HOPEFLUENT(733.HK)：SPOTTING THE UPSIDE

Stable policy tone from the 18th congress conference stimulates release ofpend-up demand in November. Strong sales in the month, which is atraditional weak season, indicated there are still huge genuine demandpending unleash in China. We believe Hopefluent is well positioned tocapture the growth of property sector and could be immune from marginsqueezing, which is haunting the property developers. The stock rose19.8% since the early November. Upside is opening up on strongfundamentals. Maintain our BUY rating with target price of HK$3.05.

Solid fundamentals with upbeat commission rate and transaction valuefor the primary property sales business. Per our channel chat, the currentcommission rate that paid by property developers to the sales agentsmaintains at 1.00-1.02%. Such a level is 3-5bp higher than our expectation.

In our financial model, we forecast Hopefluent to achieve commission rate of0.97% in FY12.Favorable industrial specialization trend helps the real estateagents to retain bargaining power against property developers.

For another key performance indicator, transaction value, we currently expectit more likely to hit management guidance of Rmb120bn given strong salesmomentum. In our financial model, we assume it at Rmb112bn, which is 7.0%lower.

Primary property business serves as the major revenue stream of the group asit contributes 60% to 70% of total revenue. Given stronger-than-expectedperformance of this business segment, earnings risk of the group in FY12 isin upside.

Outperformance since the early November with technical breakthroughon 28th November. Hopefluent rose 19.8% since the early November,outperforming HSI by 19.2% and property developers by 6.3%. Also, thestock made a new year-high level at HK$2.65 on Nov 28.

Positive view from Value Partners. Value Partners bought Hopefluent atcost HK$2.22-2.28/share in November, increasing their stake from 4.9% to6.0%.