The health fundamentals of the industry will be maintained. In 2018, we expect the growth range of commercial housing sales and sales area to be-5%-0% and-10%-5%. We also expect stable house prices, reduced area for sale and increased investment.

South China City Holdings Co., Ltd. is an integrated logistics and trading center developer and operator. The company's contract sales are expected to remain at HK $10-12 billion in the 2018-2020 fiscal year and maintain a high gross profit margin. The strategic cooperation with JD.com Group can support its e-commerce business. Rental income will increase steadily. Property management services will grow with the increase of completed area.

Other revenue comes mainly from OUTLETS operations and logistics warehousing services, which will expand rapidly.

We estimate revenue for the 2018-2020 fiscal year to be HK $10.853 billion, HK $12.341 billion and HK $13.7 billion respectively.

The core net profit for fiscal year 2018-2020 was HK $2.305 billion, HK $2.634 billion and HK $2.968 billion, equivalent to a compound annual growth rate of 29.0% in fiscal year 2017-2020.

We give the company a target price of HK $3.06, a 43% discount to the 2018 fiscal year valuation of HK $5.36 per share of net assets, equivalent to 10.6 times core price-to-earnings ratio for fiscal year 2018 and 0.9 times price-to-book ratio for fiscal year 2018. For the first time, it is given a "buy" rating to South China City. Risk factors: 1) lower-than-expected property sales; 2) uncertainty of commercial real estate operation.