50% of the rights and interests of the foreign exchange 8-1

On the evening of September 23, SOHO China announced that it would sell 50% of the shares in Shanghai Foreign Trade 8-1 Land for 84.93 yuan, completely withdrawing from the foreign trade 8-1 project. The SOHO of this transaction is that China's return fund is close to 5.1 billion, and the pre-term income of the project is equal to 1 billion. There is no doubt that the transfer of shares in such projects increases the uncertainty of the company's growth prospects and reduces NAV (about 5% 7%), while the positive aspect is to increase SOHO China's financial equipment, and the one-time transaction income will help to thicken 2015-2016 CPG and solve the long-standing assets losses of the company.

The package mode promotes "SOHO 3Q".

On October 15, SOHO China announced the formal implementation of the guaranteed mode of SOHO 3Q. This model can be summarized as follows: through mutual exchange, the 3Q workstation will be rented out quickly, and then 8% of the contract bonus will be returned to the intermediary, and all individuals and companies will join the alliance.

In January 2015, SOHO China launched its first reciprocal product, SOHO3Q. SOHO3Q is SOHO China's "mutual payment + office rental" product, online rental, rental time and social communication are the main features of this product. By the end of July 2015, SOHO China had opened five SOHO3Q centers with more than 3000 seats. Management estimates that the number of 3Q stations in Beijing and Shanghai will exceed 10000 by the end of 2015 and 40000 in 2016. We have positive views on the transformational action of SOHO China, but the effect still needs to be monitored for a long time.

Pay a special dividend

On October 16, SOHO China announced that it would pay a special dividend of 0.348 yuan per share to the stock market, with a total dividend of more than 1.8 billion yuan. We believe that this is a way for SOHO China to use abundant funds to enhance the attractiveness of stocks. At the end of June 2015, SOHO, China's total funds and deposits totaled 9.77 billion, and the debt ratio was 25%. The transfer of the rights and interests of the external 8-1 project and the development of inland corporate leases make the company more adequate in terms of financial resources and have the ability to pay special dividends. We estimate that the dividend per share in 2015 amounts to 0.46 yuan, which is equivalent to HK $0.56, and the current dividend yield is 16%.

Cymbals

The economic downturn exceeded expectations

Rental figures are down.

Valuation

As a new business model of "mutual payment + office rental", SOHO3Q has become an important driving force for SOHO China in terms of financing and valuation. We believe that SOHO China is in a period of transition relationship, and the capacity of withdrawal and expansion of new services to the fundamental impact is limited, and we still need to continue to monitor. We grant the SOHO China "neutral" level, 12 monthly headings of HK $3.50. (as of December 2, 2015)