% 25% 30% 26% 27% 27% 22%

Source: NBS, DBS Vickers

Industry Focus


Page 22

GFA under construction y-o-y growth

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Tier 1 Tier 2 Rest


Inventory level by city tier

0

20

40

60

80

100

120

Jan-

11

Sep-

11

Jun-

12

Feb-

13

Nov

-13

Jul-1

4

Apr

-15

Jan-

16

Tier I average Tier II average Tier III average

Tier 1

Tier 2

Tier 3

weeks

Source: DBS Vickers, Soufun

Industry Focus


Page 23

Margin trends

National figures show stable margins. We use Soufun’s 300 cities land price as a proxy for China’s land price. We found that AV as % of ASP jumped from 17% in 2012 to 20% in 2013. After that land price growth only slightly outpaced selling prices. AV as % of ASP picked up slightly to 21.4% in 2015 from 20.1% in 2013.

Major developers’ AV trended up much faster than ASP mainly due to a focus back to higher tier cities. In 2015, developers’ AV of newly acquired land increased 27% while contracted ASP increased 4% on average. In 2015, developers were relatively slow in land acquisitions. GFA acquired in 2015 was 13% less than GFA sold in 2015 and accounted for 17% of their landbank.

ASP increase in 2015 may enable some developers to see margin improvement, while stronger ASP increase in 2016 is needed in order to maintain margins for 2017 and onwards. 2014 AV as % of 2015 contracted ASP for CR Land and COGO declined, which is likely to lead to margin improvement for 2016 booking. However, land acquisitions in 2015 were generally more expensive. If a developer’s acquisition of new land in 2015 accounts for a large portion of its total landbank, it may mean that the developer will need to increase ASP faster in 2016 to maintain booking margins in 2017 and onwards. In our analysis, we found that COLI, CIFI, and Vanke will have lower margin pressure given their 2015 AV as % of ASP in 2015 were lower than that in 2014 and the percentage of new land accounted for a higher portion of their land bank. CR Land, Yuzhou, and Sino-Ocean will need larger ASP increases to maintain margins. Among them, we believe CR Land can increase ASP due to its Shenzhen exposure.

National AV vs. ASP

17.3% 20.1% 20.8%21.4%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2012 2013 2014 2015

China ASP 300 cities AV AV as % of ASP

Rmb/sm

Source: DBS Vickers; Soufun; NBS

GFA acquired vs. GFA sold by major developers, 2012 to 2015

000 sm 2012 2013 2014 2015

GFA acquired 113,067 135,305 85,354 105,578

GFA sold 69,760 86,883 102,984 121,434

% 162% 156% 83% 87%


Major developers AV as % of ASP, 2012-2015

21% 31%34% 42%

0%

20%

40%

60%

80%

100%

120%

0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015

ASP AV AV as % of ASP

Rmb/sm


Industry Focus


Page 24

GFA acquired by major developers as % of total landbank, 2012-2015

000 sm 2012 2013 2014 2015

GF A acquired 113,067 135,305 85,354 105,578

Land bank 612,108 636,472 641,400 624,715

% 18% 21% 13% 17%


2014 AV as % of 2015 ASP by developers

2013 2014

ppt schange

2014 v s.2013

2015

ppt schange

2015 v s.2014

Agile 4% 46% 41.9 14% (32.2)

Country Garden 10% 13% 3.9 13% (0.3)

CR Land 17% 40% 23.6 28% (11.8) Evergrande 17% 36% 19.4 33% (3.6)

F antasia 22% 17% (5.1) n.a n.aChina J inmao 36% 26% (10.5) 35% 9.2

Greentown 28% 36% 7.4 35% (1.0)

Longfor 22% 34% 12.2 55% 21.1 Shui On Land n.a n.a n.a n.a n.a

Sino Ocean Land 24% 11% (13.3) 32% 21.1

Yanlord n.a 30% n,a 27% n.aYuexiu 17% 62% 45.6 81% 18.8

Central China 9% 9% 0.1 17% 8.4 Sunac 20% 28% 8.1 43% 15.0

COLI 40% 31% (9.2) 37% 6.4

COGO 15% 25% 9.8 20% (5.5) CIF I 29% 37% 7.6 51% 14.0

Yuzhou 10% 26% 16.2 54% 27.5 V anke 25% 28% 3.0 38% 10.1


Industry Focus


Page 25

2015 AV as % of 2015 ASP by developers

2012 2013 2014ppt s

change2014

2015ppt s

change2015

CR Land 17% 37% 34% 16.9 87% 52.6

Yuzhou 12% 25% 54% 42.1 82% 28.8

Yuexiu 18% 57% 76% 58.4 81% 4.6 Agile 5% 38% 13% 7.9 79% 66.0

Longfor 26% 33% 66% 39.9 70% 4.0 Sino Ocean Land 28% 10% 29% 1.4 50% 21.0

China J inmao 36% 21% 42% 5.6 46% 4.4 CIF I 38% 42% 61% 23.3 45% (15.7)

Evergrande 19% 39% 36% 16.5 44% 8.7 Greentown 29% 36% 31% 2.9 42% 11.0

V anke 27% 29% 41% 14.1 38% (2.7)

COLI 38% 29% 37% (1.3) 35% (1.4) Sunac 25% 25% 47% 21.7 31% (16.0)

Country Garden 10% 14% 13% 2.6 28% 15.0 COGO 9% 23% 20% 11.9 21% 0.5

Central China 9% 9% 14% 4.8 19% 4.8 Fantasia 21% 16% n.a n.a n.a n.a

Shui On Land n.a n.a n.a n.a n.a n.aYanlord n.a 28% 31% n.a n.a n.a


Margin pressure analysis for 2016 earnings

Agile

CG

CR Land

ERE

Jinmao GT Longfor

Sino-Ocean CCRE

Yuexiu

Sunac

COLI

CIFI

Yuzhou

Vanke

(30)

(20)

(10)

-

10

20

30

40

50

60

70

80

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Larger margin pressure

Less margin pressure

2015 new land as % of total land bank

ppts of AV as % ASP increase


Industry Focus


Page 26

GFA acquired vs. GFA sold by developers

GFA acquired as % of total landbank by developers

2012 2013 2014 2015Agile 189% 98% 50% 4%Country Garden 204% 63% 99% 110%CR Land 104% 132% 128% 73%Evergrande 169% 180% 46% 78%Fantasia 62% 124% 0% 0%China J inmao 235% 337% 330% 187%Greentown 82% 109% 85% 28%Longfor 213% 108% 65% 114%Shui On Land 0% 0% 0% 0%Sino Ocean Land 51% 29% 218% 72%Yanlord 0% 67% 33% 0%Yuexiu 369% 239% 45% 75%Central China 228% 282% 226% 84%Sunac 405% 407% 75% 49%COLI 91% 131% 96% 134%COGO 501% 278% 146% 74%CIFI 102% 272% 75% 215%Yuzhou 213% 255% 84% 59%Vanke 144% 225% 50% 83%

A v erage 162% 156% 83% 87%

2012 2013 2014 2015Agile 18% 8% 6% 1%Country Garden 17% 14% 24% 29%CR Land 16% 21% 21% 13%Evergrande 19% 18% 6% 14%Fantasia 7% 18% 0% 0%China J inmao 14% 27% 27% 17%Greentown 5% 9% 10% 3%Longfor 23% 12% 8% 14%Shui On Land 0% 0% 0% 0%Sino Ocean Land 7% 4% 32% 12%Yanlord 0% 8% 3% 0%Yuexiu 26% 18% 6% 12%Central China 22% 32% 25% 12%Sunac 50% 43% 12% 8%COLI 18% 29% 24% 41%COGO 40% 39% 21% 13%CIFI 17% 42% 14% 37%Yuzhou 23% 31% 12% 10%Vanke 24% 43% 11% 22%

Average 18% 21% 13% 17%

Source: DBS Vickers, Company Source: DBS Vickers, Company

Industry Focus


Page 27

DBS margin estimates, 2015E, 2016E, 2017E

F Y 15 F Y 16 F Y 17

3383 HK Agile 27% 24% 26%

832 HK Central China 29% 25% 27%

1109 HK CR Land 30% 31% 32%

688 HK COLI 32% 32% 31%

81 HK COGO 21% 25% 27%

2007 HK Country Garden 23% 22% 21%

3333 HK Ev ergrande 29% 29% 29%

817 HK China J inmao 39% 38% 36%

813 HK Shimao 32% 30% 30%

3377 HK Sino Ocean 22% 23% 26%

272 HK Shui On 34% 35% 36%

410 HK SOHO 78% 70% 71%

337 HK Greenland HK 29% 17% 25%

123 HK Yuexiu 24% 23% 22%

YLLG SP Yanlord 30% 30% 30%

2202 HK V anke 25% 25% 24%


Industry Focus


Page 28

Faster than expected RMB depreciation may cloud the upcoming result season and create buying opportunities

COLI, COGO, and SOHO had the highest portion of their

debt in HKD/USD, while COLI’s impact may be overstated.

Developers on average had 53% of their debt in USD/HKD as at mid-15. The ratio is likely to be lower at end-15. COLI, COGO, and SOHO have > 70% of their debt in USD/HKD. Wanda, Vanke, and China South City have a relatively lower percentage of their debt in USD/HKD. Longfor has hedged its half of its USD/HKD debt to Rmb. After considering COLI’s natural hedging, its USD/HKD exposure is only 22% which is much lower than the sector average.

Impact of RMB depreciation on core earnings is not

significant. As we had pointed out in our report issued in Jan 2015, realised exchange loss due to additional interest payments only accounted for 1.4% of developers’ 2015 core earnings based on 4.4% depreciation in the RMB. However, developers who had redeemed their USD debt in 2015 to lower their USD exposure would have suffered a slightly larger hit. This group includes Shimao, Country Garden, Shui On, Yuzhou and SOHO. In 2016, CR Land, GLHK, and R&F have more debt due in 2016 and Evergrande, Agile, and China Jinmao have higher amount of callable debt.

But watch out for impact of unrealised exchange loss on

FY15 earnings. Based on 4.4% RMB depreciation, our analysis shows that converting offshore debts to RMB will result in significant unrealised exchange losses, which would account for c. 19% of major developers' core earnings, on average. Among the companies we track, unrealised losses for GLHK, Yuexiu, and Agile may account for c. 30% of FY15E core earnings. The impact on Longfor (960 HK) could be less than 5% due to 50% currency risk hedged. Developers reporting in

RMB currently use two different accounting methods to treat the losses. One is to record the forex losses as a loss provision in the income statement. The other is to deduct the losses from translation reserve in the balance sheet. Vanke (2202 HK), Central China (832 HK), KWG (1813 HK), Yuzhou (1628 HK), and SOHO (410 HK) are among the developers that we track that are using the latter method. Some companies may report profit alerts as a result of this issue. For companies reporting in HKD, unrealized exchange loss will be reflected on their balance sheets as well.

Most companies may report lower FY15 earnings due to

unrealised exchange loss. Since the market is gradually forming the view that RMB depreciation is a trend and will not reverse in the near term, investors are expressing concerns over the impact of provisions for unrealised exchange losses on reporting earnings. Therefore, market sentiment during the upcoming reporting season may be weak and potentially lead to increased share price volatility.

Net debt ratio after considering exchange rate losses will

boost sector average net debt up by 5.5 ppts. Although unrealized exchange losses on developers’ P/L is likely to vary substantially due to accounting methods used and reporting currency, all developers’ equity will reflect the unrealized exchange loss. Our analysis shows that on average, a 4.4% RMB depreciation will lead to developers’ equity falling by 5% vs our original forecasts. Accordingly, sector average net debt ratio would be higher by 5.5 ppts. GLHK, CCRE, Yuexiu, and Agile will see the largest negative impact, while Vanke, Evergande, China Jinmao, and SOHO will be less affected. NAV impact for a 5% RMB depreciation will be 6.1% on average for the companies we tracked.

