Evergrande(3333HK,HK$4.06,N,TP:HK$4.37)reportedmoderatemonthlycontractedsalesofRmb7.25bninJan2013,down6%MoMbutup227%YoY.
GFAsoldwas1,168ksqm,down4%MoMbutup213%YoY.ASPwasRmb6,207/sqmvs2012averageofRmb5,962andthe2011averageofRmb6,590.Januarycontractedsaleswere7.25%offullyearcompanysalestargetofRmb100bnin2013.ASPsinJanuaryandDecemberhavecomebacktoapproximatelyRmb6.2-6.3k/sqm,whichwas4-5%higherthan2012fullyearaverage.ThisisapositivesignaltoEvergrandespotentialgrossmargin.
However,wearestillnegativeonpropertysalesintier3citiesduetosignificantsupply,whichmaycurbASPgrowth.InJanuary,Evergrandelaunched9newprojects.Currentlythecompanyhas188projectsonsales.
ShimaoProperty(813HK,HK$16.66,Outperform,TP:HK$22.46)reportedmoderateJanuarycontractedsalesofRmb4.1bn,up8%MoMand353%YoY.GFAsoldwas336ksqm,up8%MoMand568%YoY.ASPwasRmb12,253/sqmvsRmb12,221/sqminDecember,Rmb11,278/sqmin2012andthe2011averageofRmb12,845/sqm.TheASPreboundfromthebottomofRmb10,079inAugusttoRmb12,040/sqminNovemberandtoRmb12,253/sqminJanuaryisencouragingandmayhelpmarginrecoveryin2013F.Weexpectgrossmargintoimproveto36%in2013Ffrom33%in2012F.WecontinuetolikeSHIMsqualitylandbank(averagelandcostofRmb1.5k/sqmversus2012salesASPofRmb11,278k/sqm),decentgrossmargin(32.5-37.1%between2012-15F)andstrongexecutions(over70%sell-throughratein2012).Weexpectthestrongsalesmomentumshouldbemaintainedin2013atRmb54bn,18%YoYgrowth.
GuangzhouR&F(2777HK,HK$13.94,Outperform,TP:HK$18.57)reportedmildJanuarycontractedsalesofRmb2.6bn,down12%MoMbutup115%YoY.GFAsoldwas235ksqm,down6%MoMbutup168%YoY.ASPwasRmb11,196/sqmvsRmb11,985/sqminDecemberandthe2012averageofRmb11,197/sqmand2011averageofRmb13,040/sqm.GuangzhouandBeijingremainedtobethetopsalescontributor(52%oftotal)inJanuary.WeupgradeditsTPby52%toHK$18.57andNAVby35%toHK$19.66on22January2013,duetoindustry-wideupgradeofpricegrowthassumptions.Weprojected20%contractedsalesgrowthtoRmb38bn(excludingJVprojects)in2013.Wealsobelieveitsgrossmargincanstayabove40%for2012Fand2013F,incontrasttomargincompressionbymostpeers.