Key points of investment
The company announced contract sales for May 2016: the company's contract sales amount in May was 1.4 billion yuan (same below), up 12% year-on-year, with a contract sales area of 891,000 square meters; the cumulative contract sales amount for January-May was 7.03 billion yuan, an increase of 45% over the previous year, with a cumulative contract sales area of 5455,500 square meters. The sales performance was slightly lower than expected, mainly related to the company's push pace. The company's sales value is abundant throughout the year, reaching a total of 36 billion yuan. It is expected that sales will accelerate in the second half of the year, and contract sales of 22 billion yuan can be completed throughout the year.
Supplementing high-quality land in Wujiang, Suzhou: In May, the company added a plot of Suzhou Wujiang, located in the Wujiang Economic Development Zone. It covers an area of 69,217 square meters and has a planned construction area of 170,000 square meters. It is commercial and residential land. The commercial ratio does not exceed 10% of the land area, and the average floor price is 8,800 yuan per square meter. The company plans to turn the project into a high quality residential community. The project strengthened the company's presence in the Yangtze River Delta region.
Our view: Under the current market environment, the real estate market in different cities is divided. The company is actively removing inventory, replenishing land reserves in an orderly manner, and is also taking corresponding countermeasures against the devaluation of the RMB. We are still optimistic about its annual performance, maintaining Greenland Hong Kong's “buy” rating. The target price is HK$4.8, which is equivalent to the company's NAV discount of 44%, which is equivalent to a 44% discount on the company's NAV, and there is room for an increase of 80.5% from the current price.
Risk warning: The real estate development business is affected by the country's macroeconomic and industry policies; the development of the Internet finance business falls short of expectations and regulatory risks; the RMB exchange rate fluctuates.