Industry Focus


Page 29

USD/HKD exposure comparison FX impact on NAV, reporting currency

Dev elopers Report ingCurrency

Total debt USD/HKDliabilit ies*

% oftotaldebt

COLI HKD 103,655 83,546 81%COGO HKD 21,759 16,298 75%

Soho China RMB 19,934 14,153 71%Greenland RMB 18,066 12,466 69%

Central China RMB 11,693 7,200 62%Yuexiu Property RMB 31,926 18,773 59%

CR Land HKD 92,295 53,707 58%Shui On Land RMB 51,347 29,131 57%

China J inmao HKD 53,232 29,883 56%Sino-Ocean Land RMB 48,580 25,096 52%

Agile RMB 47,050 23,895 51%Country Garden RMB 67,258 30,450 45%Shimao RMB 67,114 30,201 45%

Evergrande RMB 237,655 71,228 30%Vanke RMB 63,183 13,818 22%

China South City HKD 25,003 4,933 20%

Before F Xadjustment

A f t er F Xadjustment

% of t ot aldebt

Shui On Land 5.17 4.74 -8.3%

Greenland 6.37 5.86 -8.0%

COGO 9.18 8.53 -7.1%

Central China 6.06 5.64 -6.9%

China J inmao 4.81 4.49 -6.7%

Yuexiu Property 3.12 2.92 -6.5%

Agile 16.63 15.56 -6.4%

Soho China 8.99 8.45 -6.0%

Shimao 28.52 26.81 -6.0%

Country Garden 4.40 4.15 -5.6%

CR Land 27.52 26.01 -5.5%

Sino-Ocean Land 8.37 7.92 -5.4%

China South City 3.57 3.39 -5.2%

COLI 28.06 26.72 -4.8%

V anke 22.38 21.38 -4.5%

Evergrande 9.59 9.19 -4.2%

A v erage -6.1%

NA V per share (HK $)

* Including debts and perpetual securities denominated in US$/HK$ (based on 1H15 figures)


* based on 5% RMB depreciation


Industry Focus


Page 30

Foreign exchange impact on FY15E earnings

Beforerealized

exchangeloss

A f terrealized

exchangeloss

Chg Beforerealized

exchangeloss

A f terrealized

exchangeloss

Chg

Greenland HK 502 478 -4.9% 548 (71) n.a.

Evergrande 7,364 7,283 -1.1% 830 6,453 -11%

Agile 3,474 3,405 -2.0% 984 2,421 -29%Yuexiu 1,837 1,805 -1.7% 801 1,004 -44%

Shimao 7,502 7,428 -1.0% 994 24 6,409 -14%

Country Garden 10,050 10,002 -0.5% 752 10 9,241 -8%CIFI 2,380 2,340 -1.7% 433 1,907 -19%

GZ R&F 5,512 5,461 -0.9% 530 4,932 -10%

Sunac 4,181 4,136 -1.1% 541 3,594 -13%

Longfor 7,308 7,222 -1.2% 326 7,222 -5%

Greentown 3,100 3,035 -2.1% 815 2,220 -27%

Sino Ocean 3,454 3,400 -1.6% 884 2,516 -26%Shui On Land 2,085 2,061 -1.1% 1,026 68 967 -53%

Yuzhou 1,427 1,435 0.6% 317 41 1,077 -25%

KWG 3,124 3,076 -1.5% 527 2,549 -17%

Vanke 16,694 16,670 -0.1% 532 16,137 -3%Central China 934 909 -2.7% 317 592 -35%

SOHO 277 240 -13.3% 1,026 123 (909) n.a.

COLI 28,591 27,386 -4.2%

COGO 2,363 2,273 -3.8%CR Land 12,028 11,599 -3.6%

China J inmao 4,015 3,915 -2.5%

Shenzhen Inv 2,771 2,707 -2.3%

China South City 2,053 2,020 -1.6%A v erage -1.4%* -19% -3.0%

Unrealized exchange losses w ill NOT be ref lected on P/L: Dev elopers report ing in RMB and foreign exchange gain/lossbooked through t ranslat ion reserv e of equit y

Unrealized exchange losses w ill NOT be ref lected on P/L: Dev elopers report ing in HK$ and foreign exchange gain/ lossbooked through t ranslat ion reserv e of equit y

Unrealized exchange loss w ill be ref lected on P/L : Dev elopers report ing in RMB and foreign exchange gain/ loss bookedthrough income statement

Realisedexchange

loss due toearly

redempt ion

Unrealisedexchange

loss

Core earnings in Rmb Earningsaf ter both

realized andunrealizedexchange

loss

Unrealizedexchangeloss as %

of coreearnings

Core earnings in HKD

* excluding SOHO

^ based on 4.4% RMB depreciation

Source: DBS Vickers, company

Industry Focus


Page 31

Foreign exchange impact on FY16E earnings

Beforerealized

exchangeloss

A f terrealized

exchangeloss

Chg Beforerealized

exchangeloss

A f terrealized

exchangeloss

Chg

Greenland HK RMB 1,541 1,513 -1.8% 623 890 -41%

Evergrande RMB 9,083 8,990 -1.0% 943 8,047 -10%Agile RMB 3,314 3,236 -2.4% 1,118 2,118 -35%

Yuexiu RMB 2,177 2,141 -1.7% 910 1,230 -43%

Shimao RMB 8,153 8,065 -1.1% 1,130 6,935 -14%Country Garden RMB 10,658 10,600 -0.5% 854 9,746 -8%

CIFI RMB 2,930 2,885 -1.5% 492 2,393 -17%

GZ R&F RMB 6,093 6,035 -0.9% 602 5,434 -10%

Sunac RMB 5,005 4,953 -1.0% 615 4,338 -12%Longfor RMB 8,167 8,077 -1.1% 371 8,077 -5%

Greentown RMB 3,414 3,340 -2.2% 926 2,414 -28%

Sino Ocean RMB 4,408 4,347 -1.4% 1,005 3,342 -23%Shui On Land RMB (111) (145) n.a. 1,166 (1,311) n.a.

Yuzhou RMB 1,790 1,794 0.2% 360 1,434 -20%

KWG RMB 3,709 3,655 -1.5% 599 3,056 -16%

Vanke RMB 18,591 18,563 -0.1% 605 17,959 -3%Central China RMB 1,196 1,167 -2.4% 360 807 -31%

SOHO RMB 1,213 1,173 -3.3% 1,166 7 -99%

COLI HKD 32,914 31,329 -4.8%

COGO HKD 3,044 2,909 -4.5%

CR Land HKD 13,646 13,077 -4.2%China J inmao HKD 4,638 4,491 -3.2%

Shenzhen Inv HKD 3,136 3,045 -2.9%

China South City HKD 2,404 2,349 -2.3%A v erage -1.4% -20% -3.6%

Unrealized exchange loss w ill be ref lected on P/L: Dev elopers report ing in RMB and foreign exchange gain/loss booked throughincome statement

Unrealized exchange losses w ill NOT be ref lected on P/L: Dev elopers report ing in RMB and foreign exchange gain/loss bookedthrough t ranslat ion reserv e of equity

Unrealized exchange losses w ill NOT be ref lected on P/L: Dev elopers report ing in HK$ and foreign exchange gain/loss bookedthrough t ranslat ion reserv e of equity

Core earnings in Rmb Unrealisedexchange

loss

Realisedexchange

loss due toearly

redempt ion

Earningsaf ter both

realized andunrealizedexchange

loss

Unrealizedexchangeloss as %

of coreearnings

Core earnings in HKD

* Assuming another 5% RMB depreciation in 2016


Industry Focus


Page 32

Impact on end-15 equity, reporting currency

WithoutF X impact

WithF X

impact

Dif f (%)

COGO 81 HK HKD 6.6 6.2 -6%Central China 832 HK CNY 3.1 2.8 -9%China J inmao 817 HK CNY 6.1 5.9 -4%Agile 3383 HK CNY 12.8 12.2 -5%Yuexiu Property 123 HK HKD 3.1 2.9 -5%Greenland 337 HK CNY 2.8 2.4 -14%Country Garden 2007 HK CNY 3.4 3.3 -2%Shimao 813 HK CNY 21.1 20.4 -3%CR Land 1109 HK HKD 17.0 16.1 -5%Sino-Ocean Land 3377 HK CNY 6.4 6.2 -4%COLI 688 HK HKD 21.0 19.8 -6%Shui On Land 272 HK CNY 6.7 6.4 -5%SOHO China 410 HK CNY 7.7 7.4 -5%Evergrande 3333 HK CNY 7.8 7.7 -1%Vanke 2202 HK CNY 11.8 11.7 -1%A v erge -5%

F Y15E total equit y per share

* based on 4.4% RMB depreciation


Impact on end-15 net debt ratio

WithoutF X impact

With F Ximpact

Dif f(ppt s)

F Y14 netgearing

Chg (ppts)

COGO 81 HK 67% 72% 4.9 70% 2%Central China 832 HK 39% 48% 8.3 43% 4%China J inmao 817 HK 54% 55% 1.3 58% -3%Agile 3383 HK 71% 77% 5.3 75% 1%Yuexiu Property 123 HK 67% 73% 5.7 63% 10%Greenland 337 HK 149% 182% 32.3 155% 27%Country Garden 2007 HK 47% 50% 2.6 54% -4%Shimao 813 HK 54% 58% 3.7 59% 0%CR Land 1109 HK 44% 46% 2.1 43% 3%Sino-Ocean Land 3377 HK 57% 61% 4.0 66% -5%COLI 688 HK 17% 18% 1.6 32% -14%Shui On Land 272 HK 67% 73% 5.8 79% -6%SOHO China 410 HK 26% 29% 2.9 19% 10%Evergrande 3333 HK 93% 95% 1.4 86% 9%Vanke 2202 HK 10% 10% 0.5 5% 5%A v erge 58% 63% 5.5 61% 3%

F Y15E Net gearing

* based on 4.4% RMB depreciation


Industry Focus


Page 33

Companies redeemed USD bond in 2015

Date CompanyOutstandingAmount (m)

Redempt ionPremium

Totalredempt ion

price (m)

USD/Rmb(redempt ion

date)

USD/Rmb(End-2014)

USD/Rmb(End-2015)

Rmbf lucat ion

duringthe

period

Rmbdep.

Impact(Rmb

m)

Remarks

3/8/2015 Shimao US$350 5.50% US$388.50 6.265 6.206 6.494 -1% -24Early

redemption

3/29/2015CountryGarden

US$900 5.56% US$960.08 6.215 6.206 6.494 0% -10Early

redemption

9/30/2015Shui OnLand

US$433.50 0% US$433.50 6.358 6.206 6.494 -2% -68CB,

redeemed at

10/25/2015Yuzhouprop

US$250 5.88% US$279.38 6.349 6.206 6.494 -2% -41Early

redemption

12/6/2015SOHOChina

US$600 2.88% US$620.03 6.401 6.206 6.494 -3% -123Early

redemption


Companies with USD bond due in 2016

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

CR

Land

Gre

enla

nd H

K

R&F

Renh

e

CC

RE

Gre

ento

wn

Yan

lord

Kai

sa

Long

for

Beijin

g N

orth

St

ar Van

ke

Fant

asia

Pow

erlo

ngRmb m

Source: DBS Vickers, Bloomberg Finance L.P.

Industry Focus


Page 34

Companies with USD bond callable in 2016

0

5,000

10,000

15,000

20,000

25,000

Ever

gran

de

Kai

sa

Agi

le

Jinm

ao

Yan

lord

Sino

Oce

an

Wuz

hou

Gre

ento

wn

Suna

c

CIF

I

Long

for

Glo

rious

CC

RE

Chi

na S

CE

Road

king

Yuz

hou

Chi

na S

outh

City

Firs

t Spo

nsor

Rmb m

Source: DBS Vickers, Bloomberg Finance L.P.

Industry Focus


Page 35

Panda Bonds may be a new trend for HK listed developers to adjust debt structure and funding cost

Panda bond is a funding channel for corporates registered outside China to raise RMB funds in China. Potential buyers and funding costs are similar as domestic bonds. Both PBOC and Shanghai Stock Exchange can participate in potential Panda bond issuances. In 2015, although some companies were able to issue domestic bonds at low cost, the amount of bonds they can issue is constrained by the net asset scale of their onshore platform. Since Oct 2015, we saw corporates like HSBC, BOC HK, China Merchants HK, Country Garden and Shimao issue Panda Bonds at attractive cost. In addition, given that Panda Bond’s issuers are usually non-PRC registered companies, regulators make it easier for them to channel the monies offshore.

Companies which have onshore credit ratings may take this route earlier than others. As the issuance of such bonds requires onshore credit rating which often takes 2 to 3 months to obtain, companies who have onshore AAA/AA+ rating include COLI, Sino-Ocean, Evergrande, Longfor, Vanke, Country Garden, Sunac, Greentown, Future Land, China Jinmao (ex-Franshion), and Joy City, may be able to take this route faster than others.

Other potential candidates are high-quality companies which have large offshore debt exposure but do not have a sizeable onshore entity to issue onshore debt. This may include CR Land, Yuexiu, China Jinmao and Shenzhen Investment. Meanwhile, Country Garden, Evergrande, Joy City, and Greentown who have less than 60% of the net assets under the domestic platform may have more incentive to explore Panda Bonds. Although some of them are tapping into private offers of domestic bonds, they are likely to consider a public offer of Panda Bonds as another funding channel as the cost is lower.

