Weekly sales up 19% WoW;may not yet reflect impact of tightening

Deutsche Bank Markets Research Asia China Property Property Industry China Property Date 18 October 2016 Industry Update Weekly sales up 19% WoW; may not yet reflect impact of tightening Weekly sales up 19% WoW, up 40% MoM and up 12% YoY ________________________________________________________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016. Jason Ching, CFA Research Analyst (+852 ) 2203 6205 jason.ching@db.com Foo Leung Research Associate (+852 ) 2203 6239 foo.leung@db.com Iris Poon Research Associate (+852) 2203 6182 iris.poon@db.com Top picks China Resources Land (1109.HK),HKD19.40 Buy China Jinmao (0817.HK),HKD2.16 Buy Longfor (0960.HK),HKD10.72 Buy Source: Deutsche Bank Companies Featured China Resources Land (1109.HK),HKD19.40 Buy China Jinmao (0817.HK),HKD2.16 Buy Longfor (0960.HK),HKD10.72 Buy China Evergrande (3333.HK),HKD5.30 Sell Agile Group (3383.HK),HKD4.29 Sell Country Garden Holdings (2007.HK),HKD4.05 Sell China Vanke (2202.HK),HKD19.30 Hold Sino Ocean (3377.HK),HKD3.38 Hold Guangzhou R&F (2777.HK),HKD10.78 Buy Greentown China (3900.HK),HKD6.29 Buy Central China Real Estate (0832.HK),HKD1.79 Buy Shimao Property (0813.HK),HKD10.16 Sell Source: Deutsche Bank For the week 10-16 October, the total sales volume in 29 major cities tracked by Soufun rebounded 19% WoW, to 5.51msqm. Weekly volume was up 40% MoM (30 cities) and up 12% YoY (31 cities). YTD volume increased 26% YoY (18 cities). October MTD volume rose 27% YoY. YTD ASP stood at RMB16,543 psqm, up 34% YoY (15 cities). The rebound in weekly volume was in line with the historical pattern for the first week after the National Day Golden Week (39.9% in 2014 and 1.5% in 2015). However, given the time lag between sales and registration, sales data in the past week may not yet reflect the full impact from recent tightening measures announced by local governments. Sales volume in Tier-1 cities soared 66% WoW The sales volume in Tier-1 cities soared 66% WoW, to 1.12msqm, for the week ended 16 October, after declining 47% WoW for the week ended 9 October. Weekly volume was up 45% MoM and down 2% YoY. October MTD volume amounted to 2.16msqm, down 1% MoM and up 7% YoY. YTD volume was up 4% YoY, to 41.1msqm. YTD ASP in Tier-1 cities stood at RMB31,760 psqm, up 42% YoY. Sales volume in Tier-2 cities up 9% WoW The sales volume in Tier-2 cities was up 9% WoW (13 cities), to 2.89msqm. The volume was up 29% MoM (13 cities) and up 8% YoY (14 cities). October MTD volume rose 7% MoM (nine cities) and 24% YoY (12 cities). YTD volume was 77.3msqm, up 34% YoY (seven cities). YTD ASP in Tier-2 cities stood at RMB15,797 psqm, up 50% YoY (five cities). Sales volume in Tier-3 cities up 15% WoW The sales volume in Tier-3 cities was up 15% WoW (12 cities), to 1.5msqm. The volume was up 64.3% MoM (13 cities) and up 35% YoY (13 cities). October MTD volume was up 42% MoM (eight cities) and up 52% YoY (11 cities). YTD volume attained 30.7msqm, up 45% YoY (seven cities). YTD ASP in Tier-3 cities stood at RMB7,020 psqm, down 3% YoY (six cities). Figure 1: Change in sales volumes in Tier-2 and Tier-3 cities by region Tier-2 cities Tier-3 cities Region WoW% MTD MoM% MTD YoY% YTD YoY% WoW% MTD MoM% MTD YoY% YTD YoY% Yangtze River Delta 10% -31% -15% 25% 24% 34% 45% 39% Pearl River Delta 21% -46% -47% -1% -15% 39% 38% 74% Western 133% 20% 136% -1% NA NA NA NA Central -29% 14% 15% 46% 42% 88% 192% 79% Northeastern -8% 29% 83% 59% 81% 58% 57% 9% Source: Soufun, Deutsche Bank Distributed on: 17/10/2016 23:39:29 GMT 18 October 2016 Property China Property Page 2 Deutsche Bank AG/Hong Kong Weekly transaction volumes 40 cities’ total weekly transaction volumes Figure 2: Weekly transaction volumes of the major cities in China 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Jan-09May-09Sep-09Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16ksqm Source: Deutsche Bank, Soufun Tier-1 cities’ weekly transaction volumes Figure 3: Weekly transaction volumes of Tier-1 cities in China 0 500 1,000 1,500 2,000 2,500 3,000 Jan-09Jun-09Nov-09Apr-10Sep-10Feb-11Jul-11Dec-11May-12Oct-12Mar-13Aug-13Jan-14Jun-14Nov-14Apr-15Sep-15Feb-16Jul-16ksqm Source: Deutsche Bank, Soufun 18 October 2016 Property China Property Deutsche Bank AG/Hong Kong Page 3 Tier-2 and Tier-3 cities’ weekly transaction volumes Figure 4: