The company's performance in 2019 was worse than expected. Total revenue in 2019 rose 2.1 per cent year-on-year to 61.593 billion yuan, slightly less than we expected. The company's performance improved significantly in the first half of 2019 compared with the same period last year, but recorded a net loss of shareholders in the second half of 2019, which was worse than the market and our expectations.

Contract sales recorded a strong increase in 2019 and are expected to continue to rise in 2020. The company's total contract sales in 2019 increased by 29.0% to 201.8 billion yuan compared with the same period last year. From January to April 2020, contract sales from investment projects increased by 13.1% compared with the same period last year, indicating a strong sales recovery after the impact of COVID-19 's epidemic. The company's 2020 contract sales target was raised to 250 billion yuan, an increase of 23.9% compared with the company's total contract sales in 2019.

Accelerated land acquisition will support future sales. According to Carey's statistics, the company's new land value from January to April 2020 reached about 126.03 billion yuan, ranking first among all real estate developers in China.

By the end of 2020, the company had accumulated an uncarried-over amount of about RMB 150.9 billion, and it is expected to confirm the real estate development income in 2019-2022. We expect the full-year performance to improve in 2020. We raised the company's target price to HK $8.60, a discount of 70.2% to the company's 2020 valuation of HK $28.82 per share, which is also equivalent to 10.5 times 2020 core price-to-earnings ratio and 0.6 times 2020 market-to-net ratio, respectively. Maintain the investment rating of "collection". Risk factors: lower-than-expected contract sales and uncertainty about the COVID-19 epidemic.