Policy change may be a risk to Panda Bond issuance. One of the key attractiveness in Panda Bond’s funding is that it is allowed to be channelled overseas. This provides developers with alternatives to pay down offshore debts and mitigate RMB depreciation risk. The risk to watch out for would be regulatory changes. Given the strong demand and RMB exchange rate fluctuation, regulators may suspend the issuance to control capital outflows.

Details regarding Panda Bonds

• Issuer has to be registered outside PRC. H-shares are not qualified to issue Panda Bond

• Have domestic credit rating

• Prefer higher rating and larger sized corporate

• Maximum quota is 40% of latest audited net asset value of the entire listco

• Coupon similar to domestic bond

• Supervised by PBOC or CSRC

• Has public offer and private offer like domestic bond while public offering is often 100bps cheaper

Source: DBS Vickers

Who has more room to tap Panda Bond market?

0

10

20

30

40

50

60

70

Chi

na Ji

nmao

CO

LI

Cou

ntry

Gar

den

Joy

City

Long

for

Gre

ento

wn

Chi

na

Ever

gran

de

Shim

ao

Sino

-oce

an

Chi

na S

outh

City

Yuz

hou

Suna

c

CIF

I

Used*Cap for panda bond

* Public domestic bond/MTN also occupied panda bond quota

* Cap is only applied to public bond placement


Industry Focus


Page 36

Who has domestic bond rating at present?

Is su er rat in g688 COLI AAA3333 Ev ergrande AAA960 Longfor AAA3377 Sino-Ocean Land AAA2202 V anke AAA3699 Wanda AAA1528 RS Macalline AA+2868 Beijing Capital Land AA+817 China J inmao AA+2007 Country Garden AA+1030 F uture Land AA+3900 Greentown AA+2777 Guangzhou R&F AA+207 J oy City AA+813 Shimao AA+1918 Sunac AA+3383 Agile AA3883 China Aoy uan AA1966 China SEC AA1668 China South City AA884 CIF I Group AA1777 F antasia AA2329 Guorui ppt AA1813 KWG AA3380 Logan prop AA1107 Modern Land AA410 SOHO China AA2608 Sunshine 100 AA1233 Times property AA1628 Yuzhou Properties AA


Industry Focus


Page 37

List of domestic bonds issued in 2015

T ic k er Company Dat e Coupon /Cost

A moun t(Rmb mn )

O t her det ails

1668 China South City Apr-15 7.00% 1,500 Due 20212868 Beijing Capital Land May -15 4.58% 3,000 Due 20203333 Ev ergrande J un-15 5.38% 5,000 Due 2020960 Longfor J ul-15 4.60% 2,000 Due 20203333 Ev ergrande J ul-15 5.30%

6.98% 6,8008,200

Due 2019Due 2022

2777 Guangzhou R&F J ul-15 4.95% 6,500 Due 20201233 Times property J ul-15 6.75% 2,000 Due 20202868 Beijing Capital Land J un-15 4.58% 3,000 Due 20203883 China Aoy uan J ul-15 5.80% 2,400 Due 2018960 Longfor J ul-15 3.93%

4.20% 2,0002,000

Due 2020Due 2022

2007 Country Garden J ul-15 4.20% 3,000 Due 20182007 Country Garden Aug-15 4.20% 3,000 Due 20181918 Sunac Aug-15 4.50%

5.70% 2,5002,500

Due 2022

3380 Logan prop Aug-15 5.00% 2,500 Due 20203380 Logan prop Aug-15 4.77% 1,000 Due 20191918 Sunac Aug-15 4.48% 1,000 Due 20223900 Greentown Aug-15 4.70% 3,000 Due 20201777 F antasia Sep-15 6.95% 2,000 Due 20203900 Greentown Sep-15 4.4%

5.16% 2,0002,000

Due 2020Due 2022

813 Shimao Sep-15 3.90% 6,000 Due 20203333 Ev ergrande Oct-15 7.38%

7.88% 17,500

2,500 Due 2020Due 2020

1628 Yuzhou Properties Oct-15 6.70% 2,000 Due 2018884 CIF I Group Oct-15 4.95% 3,495 Due 2020813 Shimao Oct-15 4.15% 1,400 Due 20222608 Sunshine 100 Oct-15 7.99% 1,500 Due 20183883 China Aoy uan Oct-15 7.80% 1,500 Due 20181233 Times Properties Oct-15 7.85% 3,000 Due 20181966 China SEC Oct-15 5.18% 2,000 Due 20201030 F uture Land Nov -15 4.50% 3,000 Due 2020960 Longfor Nov -15 4.08% 2,000 Due 20222007 Country Garden Nov -15 4.95% 4,000 Due 2019884 CIF I Group Nov -15 5.96% 500 Due 20201528 RS Macalline Nov -15 4.50% 5,000 Due 20202329 Guorui ppt Nov -15 7.25% 2,000 Due 2020817 China J inmao Dec-15 3.55% 2,200 Due 20202007 Country Garden Dec-15 5.10% 4,000 Due 20191628 Yuzhou Properties Dec-15 5.10% 3,000 Due 20201966 China SEC Dec-15 5.30% 1,500 Due 20201813 KWG Dec-15 4.94% 2,500 Due 20211813 KWG Dec-15 6.15% 800 Due 20222329 Guorui ppt Dec-15 7.47% 1,000 Due 20202007 Country Garden Dec-15 4.99% 1,000 Due 20201777 F antasia J an-16 7.29% 1,100 Due 20213383 Agile J an-15 4.70% 1,600 Due 2016


Industry Focus


Page 38

Valuation comparison

3- mt hdaily Net Disc /

M k t t rading 12- m EPS gt h PE PE Y ield Y ield RO E ROE G earing P/Bk NA V (Prem)Price Cap v alue Recom t arget 16F 17F 16F 17F 15F 16F 16F 17F 1H15 1H15 t o NA V

Company Name Code HK $ US$bn US$m HK $ % % x x % % % % % x HK $ %

Large capChina Overseas* 688 HK 21.5 27.2 71.8 Buy 30.30 9 11 6.3 5.7 3.0 3.2 15.8 15.5 13.0 1.1 28.1 23.4Country Garden* 2007 HK 2.94 8.5 7.0 Buy 3.66 7 11 5.3 4.8 5.7 6.1 14.7 14.9 54.1 0.9 4.4 33.1CR Land* 1109 HK 18.08 16.1 33.5 Buy 26.01 14 8 8.2 7.6 2.9 3.3 11.3 11.3 39.4 1.1 27.5 34.3China V anke 'H'* 2202 HK 17.36 39.0 42.4 Hold 19.60 17 5 8.1 7.7 3.7 4.3 18.6 17.3 15.8 1.8 22.4 22.4Dalian Wanda 'H' 3699 HK 35.4 20.6 15.7 NR n.a. 21 19 6.3 5.3 3.7 4.3 12.8 13.8 73.7 0.8 n.a. n.a.Evergrande* 3333 HK 4.87 8.5 39.7 Hold 6.45 18 11 7.3 6.6 5.8 6.9 13.1 13.6 85.8 1.1 9.6 49.2Longfor 960 HK 9.6 7.2 5.4 NR n.a. 12 11 5.7 5.2 3.6 4.0 14.4 14.3 61.1 0.9 n.a. n.a.Shimao Property* 813 HK 10.46 4.7 9.6 Buy 16.53 6 2 3.9 3.8 8.4 9.2 14.6 13.7 57.5 0.6 28.5 63.3A v erage 13 10 6.4 5.8 4.6 5.2 14.4 14.3 50.1 1.0 37.6

M id capAgile Property* 3383 HK 3.48 1.7 2.5 Hold 3.66 (10) 7 3.7 3.4 7.5 6.8 7.4 7.5 72.4 0.3 16.6 79.1China South City*^^ 1668 HK 1.48 1.5 2.4 Hold 1.94 45 69 11.3 6.7 3.3 4.9 4.2 6.9 65.3 0.5 3.6 58.6COGO* 81 HK 2.48 0.7 0.8 Buy 4.25 49 12 2.3 2.1 2.0 2.0 16.1 15.4 81.4 0.3 9.2 73.0China J inmao Hldgs* 817 HK 1.93 2.6 3.9 Buy 3.00 25 21 5.4 4.4 4.1 5.6 9.3 10.4 49.5 0.5 4.8 59.9Greentown 3900 HK 5.39 1.5 4.5 NR n.a. 11 9 3.4 3.1 4.7 5.2 10.0 10.6 78.0 0.4 18.5 70.9Guangzhou R&F 2777 HK 7.97 3.3 7.9 NR n.a. 10 11 3.6 3.3 8.1 8.6 13.0 13.6 119.4 0.6 18.1 56.0Hopson Dev 754 HK 7.02 2.0 0.8 NR n.a. 8 (12) 11.7 13.3 0.0 0.0 2.0 2.0 73.5 0.3 n.a. n.a.KWG Property 1813 HK 4.67 1.8 4.0 NR n.a. 18 16 3.3 2.9 8.7 10.0 14.9 15.2 69.8 0.5 10.8 56.8Poly (Hong Kong) 119 HK 1.99 0.9 3.8 NR n.a. 56 26 15.8 12.5 1.4 1.9 1.7 2.2 109.2 0.2 13.1 84.8Shenzhen Inv 604 HK 2.75 2.6 6.3 NR n.a. 16 15 5.9 5.1 5.8 6.6 9.8 11.0 57.7 0.6 n.a. n.a.Shui On Land* 272 HK 1.76 1.8 3.2 Hold 2.07 (105) n.a. n.a. 44.3 4.1 1.7 (0.3) 0.7 86.9 0.3 5.2 66.0Sino-Ocean Land* 3377 HK 3.72 3.6 29.3 Hold 6.70 26 18 5.4 4.5 4.9 5.9 9.7 10.6 62.6 0.5 8.4 55.5Soho China* 410 HK 3.48 2.3 4.5 Hold 3.60 67 24 33.3 26.8 0.9 1.6 1.2 1.4 26.4 0.4 9.0 61.3Sunac China 1918 HK 4.56 2.0 7.4 NR n.a. 18 21 3.0 2.5 5.2 6.1 20.9 21.0 70.7 0.7 n.a. n.a.Yanlord Land*^ YLLG SP 1.01 1.4 1.1 Buy 1.35 45 20 6.9 5.7 1.4 1.5 6.4 7.2 39.2 0.5 1.9 48.1Yuexiu Property* 123 HK 1.09 1.7 2.7 Hold 1.35 16 2 5.8 5.7 6.2 6.9 6.3 6.2 65.5 0.4 3.1 65.1A v erage# 24 17 6.2 5.4 4.5 5.1 9.4 10.0 72.5 0.5 64.3

