Sales grew by about 30% in 2012, entering the ranks of 10 billion yuan.

By the end of 2012, the company had achieved 10.5 billion yuan in contract sales, 117% of the annual sales target of 9 billion yuan, and the contract sales area was about 1.6 million square meters. Among them, monthly sales exceeded 1 billion yuan in four months, and the company's monthly sales reached a new high of 1.636 billion yuan in June. The company rose to 46th among the top 100 developers in the country and successfully entered the 10 billion scale array.

Sales are expected to continue in 2013, and Henan Province has a solid leading position.

At present, the removal rate of the company is between 60% and 65%. As a result, the volume of goods brought by the company in 13 years is between 60 and 7 billion yuan. At the same time, we predict that the company's new push volume in 13 years is between 15 and 16 billion yuan, so the total salable volume of the company in 2013 is between 22 and 23 billion yuan. According to the historical removal rate of the company, the company's sales growth in the past 13 years is still worth looking forward to.

The company's market share was about 5% in 2012, up from 3.7% in 11 years. In the future, the company hopes to increase its market share from the current level of 5% to 7% next year and to 10% within 5 years.

The land reserve is abundant and the average land cost is low

The total construction area of the company's land reserve is 1600 million square meters, and the average land cost is 670 yuan / square meter.According to the mass estimate of 3.07 million square meters of new construction area in 2012, the company's current land reserve can meet the company's development land needs in the next 4-5 years.

In terms of land types, residential land accounts for 71.3%, commercial use accounts for 14.6%, and other 14.1%. All the land projects are distributed in 18 cities in Henan province. Zhengzhou ranks first not only in terms of the number of projects (19%) but also in terms of the total area (20.2%), followed by the contraction of land reserves in Kaifeng and Luoyang.

Future growth is expected to accelerate, with a target price of HK $4.15:

According to our forecast, the company's 13-year sales are expected to grow by 20-30%, and the gross profit margin remains stable, so that the 13-and 14-year EPS can reach RMB 0.52 and 0.69 respectively, corresponding to the current stock price PE of 4.5 and 3.4 times, which is seriously undervalued compared with the industry average.

Combined with the PE level, we give the company a 50% NAV discount, and the reasonable share price is HK $3.98-4.36 per share. Taken together, we give a target price of HK $4.15.