Achieved RMB2.1bn contracted sales in Oct, similar to Sep
Poly Property achieved contracted sales of RMB2.1bn in October 2012, withGFA sold of 220ksqm, up 133% YoY and 100% YoY respectively. ASP inOctober 2012 rose by 17% YoY to RMB9,545/sqm. In the first 10 months of2012, Poly has achieved contracted sales of RMB19.3bn and contracted GFAof about 2.08msqm, up 47% YoY and 24% YoY respectively. YTD ASP alsoincreased by 19% YoY to Rmb9,279/sqm. By end-Oct, Poly has already hit itsrevised-up 2012 full-year contracted sales target of Rmb19bn, highlighting itsimproved execution ability.
Operation turnaround continues
In the past, the relatively slow sales and higher net gearing of Poly Propertyhas led to market concerns about its asset turnover and financial health; hencePoly has been trading at bigger NAV and PB discounts vs. its state-ownedpeers and other bigger private developers. In our view, with its acceleration insales in 2012 and prudent landbanking strategy now, its asset turnover shouldcontinue to pick up and net gearing should decrease, which should help drivea valuation re-rating for the stock.
Valuation looks attractive, maintain BUY
Poly Property is currently trading at a 56% discount to our estimated NAV, 6x2013F P/E and 0.6x 2013F P/B - attractive in our view. We believe that itscontinued strong sales momentum should help trigger further valuation reratingfor the stock. Reiterate Buy.