2016e core earnings expected to rise 32% YoYThe pre-sales and delivery of Shumyip Zhongcheng, which willprobably be delayed into 2018e, bring the biggest uncertainty tothe 2017e results. However, we maintain BUY, as 1） this is led bypolicies; 2） any turnaround would thus come in 2018e; and 3） ithas nothing to do with the company's superior fundamentals.
　　2017e contracted sales: flat with 2016s. SZ governmenthas a ceiling on pre-sale ASP. Given the protection on GPM, wethink the company will put back new launches of Zhongchenginto 2018, which may damage its pre-sales by Rmb5——6bn.
　　2017e earnings also flat with 2016e. SZ government alsorequests inspection & acceptance of planning upon completion,which would extend the delivery ——0.5 year.
　　Trends to watch
　　SOE in SZ: Fine quality to continue. As well as ourexpectation of a land parcel injection in the Pingshan district ofSZ in 2017, other benefits such as financing could also begenerated from the Shumyip Group, its parent company.
　　Results to turn around in 2018e. Zhongcheng should be astrong support for the company's 2018e performance.
　　Valuation and recommendation
　　We cut 2017e core earnings 20% to HK$2,896mn due to thedelay of the Zhongcheng launches and introduce 2018e core NPat HK$3,380mn, +17% YoY. Maintain BUY & TP at HK$4.24 dueto prospects over the medium-to-long-term. Our TP is a 40%discount to 2017e NAV and 11.1x 2017e P/E, implying 25%upside. The firm now trades at 8.9x 2017e P/E.
　　Risks
　　Zhongcheng performance significantly beats the expectations.