Weekly sales down 10% WoW as tightening led to softened sales

Deutsche Bank Markets Research Asia China Property Property Industry China Property Date 8 November 2016 Industry Update Weekly sales down 10% WoW as tightening led to softened sales Weekly sales down 10% WoW, up 4% MoM and up 2% 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),HKD19.20 Buy China Jinmao (0817.HK),HKD2.11 Buy Longfor (0960.HK),HKD9.98 Buy Source: Deutsche Bank Companies Featured China Resources Land (1109.HK),HKD19.20 Buy China Jinmao (0817.HK),HKD2.11 Buy Longfor (0960.HK),HKD9.98 Buy China Evergrande (3333.HK),HKD5.20 Sell Agile Group (3383.HK),HKD4.32 Sell Country Garden Holdings (2007.HK),HKD4.18 Sell China Vanke (2202.HK),HKD20.60 Hold Sino Ocean (3377.HK),HKD3.27 Hold Guangzhou R&F (2777.HK),HKD10.86 Buy Greentown China (3900.HK),HKD6.30 Buy Central China Real Estate (0832.HK),HKD1.65 Buy Joy City Property (0207.HK),HKD1.09 Buy Shimao Property (0813.HK),HKD10.36 Sell Source: Deutsche Bank For the week of 31 October to 6 November 2016, the total sales volume in 32 major cities tracked by Soufun dropped 10% WoW to 4.958msqm. The volume was up 4% MoM (30 cities) and up 2% YoY (33 cities). In October, the total volume declined 19% MoM (27 cities) to 20.57msqm. YTD volume reached 159.8msqm, up 23% YoY (18 cities). YTD ASP stood at RMB15,984 psm, up 27% YoY (19 cities). Sales activities turned weak in the first week of November as tightening measures prevailed in Tier-1 and major Tier-2 cities, while ASP managed to stay on par with the level in October. Volume in Tier-1 cities down 15% WoW Sales volume in Tier-1 cities declined 15% WoW to 805ksqm, and was up 20% MoM and down 13% YoY. In October, the volume in Tier-1 cities amounted to 4.21msqm, down 4% MoM. YTD volume for Tier-1 cities was 43.8msqm, up 2% YoY. YTD ASP stood at RMB31,906 psm, up 41% YoY. Volume in Tier-2 cities down 3% WoW Sales volume in Tier-2 cities declined 3% WoW (14 cities) to 2.97msqm, and was up 9% MoM (13 cities) and up 1% YoY (15 cities). In October, the volume in Tier-2 cities declined 30% MoM (12 cities). YTD volume for Tier-2 cities reached 82.6msqm, up 29% YoY (seven cities). YTD ASP stood at RMB14,852 psm, up 28% YoY (nine cities). Volume in Tier-3 cities down 22% WoW Sales volume in Tier-3 cities declined 22% WoW (14 cities) to 1.19msqm, and was down 13% MoM (13 cities) and up 20% YoY (15 cities). In October, the volume in Tier-3 cities declined 3% MoM (11 cities). YTD volume for Tier-3 cities reached 33.4msqm, up 45% YoY (seven cities). YTD ASP stood at RMB7,067 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 0% -27% -27% 17% -22% 15% -5% 40% Pearl River Delta -35% -46% -69% -8% -26% 1% -29% 70% Western -17% -60% -3% 0% NA NA NA NA Central -3% 9% 7% 41% -35% -44% 225% 87% Northeastern 16% -35% 41% 58% -26% 25% 61% 13% Source: Soufun, Deutsche Bank Distributed on: 07/11/2016 17:54:29 GMT 8 November 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 8 November 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 4,000 5,000 6,000 7,000 Jan-09May-09Sep-09Jan-10May-10Sep-10Jan-11May-11Sep-11Jan-12May-12Sep-12Jan-13May-13Sep-13Ja