Weekly sales -13% WoW; recent tightening measures have kicked in

Deutsche Bank Markets Research Asia China Property Property Industry China Property Date 24 October 2016 Industry Update Weekly sales -13% WoW; recent tightening measures have kicked in Weekly sales down 13% WoW, down 19% MoM and down 7% 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),HKD19.92 Buy China Jinmao (0817.HK),HKD2.20 Buy Longfor (0960.HK),HKD10.54 Buy Source: Deutsche Bank Companies Featured China Resources Land (1109.HK),HKD19.92 Buy China Jinmao (0817.HK),HKD2.20 Buy Longfor (0960.HK),HKD10.54 Buy China Evergrande (3333.HK),HKD5.27 Sell Agile Group (3383.HK),HKD4.38 Sell Country Garden Holdings (2007.HK),HKD4.15 Sell China Vanke (2202.HK),HKD20.50 Hold Sino Ocean (3377.HK),HKD3.41 Hold Guangzhou R&F (2777.HK),HKD11.06 Buy Greentown China (3900.HK),HKD6.63 Buy Central China Real Estate (0832.HK),HKD1.78 Buy Shimao Property (0813.HK),HKD10.36 Sell Source: Deutsche Bank For the week of 17-23 October, the total sales volume in 31 major cities tracked by Soufun declined 13% WoW, to 5.13msqm. Weekly volume was down 19% MoM (31 cities) and down 7% YoY (33 cities). YTD volume increased by 24% YoY (18 cities), to 152.57msqm. October MTD volume rose 2% MoM and 13% YoY. YTD ASP stood at RMB16,577 psm, up 34% YoY (15 cities). The WoW decline is weaker than expected, as patterns in 2013-2015 pointed towards a recovery in volume for not less than three weeks after the National Day Golden Week. We argue that the decline is starting to reflect the impact from recent tightening measures in Tier-1 and major Tier-2 cities. Sales volume in Tier-1 cities down 12% WoW The sales volume in Tier-1 cities was down 12% WoW, to 991ksqm. Weekly volume was down 8% MoM and down 19% YoY. October MTD volume amounted to 3.15msqm, down 1% MoM and down 2% YoY. YTD volume was up 3% YoY, to 42.1msqm. YTD ASP in Tier-1 cities stood at RMB31,814 psqm, up 41% YoY. Sales volume in Tier-2 cities down 16% WoW The sales volume in Tier-2 cities was down 16% WoW (14 cities), to 2.73msqm. The volume was down 29% MoM (14 cities) and down 14% YoY (14 cities). October MTD volume declined 7% MoM (nine cities) but was up 9% YoY (12 cities). YTD volume was 78.8msqm, up 32% YoY (seven cities). YTD ASP in Tier-2 cities stood at RMB15,837 psm, up 50% YoY (five cities). Sales volume in Tier-3 cities down 9% WoW The sales volume in Tier-3 cities declined 9% WoW (13 cities), to 1.4msqm. The volume was up 2% MoM (13 cities) and up 17% YoY (15 cities). October MTD volume was up 34% MoM (eight cities) and up 41% YoY (11 cities). YTD volume reached 31.7msqm, up 44% YoY (seven cities). YTD ASP in Tier-3 cities stood at RMB7,035 psm, 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 -11% -45% -22% 22% -3% 25% 36% 38% Pearl River Delta -35% -50% -58% -5% 1% 48% 26% 74% Western -19% 26% 91% 0% NA NA NA NA Central 7% 10% 2% 43% -54% 54% 163% 80% Northeastern -27% 1% 52% 58% -17% 68% 74% 12% Source: Soufun, Deutsche Bank Distributed on: 24/10/2016 15:48:29 GMT 24 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-09Jun-09Nov-09Apr-10Sep-10Feb-11Jul-11Dec-11May-12Oct-12Mar-13Aug-13Jan-14Jun-14Nov-14Apr-15Sep-15Feb-16Jul-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 24 October 2016 Property China Property Deutsche Bank AG/Hong Kong Page 3 Tier-2 and Tier-3 cities’ weekly transaction volumes Figure 4: Weekly transaction volumes of Tier-2 and Tier-3 cities in China 0 1,000 2,000 3,000 4,00