Poly Property full-year sales of RMB23.4bn achieved 123% of 2012 target
Poly Property has just released its full-year 2012 sales performance today. Itrecorded monthly contracted sales of RMB2.3bn, up 53% YoY, monthlycontracted GFA sold stood at 220ksqm, down 18% YoY, and monthlycontracted ASP stood at RMB10,455psm, up 87% YoY. For its full-year 2012sales performance, the company recorded a total of RMB23.4bn (whichexcludes subscription sales of approximately RMB2bn) of sales, up 48% YoY.Full year contracted GFA sold stood at 2.51msqm, up 17% YoY, and full-yearcontracted ASP stood at RMB9,323psm, up 27% YoY. The company hasbeaten its 2012 full-year sales target of RMB19bn by 23%.
1 new project was launched in December in Nanning
Poly had launched a new project for sale last month, namely Poly Aegan Sea inNanning, Guangxi Zhuang Autonomous Region. The Nanning Poly Aegan Seaproject has a total site area of 73,570sqm and a total GFA around 373,332sqm.The company had launched 248 units of units sized around 90sqm for sale inDecember as a first batch, of which 224 units were quickly sold at ASP rangingbetween RMB7,500psm-RMB7,700psm, fetching around RMB150mn. Overallhomebuyer response towards the company’s project was positive.
Operation turnaround continues
During the month of December, the company acquired no new land lots, andas at year-end its current landbank stood at around 24msqm. This implies thatthe net gearing ratio is more of less at the same level without any substantialincrease. In addition, the company’s 2012 sale-through ratio is around 64%,with 2012 new construction GFA start is around 3.5msqm. Given that thecompany had achieved RMB23.4bn of contracted sales this year withsubscription sales yet to be contracted, in our view the company issuccessfully accelerating its asset turnover, which would help to decrease itsnet gearing ratio in the coming year and should help drive a valuation re-ratingfor the stock.
In addition, the company’s saleable resource as at end-2012 is around4.45msqm, and we expect it to grow to 5.2msqm in 2013, mainly driven by itscurrent property-under-development.
Attractive valuation – well below other state-owned peers
Poly is now trading at a 43% NAV discount, 7.8x 2013E P/E and 0.8x P/B –attractive in our view. As Poly’s sales continue to accelerate and its net gearingfalls, 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) isbased on a 30% NAV discount. We lowered our NAV, target price and earningsas we factor in more conservative assumptions on property delivery and ASPs.
Risks: unexpected economic volatility and unexpectedly harsh governmenttightening measures.