Small capBJ Cap Land 'H' 2868 HK 2.77 1.4 1.5 NR n.a. 24 (11) 2.5 2.8 8.7 9.7 16.7 15.9 155.3 0.5 n.a. n.a.BJ North Star 'H' 588 HK 2.15 0.9 0.5 NR n.a. 31 (6) 5.7 6.0 3.9 3.9 4.8 5.9 84.7 0.4 n.a. n.a.C C Land* 1224 HK 2.41 0.8 0.5 Hold 2.06 6 (79) 5.5 26.6 2.1 3.6 7.4 1.5 19.9 0.4 2.8 12.9Central China* 832 HK 1.32 0.4 0.2 Buy 1.89 8 9 3.4 3.1 8.2 8.9 11.2 11.3 66.9 0.4 6.1 78.2China SCE 1966 HK 1.66 0.7 0.5 NR n.a. 24 20 3.9 3.2 5.2 6.5 15.7 16.0 62.0 0.7 n.a. n.a.CIF I Holdings 884 HK 1.38 1.2 1.1 NR n.a. 19 11 2.8 2.5 8.4 10.0 18.8 18.7 72.5 0.7 n.a. n.a.F irst Sponsor*^ FSG SP 1.23 0.5 0.1 Buy 1.57 45 (47) 6.3 11.8 3.0 2.8 12.3 6.4 n.a. 0.8 4.1 70.0Glorious Property 845 HK 0.83 0.8 0.3 NR n.a. 58 34 18.4 13.7 0.0 0.0 1.9 2.5 142.5 0.4 5.9 85.9Hydoo Int'l 1396 HK 0.84 0.4 0.1 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 60.4 0.6 n.a. n.a.Kaisa Group 1638 HK 1.56 1.0 0.0 NR n.a. 13 23 2.2 1.8 11.6 n.a. 16.4 14.9 70.4 0.3 n.a. n.a.Lai Fung* 1125 HK 0.111 0.2 0.1 NR n.a. 50 n.a. 5.2 n.a. 2.8 2.8 2.6 0.0 24.3 0.1 0.6 80.9Minmetals Land 230 HK 0.72 0.3 0.1 NR n.a. 44 34 2.8 2.1 2.5 3.6 9.7 11.8 45.4 0.3 n.a. n.a.Powerlong 1238 HK 1.36 0.7 0.3 NR n.a. 24 12 3.1 2.7 6.1 7.4 8.7 8.8 68.3 0.2 n.a. n.a.Renhe Commercial 1387 HK 0.32 1.8 1.1 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26.0 0.4 2.7 88.3Road King 1098 HK 6.11 0.6 0.3 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 81.8 0.3 n.a. n.a.Greenland* 337 HK 2.15 0.8 2.0 Buy 4.97 268 96.9 2.4 1.3 0.0 0.0 10.9 17.4 193.0 0.6 6.4 66.2SRE Group 1207 HK 0.285 0.8 0.5 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 182.3 0.2 n.a. n.a.Wuzhou Int'l 1369 HK 0.81 0.5 1.9 NR n.a. 59 51 8.6 5.7 0.0 0.0 n.a. n.a. 81.4 0.8 n.a. n.a.Ying Li^ YINGLI SP 0.128 0.2 0.6 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0.4 0.9 86.1Yuzhou Properties* 1628 HK 1.78 0.9 1.0 NR n.a. 31 39 3.1 2.3 7.5 9.8 18.3 21.7 69.0 0.6 5.0 64.4Zhong An 672 HK 0.74 0.2 0.0 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 75.2 0.2 n.a. n.a.A v erage** 29 11 5.2 3.2 5.4 5.8 11.8 11.7 80.2 0.4 69.3

A v erage (O v erall)@ 23 13 5.5 4.8 4.8 5.4 11.4 11.6 71.3 0.6 58.7~

28- J an

^ Denominated in SGD for price ~ Simple average discount to NAV; Market cap weighted average NAV = 38% # Exclude Soho China & Shui On Land ** Exclude Greenland, First Sponsor & Lai Fung @ Exclude Soho China, Shui On Land, Greenland, First Sponsor & Lai Fung ^^ FY15: 16F; FY16: FY17F; FY17: FY18F Source: Thomson Reuters, *DBS Vickers

Industry Focus


Page 39

PE valuations, 2007 to 2015 trough (based on earnings forecasts)

28- J an M k t 16F 17F PE

Company Name CodePric eHK $

CapUS$bn

PEx

PEx

T rough2007

T rough2008

T rough2009

T rough2010

T rough2011

T rough2012

T rough2013

T rough2014

T rough2015

China Ov erseas* 688 HK 21.50 27.2 6.3 5.7 14.1 9.7 11.1 12.8 6.5 7.1 7.8 6.1 6.7Country Garden* 2007 HK 2.94 8.5 5.3 4.8 25.7 3.6 5.2 10.7 5.2 5.8 6.5 4.0 4.2CR Land* 1109 HK 18.08 16.1 8.2 7.6 22.6 15.9 13.1 14.4 7.2 10.1 11.9 7.1 8.1China V anke 'H'* 2202 HK 17.36 39.0 8.1 7.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6.3 6.8Dalian Wanda 'H' 3699 HK 35.40 20.6 6.3 5.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8.3Ev ergrande* 3333 HK 4.87 8.5 7.3 6.6 n.a. n.a. n.a. 3.8 2.9 3.3 4.2 3.4 4.3Longfor 960 HK 9.60 7.2 5.7 5.2 n.a. n.a. 17.8 13.8 6.3 5.6 7.4 5.3 5.4Shimao Property * 813 HK 10.46 4.7 3.9 3.8 14.7 3.8 4.2 8.6 3.6 3.9 6.4 4.3 3.3A v erage 6 .4 5 .8 19.3 8 .2 10 .3 10.7 5 .3 6 .0 7 .4 5 .2 5 .9

Agile Property * 3383 HK 3.48 1.7 3.7 3.4 11.7 1.6 4.7 8.5 2.7 3.8 4.0 2.4 3.0China South City *^^ 1668 HK 1.48 1.5 11.3 6.7 n.a. n.a. 17.7 6.9 4.3 5.9 4.3 5.1 5.7COGO* 81 HK 2.48 0.7 2.3 2.1 n.a. n.a. n.a. n.a. 3.6 5.0 6.3 3.1 3.1China J inmao Hldgs* 817 HK 1.93 2.6 5.4 4.4 29.6 5.5 6.9 15.0 6.1 6.0 7.3 4.8 5.0Greentown 3900 HK 5.39 1.5 3.4 3.1 8.1 1.9 2.3 6.3 2.0 1.5 3.3 2.3 3.1Guangzhou R&F 2777 HK 7.97 3.3 3.6 3.3 12.2 2.4 4.8 6.8 3.2 3.2 4.7 3.8 3.1Hopson Dev 754 HK 7.02 2.0 11.7 13.3 9.1 1.0 2.2 4.9 2.8 2.8 5.6 3.9 9.8KWG Property 1813 HK 4.67 1.8 3.3 2.9 7.0 2.1 2.9 8.0 3.1 2.8 3.7 2.9 3.2Poly (Hong Kong) 119 HK 1.99 0.9 15.8 12.5 n.a. 10.0 3.8 14.9 4.2 4.9 5.2 3.9 5.4Shenzhen Inv 604 HK 2.75 2.6 5.9 5.1 9.1 2.1 4.2 6.5 3.8 4.6 6.2 5.3 5.4Shui On Land* 272 HK 1.76 1.8 n.a. 44.3 13.3 1.7 3.4 9.4 5.2 6.5 9.1 10.6 6.4Sino-Ocean Land* 3377 HK 3.72 3.6 5.4 4.5 28.1 4.7 9.0 11.3 4.1 5.4 6.7 6.0 6.0Soho China* 410 HK 3.48 2.3 33.3 26.8 13.8 5.7 4.0 4.6 9.0 4.5 6.3 8.8 15.8Sunac China 1918 HK 4.56 2.0 3.0 2.5 n.a. n.a. n.a. 4.5 1.4 1.4 3.1 2.2 2.8Yanlord Land*^ YLLG SP 1.01 1.4 6.9 5.7 7.2 4.1 6.6 9.3 5.0 6.7 9.3 7.5 7.1Yuexiu Property * 123 HK 1.09 1.7 5.8 5.7 12.5 1.9 2.9 8.9 4.5 4.5 5.8 5.9 6.3A v erage# 6 .2 5 .4 13.5 3 .4 5 .7 8 .6 3 .6 4 .2 5 .4 4 .2 4 .9

BJ Cap Land 'H' 2868 HK 2.77 1.4 2.5 2.8 6.7 1.6 3.1 5.1 1.9 2.0 3.3 2.6 3.0BJ North Star 'H' 588 HK 2.15 0.9 5.7 6.0 18.6 3.5 5.0 7.5 3.6 6.5 4.0 3.8 5.0C C Land* 1224 HK 2.41 0.8 5.5 26.6 n.a. 18.7 n.a. n.a. 5.2 3.9 6.7 3.5 4.0Central China* 832 HK 1.32 0.4 3.4 3.1 n.a. 1.3 1.5 3.9 2.8 2.8 3.5 2.6 2.5China SCE 1966 HK 1.66 0.7 3.9 3.2 n.a. n.a. n.a. 4.7 3.7 2.9 2.4 5.6 4.5CIF I Holdings 884 HK 1.38 1.2 2.8 2.5 n.a. n.a. n.a. n.a. n.a. n.a. 3.8 3.2 2.7F irst Sponsor*^ FSG SP 1.23 0.5 6.3 11.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29.9 13.4Glorious Property 845 HK 0.83 0.8 18.4 13.7 n.a. n.a. 12.9 6.4 2.8 2.8 4.8 4.4 3.6Hydoo Int'l 1396 HK 0.84 0.4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 3.6 2.3 2.3Kaisa Group 1638 HK 1.56 1.0 2.2 1.8 n.a. n.a. n.a. 3.5 3.7 2.9 2.8 1.9 1.7Lai F ung* 1125 HK 0.11 0.2 5.2 n.a. 7.1 0.8 3.2 6.7 3.1 2.6 4.0 4.0 4.0Minmetals Land 230 HK 0.72 0.3 2.8 2.1 n.a. 0.8 2.2 6.9 3.8 2.3 4.2 3.6 3.9Powerlong 1238 HK 1.36 0.7 3.1 2.7 n.a. n.a. 4.7 5.3 1.5 1.6 3.6 2.8 3.2Renhe Commercial 1387 HK 0.32 1.8 n.a. n.a. n.a. 10.5 5.7 5.4 3.2 2.7 4.7 7.7 7.7Road King 1098 HK 6.11 0.6 n.a. n.a. 6.0 1.1 4.4 5.4 2.2 2.4 6.5 6.8 6.8Greenland* 337 HK 2.15 0.8 2.4 1.3 6.7 0.7 1.1 3.6 1.2 1.0 0.6 11.7 8.0SRE Group 1207 HK 0.29 0.8 n.a. n.a. 3.1 1.0 1.5 2.0 2.3 0.9 1.1 1.1 1.1Wuzhou Int'l 1369 HK 0.81 0.5 8.6 5.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7.3 5.2Ying Li^ YINGLI SP 0.13 0.2 n.a. n.a. n.a. n.a. 64.8 22.4 6.9 4.7 7.8 4.1 5.1Yuzhou Properties* 1628 HK 1.78 0.9 3.1 2.3 n.a. n.a. 9.6 5.5 2.7 3.6 3.6 2.4 2.1Zhong An 672 HK 0.74 0.2 n.a. n.a. n.a. 1.7 2.9 7.8 3.0 9.9 5.3 8.3 8.3A v erage** 5 .2 3 .2 8 .6 4 .5 9 .9 6 .5 3 .3 3 .5 4 .2 4 .1 4 .0

A v erage (O v erall)@ 5 .5 4 .8 13.7 4 .6 8 .2 8 .1 3 .8 4 .2 5 .2 4 .3 4 .7 ^ Denominated in SGD for price

# Exclude Soho China & Shui On Land for 16F & 17F PE

** Exclude Greenland, First Sponsor & Lai Fung for 16F & 17F PE

@ Exclude Soho China, Shui On Land, Greenland, First Sponsor & Lai Fung for 16F & 17F PE

^^ FY15: 16F; FY16: FY17F; FY17: FY18F Source: Thomson Reuters, *DBS Vickers

Industry Focus


Page 40

PE valuations, 2007 to 2015 peak (based on earnings forecasts)

28- J an M k t 16F 17F PE (x )

Company Name CodePric eHK $

CapUS$bn

PEx

PEx

Peak2007

Peak2008

Peak2009

Peak2010

Peak2011

Peak2012

Peak2013

Peak2014

Peak2015

China Overseas* 688 HK 21.50 27.2 6.3 5.7 37.3 22.7 25.0 17.0 12.1 12.4 11.2 8.5 9.9Country Garden* 2007 HK 2.94 8.5 5.3 4.8 50.2 19.8 20.3 16.7 11.6 9.2 10.0 6.4 7.3CR Land* 1109 HK 18.08 16.1 8.2 7.6 69.0 28.6 30.4 21.1 15.2 17.6 16.2 10.7 12.8China V anke 'H'* 2202 HK 17.36 39.0 8.1 7.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 9.0 11.8Dalian Wanda 'H' 3699 HK 35.40 20.6 6.3 5.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14.5Ev ergrande* 3333 HK 4.87 8.5 7.3 6.6 n.a. n.a. n.a. 9.1 8.9 6.1 6.4 4.6 14.2Longfor 960 HK 9.60 7.2 5.7 5.2 n.a. n.a. 24.4 21.7 14.2 11.9 10.4 6.9 8.7Shimao Property* 813 HK 10.46 4.7 3.9 3.8 30.0 14.9 18.4 13.3 9.7 9.5 8.8 6.1 6.2A v erage 6 .4 5 .8 46 .6 21 .5 23 .7 16 .5 11 .9 11 .1 10 .5 7 .4 10 .7

