Poly Property 11M12 sales of RMB2 1.1bn achieved 111% of 2012 target
Poly Property released its November 2012 sales performance today. It had recorded monthly contracted sales of RMB1.8bn, up 50% YoY, with total GFA of 210ksqm, up 5% YoY, and a monthl y ASP of RMB8,571psm, up 43% YoY. For 11M12 sales performance, the company had recorded a total of RMB21.1bn (Excluding subscription sales of approximately RMB1.9bn) of sales, up 48% YoY. 11M12 GFA sold at 2.29msqm, up 22% YoY. 11M12 ASP stood at RMB9,214psm, up 21% YoY. As of end-November, Poly Property had achieved 111% of 2012's full-year sales target of RMB19bn.
2 new projects were launched in November
Poly had launched 2 new projects or phases of projects for sale last month, including Shanghai Poly Star Island in Jiading District and Wuhan Poly Park. Shanghai Poly Star Island has a site area of approximately 151,700sqm and a planned GFA of 476,800sqm and saleable area of 301,000sqm. Since Shanghai Poly Star Island is the fully furnished apartment, the ASP is estimated to be around Rmb17,500-18,000psm. Wuhan Poly Park was launched at ASP of around RMB6,400psm in November and th e project has a site area of about 100,000sqm with a planned GFA of around 152,000sqm.
Operation turnaround continues
During the month of November, Poly didn’t acquire any new land for the land bank and the net gearing ratio keeps th e same level without any increase. We expected that Poly Property will achi eve annual contracted sales of RMB22-22.5bn in 2012 with new projects launched in Nov and subscription sales to be contracted. In the past, the relatively slow sales and higher net gearing of Poly Property has led to market concerns about its asset turnover and financial health; hence Poly has been tradin g at a bigger NAV and PB discount compared to its state-owned peers and other bigger private developers. In our view, with its acceleration in sales in 2012 and prudent landbanking strategy now, its asset turnover should continue to pick up and net gearing should decrease, which should help drive a valuation re-rating for the stock
Attractive valuation – well below other state-owned peers
Poly is now trading at a 49% NAV disco unt, 7.0x 2013E P/E and 0.7x P/B – attractive in our view. As Poly’s sales co ntinue to accelerate and its net gearing falls, we expect to see more NAV and P/B discount-narrowing for the stock. Our target price of HK$7.82 (revised down from HK$10.95 on 21 September) is based on a 30% NAV discount. We lowered our NAV, target price and earnings as we factor in more conservative assumptions on property delivery and ASPs. Risks: unexpected economic volatilit y and unexpectedly harsh government tightening measures.