Citi said favorable policy prospects and good fundamentals will continue to drive Chinese real estate stocks in the second half of 2012, which have risen 29% since this year. According to Citi, even after the stock price rises, the valuation of this type of stock is still attractive. The bank raised the target price of China Overseas Development (0688.HK) from HK$19.46 to HK$20.93, raised the target price of China Resources Land (1109.HK) from HK$17.66 to HK$18.04, and raised the target price of Shimao Real Estate (0813.HK) from HK$12.88 to HK$14.32, and raised the target price of Agile Real Estate (3383.HK) from HK$10.65 to HK$12.22, reflecting that the stock price was narrower than the net asset discount per share by 10 basis points Policy uncertainty has declined. Citi lowered the target price of Hengsheng Real Estate (0845.HK) from HK$2.02 to HK$1.61, Ocean Real Estate (3377.HK) from HK$4.38 to HK$3.50, and the target price of Poly Hong Kong (0119.HK) from HK$5.63 to HK$5.14 due to implementation issues. Citi chose China Overseas Development, Shimao Real Estate, and Evergrande Real Estate as preferred stocks because these companies' strong fundamentals and high and stable return on equity reflect the sustainability of the company's growth.