Agile Property* 3383 HK 3.48 1.7 3.7 3.4 36.9 16.1 21.0 13.7 11.1 7.1 7.6 4.3 5.7China South City *^^ 1668 HK 1.48 1.5 11.3 6.7 n.a. n.a. 19.6 20.4 12.3 6.6 6.9 11.8 9.5COGO* 81 HK 2.48 0.7 2.3 2.1 n.a. n.a. n.a. n.a. 9.8 9.8 10.0 5.1 6.1China J inmao Hldgs* 817 HK 1.93 2.6 5.4 4.4 48.2 22.9 21.8 19.1 16.8 10.3 9.3 6.8 8.4Greentown 3900 HK 5.39 1.5 3.4 3.1 15.7 9.7 18.3 10.2 6.1 6.3 6.6 4.5 6.1Guangzhou R&F 2777 HK 7.97 3.3 3.6 3.3 41.2 16.6 17.8 10.5 8.0 7.4 8.1 4.8 4.8Hopson Dev 754 HK 7.02 2.0 11.7 13.3 21.0 9.6 10.3 7.5 6.4 16.0 13.7 16.1 24.6KWG Property 1813 HK 4.67 1.8 3.3 2.9 34.3 12.4 22.1 14.2 9.9 6.6 6.6 5.2 6.1Poly (Hong Kong) 119 HK 1.99 0.9 15.8 12.5 n.a. 30.0 51.0 25.2 16.1 9.8 9.9 6.4 30.2Shenzhen Inv 604 HK 2.75 2.6 5.9 5.1 22.8 10.4 14.9 9.5 9.0 8.6 11.8 8.0 10.0Shui On Land* 272 HK 1.76 1.8 n.a. 44.3 25.0 16.2 21.3 16.6 16.2 12.6 17.6 13.8 87.1Sino-Ocean Land* 3377 HK 3.72 3.6 5.4 4.5 82.2 13.2 24.8 15.7 10.3 12.1 11.4 7.8 9.9Soho China* 410 HK 3.48 2.3 33.3 26.8 21.0 14.7 11.0 7.9 17.7 6.2 7.7 11.8 24.4Sunac China 1918 HK 4.56 2.0 3.0 2.5 n.a. n.a. n.a. 5.8 3.5 5.5 4.9 5.1 6.3Yanlord Land*^ YLLG SP 1.01 1.4 6.9 5.7 28.7 14.5 19.8 14.5 10.5 15.0 14.4 9.8 12.7Yuexiu Property* 123 HK 1.09 1.7 5.8 5.7 31.9 11.0 25.5 15.7 11.0 9.1 9.5 7.9 11.1A v erage# 6.2 5 .4 36 .3 15 .1 22 .3 14 .0 10 .0 9 .3 9 .3 7 .4 10 .8

BJ Cap Land 'H' 2868 HK 2.77 1.4 2.5 2.8 18.8 9.5 15.9 9.6 5.9 4.7 5.3 3.3 6.3BJ North Star 'H' 588 HK 2.15 0.9 5.7 6.0 49.9 20.6 18.0 12.7 10.5 8.9 7.0 8.2 13.0C C Land* 1224 HK 2.41 0.8 5.5 26.6 n.a. n.a. n.a. n.a. 17.4 12.7 10.9 6.4 8.7Central China* 832 HK 1.32 0.4 3.4 3.1 n.a. 10.8 9.4 6.6 5.6 6.3 5.2 3.8 4.4China SCE 1966 HK 1.66 0.7 3.9 3.2 n.a. n.a. n.a. 6.9 5.5 3.5 6.6 5.6 5.6CIF I Holdings 884 HK 1.38 1.2 2.8 2.5 n.a. n.a. n.a. n.a. n.a. n.a. 5.9 4.3 5.1F irst Sponsor*^ FSG SP 1.23 0.5 6.3 11.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 31.3 13.9Glorious Property 845 HK 0.83 0.8 18.4 13.7 n.a. n.a. 17.7 10.8 7.3 6.3 11.0 9.1 41.0Hydoo Int'l 1396 HK 0.84 0.4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5.5 5.9 7.8Kaisa Group 1638 HK 1.56 1.0 2.2 1.8 n.a. n.a. n.a. 8.4 10.0 6.9 5.9 3.9 2.3Lai Fung* 1125 HK 0.11 0.2 5.2 n.a. 7.9 7.8 11.1 17.4 19.0 4.9 4.0 4.0 4.0Minmetals Land 230 HK 0.72 0.3 2.8 2.1 n.a. 3.4 13.2 20.1 n.a. 7.1 6.6 5.9 6.1Powerlong 1238 HK 1.36 0.7 3.1 2.7 n.a. n.a. 7.0 8.2 6.5 5.6 6.7 3.8 4.6Renhe Commercial 1387 HK 0.32 1.8 n.a. n.a. n.a. 12.5 10.7 7.2 7.0 9.4 23.9 7.7 7.7Road King 1098 HK 6.11 0.6 n.a. n.a. 11.0 10.3 7.2 7.3 7.0 7.6 7.3 6.8 6.8Greenland* 337 HK 2.15 0.8 2.4 1.3 14.0 9.3 11.9 6.7 3.2 7.6 44.8 28.2 21.6SRE Group 1207 HK 0.29 0.8 n.a. n.a. 8.8 4.2 4.6 3.7 2.9 1.4 1.1 1.1 1.1Wuzhou Int'l 1369 HK 0.81 0.5 8.6 5.7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12.4 29.6Ying Li YINGLI SP 0.13 0.2 n.a. n.a. n.a. n.a. 196.2 331.2 42.9 13.0 16.1 14.7 16.4Yuzhou Properties* 1628 HK 1.78 0.9 3.1 2.3 n.a. n.a. 11.7 9.9 5.8 6.5 6.5 3.3 5.2Zhong An 672 HK 0.74 0.2 n.a. n.a. n.a. 8.8 22.3 13.8 12.3 14.9 10.3 8.3 8.3A v erage** 5.2 3 .2 22 .1 10 .0 27 .8 32 .6 10 .5 7 .7 8 .3 6 .4 10 .0

A v erage (O v erall)@ 5.5 4 .8 35 .4 14 .5 24 .8 22 .3 10 .6 8 .9 9 .1 6 .9 10 .4 ^ Denominated in SGD for price # Exclude Soho China & Shui On Land for 16F & 17F PE



^^ FY15: 16F; FY16: FY17F; FY17: FY18F

Source: Thomson Reuters, *DBS Vickers

Industry Focus


Page 41

PE valuations, 2007 to 2015 trough (based on reported earnings)

3- mt h dailyM k t t rad ing F Y 16F F Y 17F PE (x )

Pric e Cap v alue PE PE A v g T rough T rough T rough T rough T rough T rough T rough T rough T roughCompany Name Code HK $ US$bn US$m x x PE (x ) 2008 2008 2009 2010 2011 2012 2013 2014 2015China Overseas* 688 HK 21.5 27.2 71.8 6.3 5.7 10.0 12.5 9.9 10.0 8.9 5.3 5.3 6.4 5.1 6.6Country Garden* 2007 HK 2.94 8.5 7.0 5.3 4.8 14.8 19.6 11.3 9.2 6.3 4.3 5.2 5.8 4.4 5.0CR Land* 1109 HK 18.08 16.1 33.5 8.2 7.6 12.0 18.5 13.1 8.5 10.6 4.9 6.4 7.3 5.3 9.1China V anke 'H'* 2202 HK 17.36 39.0 42.4 8.1 7.7 9.0 n.a. n.a. n.a. n.a. n.a. n.a. 6.5 6.3 8.6Dalian Wanda 'H' 3699 HK 35.4 20.6 15.7 6.3 5.3 10.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5.7 9.2Evergrande* 3333 HK 4.87 8.5 39.7 7.3 6.6 4.8 n.a. n.a. 42.7 3.0 2.4 3.6 2.7 2.7 5.6Longfor 960 HK 9.6 7.2 5.4 5.7 5.2 6.9 n.a. n.a. 11.8 7.2 4.5 5.1 5.8 4.7 5.7Shimao Property* 813 HK 10.46 4.7 9.6 3.9 3.8 9.2 7.6 11.4 3.1 6.6 2.7 3.0 4.9 4.8 3.8A v erage 6 .4 5 .8 9 .6 14 .5 11.4 14 .2 7.1 4 .0 4 .8 5 .6 4 .9 6 .7

Agile Property* 3383 HK 3.48 1.7 2.5 3.3 3.4 6.3 8.7 1.2 4.2 3.6 2.9 3.5 4.2 2.6 3.3China South City*^^ 1668 HK 1.48 1.5 2.4 16.4 6.7 7.5 n.a. n.a. n.a. n.a. 3.6 2.9 3.1 4.3 17.7COGO* 81 HK 2.48 0.7 0.8 3.5 2.1 7.6 3.3 32.9 (3.5) 2.9 2.9 4.0 5.3 6.8 3.1China J inmao Hldgs* 817 HK 1.93 2.6 3.9 6.7 4.4 9.0 2.6 8.4 12.3 12.6 4.4 4.8 5.2 3.3 6.0Greentown 3900 HK 5.39 1.5 4.5 3.7 3.1 8.7 14.9 4.2 2.8 6.6 1.7 0.9 3.9 6.7 3.6Guangzhou R&F 2777 HK 7.97 3.3 7.9 4.0 3.3 7.3 7.9 3.3 6.3 6.6 3.7 2.7 3.4 4.0 3.2Hopson Dev 754 HK 7.02 2.0 0.8 12.5 13.3 6.0 6.6 1.1 0.8 2.3 4.6 2.1 3.9 5.1 9.1KWG Property 1813 HK 4.67 1.8 4.0 3.9 2.9 7.8 4.6 6.2 3.8 6.4 2.3 2.2 2.8 2.4 3.6Poly (Hong Kong) 119 HK 1.99 0.9 3.8 24.6 12.5 13.9 5.7 11.4 5.0 11.5 2.9 4.2 5.2 11.1 23.5Shenzhen Inv 604 HK 2.75 2.6 6.3 6.8 5.1 7.0 5.3 2.2 4.0 5.5 2.9 2.3 4.3 4.0 5.4Shui On Land* 272 HK 1.76 1.8 3.2 5.7 44.3 7.3 8.0 1.6 2.1 4.2 1.9 5.1 5.9 6.5 4.7Sino-Ocean Land* 3377 HK 3.72 3.6 29.3 6.8 4.5 9.9 14.4 4.5 8.3 9.5 5.2 4.1 5.1 5.4 6.8Soho China* 410 HK 3.48 2.3 4.5 55.5 26.8 15.4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 46.7Sunac China 1918 HK 4.56 2.0 7.4 3.6 2.5 3.7 n.a. n.a. n.a. n.a. 1.3 1.5 3.8 3.1 3.1Yanlord Land*^ YLLG SP 1.01 1.4 1.1 10.0 5.7 8.4 14.3 4.1 4.2 7.9 4.7 4.9 7.3 6.8 9.0Yuexiu Property* 123 HK 1.09 1.7 2.7 6.7 5.7 7.3 8.1 3.4 (4.6) 8.0 1.1 2.5 4.2 4.9 7.1A v erage# 6 .2 5 .4 8 .3 8 .0 6 .5 3 .5 6.7 3 .1 3 .2 4 .5 5 .1 9 .7

