AllthesixteenpropertydevelopersinourstatisticspoolannouncedtheNovembersalesresults,fifteenofwhichgrewrobustlyonYoYbasis.Year-to-month(Jan-Nov)salesoffourdevelopersexceededthefull-yeartarget.NineofthemsawMoMASPreboundinNovember.Fortheupcomingfirstquarter,atraditionalweaksalesseason,performanceisexpectedtomaintainstrongduetolowbaseeffect.Amidthecash-flowrelievefordevelopers,theywillhavelessincentivetoofferdeepdiscounttolurehomebuyers.Assuch,valuationofthepropertysectorwillbeholdingupwellataround5-yrmeanPElevelof7.06x.
StrongNovember:SixteenpropertydevelopersinourcomparablegroupannouncedNovembersales.ExceptforR&F(2777HK),otherfifteendevelopersregisteredrobustYoYsalesgrowthrangingfrom6%to851%.
Robustcumulativesales:AllsixteendevelopersregisteredpositiveYoYgrowthforthecumulativesales,rangingfrom1%to72%.Sixdevelopershavealreadyexceededbudgetwhileothertenlockedin95.0%offull-yeartargetinaverage.Shimao(813HK)ledwiththerun-rateat120.8%whileAgilewasmostbehindat87.3%.
ExpectingASPup5%in2013intoptiercities:NinepropertydeveloperssawASPreboundedonMoMrangingfrom2.0%to19.7%.Asthepropertydevelopershaveachievedtheirfull-yeartargetswithdiminishingcashflowrisk,theyareregainingbargainingpoweragainstbuyers.However,forthecurrentChinaspropertymarket,weexpectgovernmentstanceisstilladominantfactorandwedonotexpecttoseenationwidepricereboundin2013.Fortheprojectsinthecoreareaoftopcities,ASPmaysee5%YoYincreaseinlightoftheirscarcitybynature.
Valuationholdinguponstrongfirstquarterin2013:Movingtothefirstquarternextyear,thetraditionalweaksalesseason,salesperformanceisexpectedtomaintainflourishduetolowbasein2012asthesectorwasovershadowedbypolicyuncertaintyduringQ12012.Giventhecash-flowrelieveforpropertydevelopersin2H12,developerswillhavelessincentivetoofferdeepdiscounttolurehomebuyersinQ12013.PropertysectoroutperformedtheHangSengIndexby4.0%inamonthandthePEvaluationrevertedabove5-yrmeanlevelat7.06x.Weexpectthevaluationtobeholdingupwellonstrongfundamentals.