【研究报告内容摘要】
Project of the week: Wharf – Foshan Evian Buena Vista.
We recently visited Wharf’s (4.HK, BUY) Evian Buena Vistaproject. It is a JV project between Wharf and ChinaMerchants in Foshan Nanhai District. The project wasinitially launched in Apr 2012 at a lower ASP ofRmb6.4k/sm. Sales were good given good pricing andlandscape design. In 2013, it launched 160 units andcontinued to see over 90% sales-through rate despitehigher ASPs. According to local sales persons, ASP was atleast 30% higher, on a like-to-like basis. YTD salesamounted to Rmb450m, locking in 75% of its full yeartarget of Rmb600m. Since April 2012, it has sold 22 villas(out of 35) and nearly all of the 688 units of high-riseapartments. Based on an ASP of Rmb11.5k/sm, the projectshould deliver decent gross and net margins, estimated at30% and 14% respectively.
Policy update: Beijing to auction its first land for selfoccupiedcommodity property. It was reported that theMinistry of Land and Resources (MLR) organised a meetingwith local Bureaus of Land Resources and Housing from 13provinces and 16 cities, requiring local departments toincrease the supply of residential land and avoid another“land king” for the rest of the year. Meanwhile, Beijing willauction its first parcel of land for self-occupied commodityproperty with a cap on land price. After the bidding price hitsthe capped price, bidders will compete on the area of selfoccupiedcommodity properties they will build. Self-occupiedcommodity property could supplement social housing.
Property sales: Sales jumped between Moon Festival andGolden Week holiday. Last week, sales volume soared69%/57%/102% w-o-w in major Tier I/II/III cities, whileASP rose 9% (mainly driven by Beijing, +27% w-ow)/3%/-1%, respectively. In Sep, overall sales volume grew8% m-o-m, with Tier 1 cities posting the strongest growthof 24%. Tier II/III cities registered 6%/2% m-o-m volumegrowth respectively. ASP was up by 10%/3%/2% m-o-min major Tier I/II/III cities.
Focus on quality names. The sector is now trading at 6.3xFY14 PE, 0.9x P/BV and 50% discount to NAV (vs. itshistorical average of 10x/1.2x/37%). We expect the sectorto range trade as it lacks a strong near-term catalyst. Withinconsistent policy noises, we recommend investors tofocus on developers’ fundamentals. Our top picks are COLI,COGO and Country Garden.