BJ Cap Land 'H' 2868 HK 2.77 1.4 1.5 3.1 2.8 4.0 8.3 2.3 2.4 3.6 2.3 2.0 2.8 2.5 3.0BJ North Star 'H' 588 HK 2.15 0.9 0.5 7.4 6.0 7.9 17.2 1.6 1.9 4.6 2.3 3.1 5.4 5.8 6.8C C Land* 1224 HK 2.41 0.8 0.5 5.8 26.6 10.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 3.2Central China* 832 HK 1.32 0.4 0.2 3.6 3.1 4.9 n.a. 1.1 2.4 5.1 3.7 3.3 3.8 3.9 3.8China SCE 1966 HK 1.66 0.7 0.5 4.8 3.2 5.2 n.a. n.a. n.a. 4.0 4.1 5.1 4.4 4.5 4.0CIF I Holdings 884 HK 1.38 1.2 1.1 3.3 2.5 3.6 n.a. n.a. n.a. n.a. n.a. 2.4 2.9 3.6 3.3F irst Sponsor*^ FSG SP 1.23 0.5 0.1 9.1 11.8 13.6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13.8 8.8Glorious Property 845 HK 0.83 0.8 0.3 29.2 13.7 12.9 n.a. n.a. 6.7 3.7 2.9 5.7 23.6 (2.2) 26.7Hydoo Int'l 1396 HK 0.84 0.4 0.1 n.a. n.a. 11.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10.1 n.a.Kaisa Group 1638 HK 1.56 1.0 0.0 2.5 1.8 3.3 n.a. n.a. 16.2 1.6 2.8 2.5 2.2 n.a. 2.4Lai Fung* 1125 HK 0.111 0.2 0.1 7.8 n.a. 5.8 n.a. 2.1 1.6 5.6 2.4 1.5 3.2 10.6 7.9Minmetals Land 230 HK 0.72 0.3 0.1 4.0 2.1 8.0 2.2 2.2 6.1 6.3 3.8 9.0 7.1 6.5 3.9Powerlong 1238 HK 1.36 0.7 0.3 3.8 2.7 2.9 n.a. n.a. 2.6 2.8 1.1 1.8 3.2 2.4 3.0Renhe Commercial 1387 HK 0.32 1.8 1.1 n.a. n.a. n.a. n.a. 7.8 4.8 6.0 2.5 5.2 (3.6) (3.2) n.a.Road King 1098 HK 6.11 0.6 0.3 n.a. n.a. 7.2 9.4 2.1 2.7 6.6 3.5 3.9 4.9 4.6 n.a.Greenland* 337 HK 2.15 0.8 2.0 4.9 1.3 9.3 7.1 2.4 1.0 2.9 1.2 (1.1) 71.8 22.8 6.5SRE Group 1207 HK 0.285 0.8 0.5 n.a. n.a. 1.3 3.6 3.2 1.5 3.6 2.7 3.8 6.7 (10.6) n.a.Wuzhou Int'l 1369 HK 0.81 0.5 1.9 13.7 5.7 17.5 n.a. n.a. n.a. n.a. n.a. n.a. 3.7 18.4 11.9Ying Li^ YINGLI SP 0.128 0.2 0.6 n.a. n.a. 26.7 n.a. 1.8 32.6 18.6 7.8 6.8 18.4 9.5 n.a.Yuzhou Properties* 1628 HK 1.78 0.9 1.0 4.1 2.3 5.8 n.a. n.a. 2.6 3.6 2.6 4.2 2.8 3.4 3.5Zhong An 672 HK 0.74 0.2 0.0 n.a. n.a. 11.3 13.0 4.2 3.4 8.6 5.5 4.2 5.1 5.2 n.a.A v erage** 5 .2 3 .2 8 .6 8 .7 2 .8 5 .9 5.5 3 .2 3 .7 9 .4 5 .9 6 .6

A v erage (O v erall)@ 5 .5 4 .8 8 .8 9 .3 5 .7 6 .4 6.2 3 .3 3 .7 6 .9 5 .4 7 .9HSI Index HSI 11 .3 9 .1 9 .0 10.3 7 .8 8 .8 9 .4 9 .3 9 .8

28- J an

^ Denominated in SGD for price

# Exclude Soho China & Shui On Land for 16F & 17F PE


@ Exclude Soho China, Shui On Land, Greenland, First Sponsor & Lai Fung for 16F & 17F PE ^^ FY15: 16F; FY16: FY17F; FY17: FY18F


Industry Focus


Page 42

PE valuations, 2007 to 2015 peak (based on reported earnings)

3- mt h dailyM k t t rad ing F Y 16F F Y 17F PE (x )

Pric e Cap v alue PE PE A v g Peak Peak Peak Peak Peak Peak Peak Peak Peak

Company Name Code HK $ US$bn US$m x x PE (x ) 2007 2008 2009 2010 2011 2012 2013 2014 2015China Ov erseas* 688 HK 21.5 27.2 71.8 6.3 5.7 10.0 33.3 25.2 20.6 11.6 9.4 10.1 8.7 6.9 10.1Country Garden* 2007 HK 2.94 8.5 7.0 5.3 4.8 14.8 41.7 86.8 25.3 10.6 9.0 8.2 9.5 7.2 8.6CR Land* 1109 HK 18.08 16.1 33.5 8.2 7.6 12.0 52.0 35.6 21.6 14.5 10.2 11.5 9.3 7.8 14.7China V anke 'H'* 2202 HK 17.36 39.0 42.4 8.1 7.7 9.0 n.a. n.a. n.a. n.a. n.a. n.a. 9.9 10.5 12.5Dalian Wanda 'H' 3699 HK 35.4 20.6 15.7 6.3 5.3 10.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6.1 16.6Ev ergrande* 3333 HK 4.87 8.5 39.7 7.3 6.6 4.8 n.a. n.a. 52.1 7.0 6.6 6.3 4.5 3.9 14.0Longfor 960 HK 9.6 7.2 5.4 5.7 5.2 6.9 n.a. n.a. 14.8 11.7 9.2 10.2 8.7 6.3 9.6Shimao Property * 813 HK 10.46 4.7 9.6 3.9 3.8 9.2 18.7 63.7 14.2 9.6 6.7 7.4 7.6 6.8 7.8A v erage 6 .4 5 .8 9 .6 36 .4 52 .8 24 .8 10 .8 8 .5 9 .0 8 .3 6 .9 11 .7

Agile Property * 3383 HK 3.48 1.7 2.5 3.3 3.4 6.3 28.8 7.9 20.9 6.1 9.6 5.9 7.2 5.7 6.6China South City *^^ 1668 HK 1.48 1.5 2.4 16.4 6.7 7.5 n.a. n.a. n.a. n.a. 5.8 4.3 7.0 9.7 42.3COGO* 81 HK 2.48 0.7 0.8 3.5 2.1 7.6 12.4 188.9 n.a. 4.9 8.0 8.9 9.2 13.3 7.4China J inmao Hldgs* 817 HK 1.93 2.6 3.9 6.7 4.4 9.0 7.4 33.1 24.9 17.0 9.6 9.5 6.8 5.1 11.3Greentown 3900 HK 5.39 1.5 4.5 3.7 3.1 8.7 25.5 30.5 18.9 10.7 5.2 4.3 6.2 12.7 8.0Guangzhou R&F 2777 HK 7.97 3.3 7.9 4.0 3.3 7.3 26.4 28.6 20.6 10.2 8.3 6.0 5.2 6.0 5.2Hopson Dev 754 HK 7.02 2.0 0.8 12.5 13.3 6.0 12.3 16.2 4.1 3.9 11.7 7.3 8.2 7.1 18.4KWG Property 1813 HK 4.67 1.8 4.0 3.9 2.9 7.8 9.3 n.a. 19.5 11.8 6.9 4.9 4.9 4.6 6.7Poly (Hong Kong) 119 HK 1.99 0.9 3.8 24.6 12.5 13.9 44.2 59.7 40.1 18.6 10.8 8.3 9.1 16.4 64.2Shenzhen Inv 604 HK 2.75 2.6 6.3 6.8 5.1 7.0 13.6 20.5 13.7 8.9 6.7 5.5 6.6 5.4 11.4Shui On Land* 272 HK 1.76 1.8 3.2 5.7 44.3 7.3 15.1 11.7 7.8 6.3 4.7 9.1 10.4 9.6 8.8Sino-Ocean Land* 3377 HK 3.72 3.6 29.3 6.8 4.5 9.9 24.0 25.5 22.5 16.2 12.8 8.5 8.3 7.3 11.8Soho China* 410 HK 3.48 2.3 4.5 55.5 26.8 15.4 20.5 n.a. 6.7 7.9 8.0 2.4 3.8 7.2 96.1Sunac China 1918 HK 4.56 2.0 7.4 3.6 2.5 3.7 n.a. n.a. n.a. n.a. 3.2 5.4 6.0 6.9 8.3Yanlord Land*^ YLLG SP 1.01 1.4 1.1 10.0 5.7 8.4 33.4 27.4 17.6 11.0 11.6 8.0 10.4 8.1 12.8Yuexiu Property * 123 HK 1.09 1.7 2.7 6.7 5.7 7.3 15.9 20.2 n.a. 12.0 2.5 5.7 6.8 6.5 12.6A v erage# 6.2 5 .4 8 .3 20 .6 39 .2 18 .1 10 .4 7 .8 6 .5 7 .3 8 .2 20 .7

BJ Cap Land 'H' 2868 HK 2.77 1.4 1.5 3.1 2.8 4.0 23.6 21.7 13.2 6.3 5.4 4.7 4.0 3.3 8.0BJ North Star 'H' 588 HK 2.15 0.9 0.5 7.4 6.0 7.9 46.9 12.7 6.1 6.9 5.2 5.7 7.7 9.8 13.5C C Land* 1224 HK 2.41 0.8 0.5 5.8 26.6 10.0 36.3 n.a. n.a. 36.8 27.0 13.7 16.1 4.7 5.9Central China* 832 HK 1.32 0.4 0.2 3.6 3.1 4.9 n.a. 6.7 11.0 7.4 6.6 6.3 6.1 5.9 7.2China SCE 1966 HK 1.66 0.7 0.5 4.8 3.2 5.2 n.a. n.a. n.a. 5.9 6.1 6.3 5.8 5.9 5.4CIF I Holdings 884 HK 1.38 1.2 1.1 3.3 2.5 3.6 n.a. n.a. n.a. n.a. n.a. 2.6 4.6 4.7 6.4F irst Sponsor*^ F SG SP 1.23 0.5 0.1 9.1 11.8 13.6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16.6 9.7Glorious Property 845 HK 0.83 0.8 0.3 29.2 13.7 12.9 n.a. n.a. 8.8 6.3 8.5 10.1 39.2 (3.8) 44.3Hy doo Int'l 1396 HK 0.84 0.4 0.1 n.a. n.a. 11.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28.2 n.a.Kaisa Group 1638 HK 1.56 1.0 0.0 2.5 1.8 3.3 n.a. n.a. 20.2 3.2 7.0 4.8 3.9 n.a. 3.0Lai F ung* 1125 HK 0.111 0.2 0.1 7.8 n.a. 5.8 n.a. 15.2 5.9 7.8 5.4 2.5 5.7 14.1 14.8Minmetals Land 230 HK 0.72 0.3 0.1 4.0 2.1 8.0 19.8 16.4 38.4 12.1 9.5 15.6 11.8 8.5 7.1Powerlong 1238 HK 1.36 0.7 0.3 3.8 2.7 2.9 n.a. n.a. 3.0 3.7 3.2 3.1 5.4 4.0 5.8Renhe Commercial 1387 HK 0.32 1.8 1.1 n.a. n.a. n.a. n.a. 9.3 9.1 9.4 5.7 17.4 (8.4) (5.5) n.a.Road King 1098 HK 6.11 0.6 0.3 n.a. n.a. 7.2 14.7 15.9 6.8 8.8 6.7 6.1 6.0 5.4 n.a.Greenland* 337 HK 2.15 0.8 2.0 4.9 1.3 9.3 13.1 39.3 7.2 4.9 4.2 (1.8) 364.4 48.0 18.4SRE Group 1207 HK 0.285 0.8 0.5 n.a. n.a. 1.3 7.9 20.7 4.7 4.8 6.7 6.8 13.3 (13.9) n.a.Wuzhou Int'l 1369 HK 0.81 0.5 1.9 13.7 5.7 17.5 n.a. n.a. n.a. n.a. n.a. n.a. 4.2 32.2 31.4Ying Li^ YINGLI SP 0.128 0.2 0.6 n.a. n.a. 26.7 n.a. 4.8 112.2 33.8 17.6 11.5 26.6 17.7 n.a.Yuzhou Properties* 1628 HK 1.78 0.9 1.0 4.1 2.3 5.8 n.a. n.a. 3.2 4.7 4.6 7.1 4.1 4.5 5.8Zhong An 672 HK 0.74 0.2 0.0 n.a. n.a. 11.3 21.8 29.4 15.4 12.4 10.4 7.2 9.1 16.6 n.a.A v erage** 5.2 3 .2 8 .6 23 .0 17 .5 17 .7 10 .3 8 .2 7 .2 27 .9 10 .4 12 .4

A v erage (O v erall)@ 5.5 4 .8 8 .8 23 .8 32 .4 19 .1 10 .4 8 .1 7 .2 16 .8 9 .0 15 .7HSI Index HSI 19 .2 23 .1 18 .2 13 .6 11 .7 11 .0 11 .3 11 .1 13 .6

28- J an

^ Denominated in SGD for price # Exclude Soho China & Shui On Land for 16F & 17F PE



^^ FY15: 16F; FY16: FY17F; FY17: FY18F


Industry Focus


Page 43

Share price performance

Price Performance 20071-wk 2-wk 1-mth 2-mth 3-mth 4-mth 5-mth 6-mth YTD 1-y r 2011 2012 2013 2014 2015 high

