【研究报告内容摘要】
SUNAC China (1918 HK, Outperform) is our conviction buyfor the second half of the year based on its rich pipeline ofsaleable resources for 2H13F: RMB22.1b in 3Q andRMB24.4b in 4Q, up from RMB8.6b in 2Q (up 157% QoQ).
We spent two days in Tianjin speaking with themanagement team at SUNAC China. They shared theirviews on the latest property controls in Tianjin, Beijing andother key regions. We now expect price curbs on newlaunches in Beijing to be expanded to include completedproperties held for sale. In the meantime, housing demandin Tianjin is still strong, especially for projects located in thecentral districts of Heping and Nankai, and those inlocations close to good schools.
We expect property sales in general to rebound sharply in3Q13F due to rising housing supply. SUNAC enjoys a10-15% price premium over surrounding projects in Tianjinthanks to the developer’s positioning in the high- endmarket and its strong brand name recognition. It hasmanaged to raise the ASP on all its projects in the region.
Tighter price controls will have a limited impact on SUNAC,in our view. Most of the new measures will affect presales inBeijing where SUNAC has already managed to obtain mostof the presale permits it needs, with the notable exception ofits Yizhuang Poly project scheduled for launch in October. InMay, SUNAC took in RMB500m from its well-received WestChateau project, for which SUNAC had already obtained allnecessary presale permits. The company forecasts totalsales of RMB7b from the project (RMB2.0b has beencontracted so far). SUNAC achieved total sales from allprojects of RMB4.2b in May, leading to 111.0% YTD YoYgrowth for the first five months of the year, locking in 41.6%of its full-year sales target of RMB45.0b, which puts it aheadof peers in terms of annual sales growth in planned 2013Fsales (up 42.6% YoY).
Valuation. We raise SUNAC’s NAV from HK$12.45 toHK$12.85, to take into account its acquisition of theShanghai Huangpu project and the Hangzhou Golf project.
We raise our target price on SUNAC, from HK$7.47 toHK$7.71, but leave our target NAV discount unchanged at40.0%, offering potential upside of 32.2%. The stock iscurrently trading at 3.8x FY13 P/E and 1.0x FY13 P/B. Weview anything below HK$6.00 as attractive, translating to aP/E level of 4.0x. Action. We advise graduallyaccumulating SUNAC ahead of interim results and the spateof new launches planned for 3Q13F.