The net leverage ratio was reduced to a healthy level. The net debt-to-total equity ratio fell sharply from 105.4% in 2018 to 69.9% in 2019, reflecting an enhanced balance sheet and reduced repayment risk. The company plans to keep its net debt to total equity ratio between 70% and 90% over the next few years.

The 2020 contract sales target is realistic and achievable. The planned sales value for 2020 is estimated to reach RMB 220 billion.

Using a target removal rate of 70%, we estimate that the company's 2020 contract sales target is RMB 154 billion, an increase of 9% over 2019 contract sales. According to our observations, real estate market sales in key urban agglomerations and high-tier cities in China recovered more rapidly than in low-tier cities after the COVID-19 outbreak.

Continued share buybacks show confidence in future development. From April 7 to May 20, 2020, the company paid HK$125,370,340 to repurchase 15,896,500 shares, equivalent to an average repurchase price of HK$7.89 per share. On April 29, 2020, the company cancelled 12,400,000 shares.

The company's fundamentals remain solid, but gross margins are under pressure. The COVID-19 pandemic has cast a shadow over the Chinese economy and heightened uncertainty in the real estate market. The company's current valuation is low compared to its peers. We lowered the company's target price to HK$11.70, which is a 65.1% discount compared to the company's 2020 valuation of HK$33.55 per share, which is also equivalent to 5.0 times the 2020 core price-earnings ratio and 0.9 times the 2020 net price-earnings ratio, respectively. Maintain a “buy” investment rating. Risk factors: Contract sales were lower than expected, and there is uncertainty about the COVID-19 pandemic.