% % % % % % % % % % % % % % % %Tier 1 play ersChina Overseas 688 HK 4.1 (4.0) (19.0) (15.5) (15.5) (6.0) (4.4) (10.8) (21.0) (7.0) (9.7) 78.0 (5.6) 5.7 21.5 14.6Country Garden 2007 HK 2.4 (2.6) (5.5) 1.7 (2.6) 8.9 4.6 (2.3) (7.5) (4.2) (2.3) 46.4 15.3 (32.8) 2.6 (77.2)CR Land 1109 HK 6.4 0.1 (18.0) (13.3) (13.3) (2.6) (6.9) (15.5) (20.0) (13.9) (12.1) 69.1 (8.9) 6.4 14.2 (12.7)China Vanke 'H' 2202 HK 2.2 (4.0) (24.2) (8.4) (4.8) 4.5 1.5 (6.2) (24.2) (0.1) n.a. n.a. n.a. n.a. 32.4 n.a.Dalian Wanda 3699 HK 0.1 (8.9) (19.4) (26.2) (32.9) (20.7) (27.2) (35.5) (21.8) (27.8) n.a. n.a. n.a. n.a. (8.6) n.a.Evergrande 3333 HK 0.0 (11.5) (22.8) (23.3) (13.5) 9.2 (1.4) (8.5) (28.6) 49.4 (14.8) 32.0 (30.4) 6.1 117.2 n.a.Longfor Properties 960 HK 2.0 (6.8) (15.6) (10.9) (9.6) (2.4) 1.3 (12.1) (17.0) (8.2) (18.9) 72.9 (28.6) (7.8) 15.7 n.a.Shimao Property 813 HK 1.8 (8.6) (25.0) (19.0) (23.4) (8.9) (6.1) (23.2) (24.1) (37.1) (43.5) 120.5 21.9 (2.7) (20.5) (64.0)A v erage 2.4 (5.8) (18.7) (14.4) (14.5) (2.3) (4.8) (14.2) (20.5) (6.1) (16.9) 69.8 (6.1) (4.2) 21.8 (34.8)

T ier 2 play ersAgile Property 3383 HK (3.9) (9.8) (21.1) (17.7) (19.3) (11.0) (12.6) (22.7) (19.4) (27.8) (39.2) 56.6 (23.8) (46.9) (2.0) (82.3)China South City 1668 HK 8.0 (0.7) (15.4) (17.8) (21.7) (24.1) (28.2) (34.2) (15.4) (42.6) (32.0) 17.0 88.0 60.9 (50.6) n.a.COGO 81 HK 2.1 (8.1) (22.5) (9.8) (0.4) 6.0 (4.2) (22.3) (24.4) (40.0) 88.6 105.6 (20.7) (46.7) (16.8) (45.4)China J inmao Hldgs 817 HK (1.5) (16.1) (25.8) (17.9) (13.1) (0.5) (0.5) (18.6) (27.2) (16.5) (35.9) 85.9 (3.2) (17.4) 19.4 (69.1)Greentown 3900 HK (3.1) (14.0) (36.1) (30.9) (20.6) (4.9) (13.8) (30.4) (30.0) (22.7) (60.8) 321.4 (16.6) (35.0) 0.0 (72.4)GZ R&F 2777 HK 4.7 (4.8) (16.3) (7.6) 2.3 12.1 10.8 3.5 (16.5) (11.2) (44.8) 110.1 (12.1) (16.3) 0.6 (81.6)Hopson Dev 754 HK 4.0 4.0 (9.3) 2.8 7.3 8.8 13.8 3.7 (9.1) 1.7 (51.8) 207.2 (24.6) (24.0) 8.7 (77.5)KWG 1813 HK 6.1 0.0 (19.2) (16.5) (19.1) (7.2) (8.4) (20.7) (18.8) (3.2) (55.7) 122.1 (26.1) 33.4 13.1 (65.7)Poly HK 119 HK 2.1 (7.9) (22.3) (17.1) (21.0) (9.5) (8.7) (31.4) (21.3) (46.4) (55.7) 79.8 (31.7) (22.9) (20.7) (82.6)Shenzhen Inv 604 HK 1.9 (9.8) (25.1) (16.4) (11.6) (1.8) (1.1) (9.5) (24.2) 20.1 (48.7) 125.9 (7.0) (23.6) 62.8 (64.6)Shui On Land 272 HK 0.0 (6.4) (17.8) (18.1) (17.4) 0.6 3.5 (14.6) (17.4) (0.6) (36.9) 58.9 (31.1) (23.1) 16.4 (82.2)Sino-Ocean 3377 HK 1.6 (10.4) (27.1) (13.3) (17.3) (11.6) (9.0) (28.0) (25.2) (24.4) (29.3) 60.8 (12.1) (13.4) 12.7 (75.2)SOHO China 410 HK 14.9 7.1 (7.9) 9.8 (12.8) 14.5 0.6 (24.5) (7.4) (35.8) (10.6) 20.3 7.4 (18.0) (31.4) (70.8)Sunac China 1918 HK (0.9) (5.2) (23.6) (9.5) (2.8) 9.1 8.3 (32.2) (24.0) (34.3) (42.1) 272.7 (22.5) 69.7 (24.0) n.a.Yanlord Land YLLG SP 1.5 4.7 0.5 (1.9) (7.3) (3.3) (6.9) 3.1 0.5 (1.0) (43.2) 59.2 (19.4) (15.1) (3.4) (76.1)Yuexiu Property 123 HK 2.8 (5.2) (19.3) (16.2) (19.9) (16.8) (12.1) (26.8) (18.7) (29.7) (46.2) 118.8 (22.0) (16.8) (10.1) (62.2)A v erage 2.5 (5.2) (19.3) (12.4) (12.2) (2.5) (4.3) (19.1) (18.7) (19.6) (34.0) 113.9 (11.1) (9.7) (1.6) (72.0)

T ier 3 play ersBJ Cap. Land 2868 HK 3.0 (6.1) (19.0) (19.2) (26.5) (12.3) (12.1) (24.7) (22.0) (21.3) (41.2) 110.5 (18.0) 11.4 20.7 (62.9)BJ North Star 588 HK 0.0 (10.4) (16.0) (14.3) (15.0) (6.5) (1.8) (20.1) (16.0) (13.3) (45.5) 82.6 (16.7) 41.1 3.6 (72.8)C C Land 1224 HK 0.4 (1.6) 0.4 11.1 19.9 27.5 31.7 24.9 (0.4) 77.2 (45.0) 88.9 (28.3) (30.8) 79.3 (85.6)Central China 832 HK (1.5) (6.4) (18.0) (14.3) (18.0) (8.3) (13.7) (25.8) (18.5) (30.2) (31.2) 76.8 (12.8) (26.8) (7.4) n.a.China SCE Property 1966 HK 3.8 (1.2) (1.8) 0.0 (2.9) (2.4) (2.9) (4.6) (5.1) 10.7 (27.7) 20.2 16.2 (12.4) 8.0 n.a.CIF I Holdings 884 HK (5.5) (6.1) (20.2) (20.7) (16.9) (0.7) (5.5) (20.2) (20.2) (11.5) n.a. n.a. 17.1 (6.1) 12.3 n.a.F irst Sponsor FSG SP 1.7 (0.4) (2.0) (2.8) 0.8 0.0 1.7 (5.7) (2.4) 1.7 n.a. n.a. n.a. n.a. 0.8 n.a.Glorious Property 845 HK 3.8 0.0 (7.8) (3.5) (13.5) (6.7) (3.5) (15.3) (7.8) (6.7) (49.1) 7.4 14.4 (28.1) (25.0) n.a.Hydoo Int'l 1396 HK (8.7) (18.4) (16.8) (16.0) (30.6) (12.5) (12.5) (20.0) (22.2) (47.2) n.a. n.a. n.a. (13.5) (44.0) n.a.Kaisa Group 1638 HK 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (1.9) (42.0) 79.1 4.2 (36.4) (1.9) n.a.Lai Fung 1125 HK (5.1) (10.5) (13.3) (14.6) (15.9) (7.5) (13.3) (32.7) (14.6) (26.5) (47.3) 25.5 (5.3) (19.9) (17.2) (76.2)Minmetals Land 230 HK (1.4) (12.2) (20.9) (6.5) (8.9) (4.0) (6.5) (17.2) (20.0) (20.0) (53.4) 70.7 (19.5) (13.6) 1.1 (80.6)Powerlong 1238 HK 0.0 (8.1) (16.6) (13.4) (10.5) (8.7) (2.9) (4.2) (17.1) 22.5 (59.1) 58.7 0.6 (34.3) 50.5 n.a.Renhe Commercial 1387 HK (1.5) (1.5) (9.9) (15.8) (22.0) (23.8) (28.1) (47.5) (11.1) (7.2) (34.6) (8.9) (38.9) (28.1) 5.9 n.a.Road King 1098 HK 1.7 (3.6) (9.9) (7.6) (10.1) (10.0) (10.5) (12.8) (9.5) (8.5) (36.9) 52.1 9.6 (11.7) 3.1 (64.3)Greenland 337 HK (7.3) (10.0) (32.2) (32.8) (35.2) (44.0) (40.9) (51.4) (28.8) (27.6) (66.1) 53.5 90.4 (18.3) (1.9) (71.2)SRE Group 1207 HK (1.7) (13.6) (20.8) (25.0) (26.9) (26.9) (3.4) (30.5) (21.9) 37.0 (55.7) 24.2 (32.9) (20.8) 73.8 (91.6)Wuzhou Int'l 1369 HK 0.0 0.0 (2.4) (3.6) (33.6) (31.4) (35.2) (40.0) 0.0 (40.0) n.a. n.a. n.a. 14.0 (44.9) n.a.Ying Li YINGLI SP (3.0) (14.1) (19.5) (22.9) (31.9) (27.7) (5.9) (32.6) (22.9) (50.8) (41.4) 45.1 6.8 (38.0) (32.2) (89.3)Yuzhou Properties 1628 HK (1.7) (7.3) (11.9) (6.3) (6.3) (5.3) 8.5 4.7 (15.2) (5.3) (18.6) 37.1 2.9 1.0 7.7 n.a.Zhong An 672 HK 0.0 (5.1) (10.8) (11.9) (12.9) (15.9) (1.3) (8.6) (8.6) (29.5) (43.9) 7.5 26.3 (20.8) (28.9) (87.2)A v erage (1.1) (6.5) (12.8) (11.4) (15.1) (10.8) (7.5) (18.3) (13.5) (9.5) (43.4) 48.9 0.9 (14.6) 3.0 (78.2)

A v erage (Ov erall) 0.8 (5.9) (16.2) (12.3) (13.9) (6.3) (5.9) (17.9) (16.6) (12.5) (35.5) 78.8 (4.9) (11.2) 4.7 (68.9)

Hang Seng Index 3.5 (3.1) (12.4) (13.0) (16.4) (9.4) (11.2) (21.7) (12.4) (22.8) (20.0) 22.9 2.9 1.3 (7.2) (39.3)MSCI China 2.1 (3.9) (15.3) (16.3) (19.8) (12.5) (14.2) (23.3) (14.9) (26.5) (20.4) 18.7 0.4 4.7 (10.1) (51.4)

Source: Thomson Reuters

Industry Focus


Page 44

Discount to NAV

Sector average (DBSV coverage only) Agile Property (3383 HK)

(80)

(60)

(40)

(20)

0

20

40

Oct

-06

Apr

-08

Nov

-09

May

-11

Dec

-12

Jun-

14

Jan-

16

%

+2SD: -8.5%

+1SD: -24.3%

Mean: -40%

-1SD: -55.7%-2SD: -71.4%

(100)

(80)

(60)

(40)

(20)

0

20

Jul-0

8

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

%

+1SD -30.4%

Avg: -52.2%

-1SD -74%

C C Land (1224 HK) Central China (832 HK)

(100)(90)(80)(70)(60)(50)(40)(30)(20)(10)

0

Jul-0

8

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

%

+1SD -45.1%

-1SD -79%

Avg: -62%

(100)

(90)

(80)

(70)

(60)

(50)

(40)

(30)

Jan-

09

Mar

-10

May

-11

Jul-1

2

Sep-

13

Nov

-14

Jan-

16

%

Avg: -66.5%

+1SD -59.6%

-1SD -73.3%

China Overseas (688 HK) COGO (81 HK)

(80)

(60)

(40)

(20)

0

20

40

60

80

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

%

+1SD 3.9%

Avg: -13%

-1SD -29.9%

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

Jan-

10

Oct

-10

Jul-1

1

Apr

-12

Jan-

13

Oct

-13

Jul-1

4

Apr

-15

Jan-

16

%

+1SD -32.2%

Avg: -51.2%

-1SD -70.1%


Industry Focus


Page 45

Discount to NAV (continued)

CR Land (1109 HK) China Vanke (2202 HK)

(80)(70)(60)(50)(40)(30)(20)(10)

