Contracted sales in 1Q14 at Rmb9.13bn, locking-in 16% of full-year target。

Longfor reported 1Q14 contracted sales -10% YoY to Rmb9.13bn by value andcontracted GFA –16% YoY to 840k sqm, locking-in 16% of its FY14 contractedsales target of Rmb57bn. Meanwhile, contracted ASP stood atRmb10,869/sqm (+7% YoY). For the month of Mar, Longfor achievedcontracted sales of Rmb4.06bn (-2% YoY, +100% MoM) and contracted GFAof 341k sqm (-18% YoY, +62% MoM). Contracted ASP in Mar stood atRmb11,906/sqm (+19% YoY, +24% MoM).

Longfor Beijing Sunhe Hometown Phase 2 received an overwhelming response。

In terms of contracted sales breakdown by geography in Mar, the Westerndistrict was the largest contributor with Rmb1.39bn (34% of the total),followed by Pan Bohai Rim with Rmb1.38bn (34% of the total), Yangtze RiverDelta with Rmb960mn (24% of total), Southern China with Rmb220mn (5% oftotal) and Central China with Rmb110mn (3%).

During the month, Longfor Beijing Sunhe Hometown Phase 2 was launched,offering mainly low-rise units with size ranging from 200 to 310 sqm. The unitsranged from Rmb9 to 12 mn in lumpsum price. Market response for theproject was overwhelming, with all units launched being sold out on thelaunching day, fetching sales of over Rmb700mn.

Global brand launch for Longfor Hongqiao Paradise Walk took place on Mar 31。

The Global brand launch ceremony for Longfor’s first commercial project inShanghai – Longfor Hongqiao Paradise Walk took place on Mar 31, with some300 guests attended. The integrated commercial project (comprising retail,hotel and offce) is strategically located in the cross-city transportation hub inthe Hongqiao Business District that integrates high-speed rail, flight, metro andbus terminal and within a 1.5 hour travel time to major cities in the YangtzeRiver Delta region.

Target price at a 20% discount to our estimated NAV of HK$21/shr。

Our target price is based on a 20% discount to our NAV estimate of HK$21/shr,which implies a 2014/15 PER of 10x/9x. Our target discount is higher thanindustry leaders but a premium to other privately owned peers, which webelieve is appropriate, given its quality management. We adopt NAV as ourprimary valuation metric, in line with peers. Key risks are government policiesand execution in earnings delivery.

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