Evergrande Alert : FY13 contracted sales totaled Rmb100bn; targeting Rmb110bn in

2014 年 1 月 11 日2760

FY13 contracted sales +8.8% YoY to Rmb100.4bn; contracted ASP +13% YoYEvergrande announced FY13 contracted sales +8.8% YoY to Rmb100.4bn,slightly ahead of its sales target of Rmb100bn for the year. Meanwhile,contracted GFA sold actually fell by 4% YoY to 14.9mn sqm, yet, contractedASP saw a marked increase of 13% YoY to Rmb6,741/sqm.

Sharp slow-down in Dec sales not unexpected on sales lock-in ratio of 98% byend-NovContacted sales achieved in Dec-13 were Rmb2.01bn, a marked decline ascompared to the Rmb7.1bn registered in Nov-13. The sharp slow-down MoMwas attributable to the fact that they have already locked-in 98% of their salestarget by end-Nov, and the company thereby slowed down their sales pace inDec. Nevertheless, contracted ASP in Dec was among the fourth highest in theyear at Rmb7,015/sqm (Rmb7,312/sqm in June; RMb7,163/sqm in May;Rmb7,114/sqm in July) and markedly higher than the full-year average ofRmb6,741/sqm. In our view, the marked increase in contracted ASP in FY13should translate into a corresponding strong recovery in profit margins ahead.

FY14 contracted sales target of Rmb110bn, implying 10% YoY growthEvergrande announced its FY14 contracted sales target of Rmb110bn,implying a YoY growth rate of 10%. With more than 260 projects over 140cities (of which over 200 projects were on-sale by end-13), we believe it is anachievable and conservative target. Moreover, given the company has a goodtrack record of over-achieving its sales target (i.e. Evergrande has overachievedits full-year sales target by 26% in 2010, and by 15% in each of 2011and 2012), there might be a possibility for over-achievement in 2014. Hence,the current guidance should not be viewed as a cap to the actual salesperformance in 2014.

Currently trading at 62% discount to NAVEvergrande is currently trading at 62% discount to our estimated NAV. Ourtarget price is based on a 30% discount to our NAV estimate of HK$7.51/shr.

Our target discount reflects a slower contracted sales momentum, which hasbeen a key catalyst for the re-rating of the stock over the past two years. Ourtarget discount is also higher than that of industry leaders due to its shorterlisting history. The key risk is further tightening policies aimed at the propertysector.

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