Bank of America Merrill Lynch published a research report. Entering 2011, it is expected that the trend of domestic housing stocks will be superior to Hong Kong real estate stocks this year. As contract sales of domestic housing continue to be strong, it is believed that the mainland government can increase supply and implement a number of tightening policies. It is expected that the mainland property market will eventually have a “soft landing”. It is expected that the profit performance of domestic housing stocks may bring surprise to the market, and at the same time attractive valuations, the market earnings per share compound growth rate of the industry from 2010 to 2012 is expected to reach 30%. The bank estimates that property prices in mainland first-tier cities may drop by as much as 10% this year, and major second-tier cities by 5% to 10%, but some second-tier, third-tier, and fourth-tier cities may rise by as much as 5%. It is believed that property prices will be adjusted, but there is limited room for a sharp decline. According to Bank of America Merrill Lynch, three “preferred stocks” were selected from domestic housing stocks, including R&F Real Estate (02777-HK), Evergrande Real Estate (03333-HK), and Longhu Real Estate (00916-HK), all of which gave a “buy” investment rating, with target prices of 16.7 yuan, 5.3 yuan and 13.3 yuan, indicating that they have strong contract sales. Some have already sold the 2011 contract sales target of about 50%. According to Merrill Lynch, it is optimistic about Longhu Real Estate. Because of its high profit transparency, contract sales have reached 27.7 billion yuan since this year. It is expected that in 2011 and 2012, it will each be able to account for 40% to 45% and 20% to 25%. It is the most transparent share in the industry, with a target price of 13.3 yuan, which is equivalent to a 10% discount on net asset value per share. Stock name/investment rating/target price. R&F Real Estate (02777-HK) /Maintaining purchase/maintaining $16.7. Evergrande Real Estate (03333-HK) /Maintaining Buying/4.6->5.3. Longhu Real Estate (00960-HK) /Maintaining Buying/12.8->13.3. China Overseas (00688-HK) /Maintaining Buying/19->17 China Resources Land (01109-HK) /Maintaining Buying/19.8->16.9. Agile Real Estate (03383-HK) /Maintaining Buying/11.6->15. Ocean Real Estate (03377-HK) /Maintaining Buying/6.3->5.9. People and Commerce (01387-HK) /Maintain Buying/2.9->1.8. Hengsheng Real Estate (00845-HK) /Maintaining a loss in the market/1.9->2.6. Co-op Innovation Exhibition (00754-HK) /Maintaining a loss in the market/8.7->8. Country Garden (02007-HK) /Maintaining a loss in the market/2.2->3.1. Hejing Taifu (01813-HK) /Maintaining Neutrality/5.8->6.7