Maintain Buy with TP raised to HKD5.27
　　We maintain Buy, raising FY17-19F earnings by 1-4% and our TP by 24% toHKD5.27, after factoring in stronger sales, better gross margin, 1H17 resultsand the latest land acquisitions. The company aims to refocus on its five cityclusters for deeper penetration to achieve >RMB100bn sales in 2018F andgrow its attributable rental income to RMB4bn by 2022F. We expect it toachieve 40%/56% sales growth in 2017-18F and deliver 32% earnings CAGR inFY17-19F amid gross margin recovery to 23-25%, implying 7-8% dividendyields on a 40% payout ratio on reported profits （vs. 35% before）。
　　Reaccelerating to reach >RMB100bn sales in 2018F
In addition to raising the 2017F full-year sales target by 17% to RMB70bn,management was more positive on the physical property market, and aims toachieve >RMB100bn sales next year （implying >43% growth）。 We believe itscurrent land bank （~RMB440bn saleable resources） can support 40% salesgrowth to RMB70.7bn this year, and grow 56% to RMB110bn in 2018F.
　　Refocusing on city clusters for deeper penetration
Management expects further population consolidation of the five major cityclusters （centered with T1/top-T2 cities） that Sino-Ocean has exposure to andplans to refocus on these regions for deeper penetration. The companyacquired 12.6m sqm GFA YTD （>95% located in these regions）。 Also, it lockedin3.7m sqm of redevelopment projects in Shenzhen （average land cost~RMB10k/sqm） and 4.0m sqm of primary land development （mainly inBeijing/Tianjin） to secure quality land banks at a low cost.
　　Aims for RMB4bn attributable rental income by 2022F
The company now owns 1.1m sqm GLA under operation, generating anattributable rental income of RMB900m in 1H17. Adding the IP in the pipeline,management targets to achieve RMB4bn attributable rental income by 2020F（vs. RMB1.5bn in FY16, and our forecast of RMB3.4bn, even on flat rent）。
　　Strong results, with higher dividend payout as a surprise1） Revenue rose 85% to RMB17.3bn, 2） gross margin maintained stable at22.0% （vs. 22.1% FY16）， 3） core profits rose 59% to RMB1.5bn and 4） netgearing rose to 62% （vs. 44% FY16）。 Sino-Ocean declared an interim dividendof HKD16.7 cents/share, implying a 40% payout ratio （vs. 35% before）。
　　Valuation and risk
　　Our TP is based on a 35% discount to end-2017E NAV of HKD8.11. The stocknow trades at 6.3x FY18F P/E, a 42% discount to NAV。 Keyrisks are weaker sales due to policy tightening and slower gross marginrecovery.