Strong performance is expected from South China City (1668) — maintaining the purchase of South China City (1668, $3.67), a leading Chinese real estate developer and major integrated logistics and commodity trading center operator, will announce the 2014 fiscal year results today. Driven by strong property sales, core net profit is expected to rise 41% year-on-year to 2.5 billion yuan. The Bank maintains the South China City purchase rating and target price at 4.70 yuan, which is equivalent to 8.0 times the projected price-earnings ratio for FY2015. Based on data collected by Bloomberg, the company's core net profit for fiscal year 2015 will increase 63% year-on-year to 4.09 billion yuan. This shows that the current stock price is equivalent to 6.3 times the expected price-earnings ratio. We think the valuation is not expensive. From April 11 to May 5, the company repurchased 31.3 million shares from the open market at an average price of 3.50 yuan per share. This price is consistent with the subscription price of 244.8 million new shares obtained by Tencent (700). The Bank has limited room for stock price decline. After establishing a partnership with Tencent at the beginning of this year, South China City accelerated the pace of its business expansion and successfully extended the maturity of its debt at lower financing costs. In January, the company signed a framework agreement with the Chongqing Municipal Government to build and develop a large-scale integrated trade, logistics and trading center, with an estimated total net area of 6.26 million square meters. In February, the company purchased the remaining 35% of its shares in the Xi'an project for RMB 260 million. In March, the company signed a letter of intent to cooperate with the Guangzhou Municipal Government to build and develop a large-scale integrated trade, logistics and commodity trading center. The total planned construction area is expected to reach 10 million square meters. In April, the company purchased land use rights in Hefei at a price of RMB 208 million, and the planned construction area of its Hefei project was expanded from 3.94 million square meters to 4.84 million square meters. In May, the company signed a framework agreement with the Nanchang Government to develop and operate e-commerce and warehousing and logistics centers, which are estimated to cover a total area of about 2,300 acres. Today, South China City has 9 large-scale integrated logistics and commodity trading center projects at different stages of development in Shenzhen, Guangzhou, Chongqing, Nanchang, Nanning, Xi'an, Zhengzhou, Harbin and Hefei. We are optimistic about the company's long-term profit growth prospects.