The company is a large-scale real estate enterprise with the most discount on net assets: in 2012, the company's net assets per share was HK $24.30, corresponding to the current share price of HK $12.00, and the corresponding PB is 0.52. In the large-scale real estate enterprises with revenues of more than HK $5 billion, the current valuation PB of Hesheng Development is obviously on the low side.

Keeping a good temperature in the real estate market for 13 years is an external cause of higher valuations: the good temperature in the real estate market for 13 years is due to the policy environment, as we expect, to enter a relatively stable situation after mid-late March. Under the background that the new construction area of commercial housing is 1.307 billion square meters, which is the first decline in nearly 12 years, with a range of 11.2%, which is likely to lead to a shortage of new supply, we expect the relationship between supply and demand to remain relatively stable. On the other hand, the land market is conducive to maintaining the land market value, especially in first-and second-tier cities, as most enterprises replenish inventory one after another.

13 years of changes in corporate management and fundamentals are the internal cause of higher valuations: 13 years is a joint year of internal management promotion, and the company's organizational structure and target management have changed greatly. In terms of fundamentals, the company's sales target this year is 15 billion yuan, and the corresponding available resources are 41 billion yuan. We believe that it is a high probability for the company to achieve and break through the sales target this year. At the same time, the company's commercial properties are also gradually coming into force, and Beijing's Deshengmen and Oriental Mandarin will be put into operation.

Valuation and rating: according to our estimates, Hesheng's RNAV in 2013 is HK $47.80. Based on the RNAV discount rate of 65%, the target price is HK $19.1, corresponding to a price-to-earnings ratio of 12 times 2013. Buy? Investment rating. This discount rate, although the valuation of PE is not low, RNAV discount still reflects the relatively conservative discount level.