0 10 20 30

Jan-

05

Aug

-06

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

%

+1SD -14.6%

Avg: -29.3%

-1SD -44%

(30)

(25)

(20)

(15)

(10)

(5)

0

5

Jun-

15

Jul-1

5

Aug

-15

Sep-

15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

%

+1SD -8.9%

Avg: -16.7%

-1SD -24.5%

Country Garden (2007 HK) Evergrande (3333 HK)

(80)

(60)

(40)

(20)

0

20

40

Jan-

09

Mar

-10

May

-11

Jul-1

2

Sep-

13

Nov

-14

Jan-

16

%

+1SD -19.6%

Avg: -34.4%

-1SD -49.3%

(90)

(80)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

0

Nov

-09

Jan-

11

Apr

-12

Jul-1

3

Oct

-14

Jan-

16

%

+1SD -44.1%

Avg: -55.8%

-1SD -67.6%

China Jinmao Holdings (817 HK) Greenland (337 HK)

(80)(75)(70)(65)(60)(55)(50)(45)(40)(35)(30)

Nov

-09

Feb-

11

May

-12

Jul-1

3

Oct

-14

Jan-

16

%

+1SD -43.8%

Avg: -52.3%

-1SD -60.9%

(100)(80)(60)(40)(20)

0 20 40 60 80

100

Nov

-08

Dec

-09

Dec

-10

Dec

-11

Dec

-12

Dec

-13

Dec

-14

Jan-

16

%

+1SD -10.2%

Avg: -41.2%

-1SD -72.2%


Industry Focus


Page 46

Discount to NAV (continued)

Shimao Property (813 HK) Shui On Land (272 HK)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

Mar

-07

Feb-

08

Feb-

09

Feb-

10

Feb-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

%

+1SD -22.7%

Avg: -39.6%

-1SD -56.5%

(100)(90)(80)(70)(60)(50)(40)(30)(20)(10)

0

Oct

-06

Aug

-08

Jun-

10

Apr

-12

Feb-

14

Jan-

16

%

+1SD -46.2%

Avg: -56.4%

-1SD -66.6%

Sino-Ocean Land (3377 HK) SOHO China (410 HK)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

Oct

-07

Dec

-08

Feb-

10

Apr

-11

Jun-

12

Aug

-13

Oct

-14

Jan-

16

%

+1SD -18.2%

Avg: -39.1%

-1SD -59.9%

(80)(60)(40)(20)

0 20 40 60 80

100 120

Oct

-07

Jun-

09

Jan-

11

Sep-

12

May

-14

Jan-

16

%

+1SD -15.3%

Avg: -36.3%

-1SD -57.2%

Yanlord Land (YLLG SP) Yuexiu Property (123 HK)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

Oct

-07

Dec

-08

Feb-

10

Apr

-11

Jun-

12

Aug

-13

Oct

-14

Jan-

16

%

+1SD -25.4%

Avg: -42.6%

-1SD -59.7%

(75)

(70)

(65)

(60)

(55)

(50)

(45)

(40)

(35)

Feb-

13

Sep-

13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

%

+1SD -52.5%

Avg: -58.9%

-1SD -65.4%


Industry Focus


Page 47

PE charts

Sector average Agile Property (3383 HK)

(5)

0

5

10

15

20

25

30

35

40

Jan-

05

Nov

-06

Sep-

08

Jul-1

0

May

-12

Mar

-14

Jan-

16

x

+2SD: 19.1x

+1SD: 14x

Mean: 8.9x

-1SD: 3.8x

-2SD: -1.2x

0

2

4

6

8

10

12

14

16

Dec

-05

Aug

-07

Apr

-09

Dec

-10

Aug

-12

May

-14

Jan-

16

x

Avg: 6.3x

+1SD: 8.3x

-1SD: 4.3x


0

5

10

15

20

25

30

35

40

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

Avg: 10.1x

+1SD: 18.8x

-1SD: 1.4x

0123456789

10

Jun-

08

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

x

Avg: 4.9x

+1SD: 6.1x

-1SD: 3.7x


0

5

10

15

20

25

30

35

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

J

Avg: 10x

+1SD: 14.9x

-1SD: 5.1x

-10-505

10152025303540

Jan-

99

May

-02

Oct

-05

Mar

-09

Aug

-12

Jan-

16

x 190x (Dec-07)

Avg: 7.5x

+1SD: 18.8x

-1SD: -3.7x


Industry Focus


Page 48

PE charts (continued)


05

101520253035404550

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

Avg: 12x

+1SD: 18.8x

-1SD: 5.2x

6.0

7.0

8.0

9.0

10.0

11.0

12.0

Jun-

14

Aug

-14

Sep-

14

Nov

-14

Dec

-14

Jan-

15

Mar

-15

Apr

-15

Jun-

15

Jul-1

5

Aug

-15

Oct

-15

Nov

-15

Jan-

16

x

Avg: 9x

+1SD: 9.9x

-1SD: 8.2x


-20

0

20

40

60

80

100

Apr

-07

Jan-

09

Oct

-10

Jul-1

2

Apr

-14

Jan-

16

x

Avg: 14.7x

+1SD: 33.5x

-1SD: -4.1x

2

4

6

8

10

12

14

Nov

-09

Jan-

11

Apr

-12

Jul-1

3

Oct

-14

Jan-

16

x

Avg: 4.9x

-1SD: 3.1x

+1SD: 6.7x


0

5

10

15

20

25

30

Aug

-07

Apr

-09

Dec

-10

Aug

-12

Apr

-14

Jan-

16

x

Avg: 9x

+1SD: 13.8x

-1SD: 4.2x

05

101520253035404550

Oct

-06

Feb-

08

May

-09

Sep-

10

Jan-

12

May

-13

Sep-

14

Jan-

16

x

Avg: 9.2x

+1SD: 17x

-1SD: 1.3x


Industry Focus


Page 49

PE charts (continued)


-10

0

10

20

30

40

50

60

70

Jul-0

6

Mar

-07

Dec

-07

Sep-

08

Jun-

09

Mar

-10

Nov

-10

Aug

-11

May

-12

Feb-

13

Oct

-13

Jul-1

4

Apr

-15

Jan-

16

x

Avg: 9.2x

+1SD: 18.7x

-1SD: -0.3x

-202468

1012141618

Oct

-06

Aug

-08

Jun-

10

Apr

-12

Feb-

14

Jan-

16

x

Avg: 7.2x+1SD: 9.7x

-1SD: 4.8x


0

5

10

15

20

25

30

35

40

Sep-

07

May

-09

Jan-

11

Sep-

12

May

-14

Jan-

16

x

Avg: 9.9x

+1SD: 15x

-1SD: 4.7x

-20

0

20

40

60

80

100

Oct

-07

Jun-

09

Jan-

11

Sep-

12

May

-14

Jan-

16

x

Avg: 15.5x

+1SD: 36.7x

-1SD: -5.7x

Yanlord (YLLG SP) Yuexiu Property (123 HK)

0

5

10

15

20

25

30

35

Jun-

06

Mar

-07

Dec

-07

Sep-

08

May

-09

Feb-

10

Nov

-10

Aug

-11

May

-12

Jan-

13

Oct

-13

Jul-1

4

Apr

-15

Jan-

16

x

+1SD: 14.8x

Avg: 8.3x

-1SD: 1.8x

0

5

10

15

20

25

30

35

Jan-

03

Mar

-05

May

-07

Jul-0

9

Sep-

11

Nov

-13

Jan-

16

x

Avg: 7.2x

+1SD: 12x

-1SD: 2.5x


Industry Focus


Page 50

PB charts

Sector average Agile Property (3383 HK)

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-

05

Nov

-06

Sep-

08

Jul-1

0

May

-12

Mar

-14

Jan-

16

x

Mean 1.0x

+1SD 1.5x

-1SD 0.5x

+2SD 2.0x

-2SD -0.02x

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Dec

-05

Aug

-07

Apr

-09

Dec

-10

Aug

-12

May

-14

Jan-

16

x

Avg: 1.3x

+1SD: 2.2x

-1SD: 0.5x


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

Avg: 0.7x

+1SD: 1.2x

-1SD: 0.1x

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Jun-

08

Jan-

09

Aug

-09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

x

Avg: 0.7x

+1SD: 0.9x

-1SD: 0.5x


0.00.51.01.52.02.53.03.54.04.55.0

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

Avg: 1.8x

+1SD: 2.6x

-1SD: 1x

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-

99

May

-02

Oct

-05

Mar

-09

Aug

-12

Jan-

16

x

Avg: 0.8x

+1SD: 1.3x

-1SD: 0.2x


Industry Focus


Page 51

PB charts (continued)


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-

05

Jul-0

6

Feb-

08

Sep-

09

Apr

-11

Nov

-12

Jun-

14

Jan-

16

x

Avg: 1.3x

+1SD: 1.7x

-1SD: 0.8x

1.01.11.21.31.41.51.61.71.81.92.0

Jun-

14

Aug

-14

Sep-

14

Nov

-14

Dec

-14

Jan-

15

Mar

-15

Apr

-15

Jun-

15

Jul-1

5

Aug

-15

Oct

-15

Nov

-15

Jan-

16

x

Avg: 1.6x

+1SD: 1.7x

-1SD: 1.4x


0.0

2.0

4.0

6.0

8.0

10.0

12.0

Apr

-07

Jan-

09

Oct

-10

Jul-1

2

Apr

-14

Jan-

16

x

Avg: 1.9x

+1SD: 3.6x

-1SD: 0.2x

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Nov

-09

Jan-

11

Apr

-12

Jul-1

3

Oct

-14

Jan-

16

x

Avg: 1.1x

-1SD: 0.7x

+1SD: 1.5x


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Aug

-07

Apr

-09

Dec

-10

Aug

-12

Apr

-14

Jan-

16

x

Avg: 0.9x

+1SD: 1.4x

-1SD: 0.5x

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Oct

-06

Feb-

08

May

-09

Sep-

10

Jan-

12

May

-13

Sep-

14

Jan-

16

x

Avg: 0.9x

+1SD: 1.5x

-1SD: 0.4x


Industry Focus


Page 52

PB charts (continued)


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jul-0

6

Mar

-07

Dec

-07

Sep-

08

Jun-

09

Mar

-10

Nov

-10

Aug

-11

May

-12

Feb-

13

Oct

-13

Jul-1

4

Apr

-15

Jan-

16

x

Avg: 1.2x

+1SD: 1.9x

-1SD: 0.6x

0.0

0.5

1.0

1.5

2.0

2.5

Oct

-06

Aug

-08

Jun-

10

Apr

-12

Feb-

14

Jan-

16

x

Avg: 0.7x

+1SD: 1.1x

-1SD: 0.3x


0.2

0.7

1.2

1.7

2.2

2.7

3.2

3.7

Sep-

07

May

-09

Jan-

11

Sep-

12

May

-14

Jan-

16

x

Avg: 0.8x

+1SD: 1.2x

-1SD: 0.4x0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Oct

-07

Jun-

09

Jan-

11

Sep-

12

May

-14

Jan-

16

x

Avg: 0.9x

+1SD: 1.3x

-1SD: 0.5x

Yanlord (YLLG SP) Yuexiu Property (123 HK)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jun-

06

Mar

-07

Dec

-07

Sep-

08

May

-09

Feb-

10

Nov

-10

Aug

-11

May

-12

Jan-

13

Oct

-13

Jul-1

4

Apr

-15

Jan-

16

x

+1SD: 2x

Avg: 1x

-1SD: 0.1x

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Jan-

03

Mar

-05

May

-07

Jul-0

9

Sep-

11

Nov

-13

Jan-

16

x

Avg: 0.6x

+1SD: 0.8x

-1SD: 0.4x


Industry Focus


Page 53

DBSV 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 GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Vickers (Hong Kong) Limited (“DBSVHK”) This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd and DBSVHK, 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 DBSVHK. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBSVHK, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document 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 and it may not contain all material information concerning the company (or companies) referred to in this report. 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. 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 U.S.-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. 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 this report. As of 29 January 2016, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBSVHK and its subsidiaries do not have a proprietary position in the securities recommended in this report as of 26 Jan 2016.

2. Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for Red Star Macalline Group (1528 HK) in the past 12 months, as of 31 Oct 2015. 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.

Industry Focus


Page 54

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.

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Wong Ming Tek, Executive Director, ADBSR

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Dubai

This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

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Other jurisdictions

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Tel: (852) 2820-4888, Fax: (852) 2868-1523

Documents

China / Hong Kong Industry Focus China Property Sector GFA sold, while in 2015, China’s GFA new start was 5% lower than GFA sold. If there is no strong recovery in land sales, GFA