Company Profile
　　The Group is principally engaged in the Development of quality residential properties and mixed-usecomplex projects in the Yangtze River Delta.
　　Our Views: The earnings performance of Future Land is broadly in line with our expectations. Thecompany has rich land plot reserve, sufficient for property development in the future 3-4 years. In2016, the company's gross margin grows quickly, with financing cost on constant drop. Contract saleswill maintain steady growth. The company's interest payout accounts for 24.5% of its core net profit,slightly lower than market expectations. If continuing with fast earnings growth and maintains 30%interest payout, the company will gain more attractions from investors. The company's current priceimplies 5.1x 17E PE, .3.8x 18E PE and 3.0x 19E PE. Based on NAV valuation, we revised up TP for thecompany to HKD 2.86, implying a 60% discount to NAV and 7.2x 17E PE/5.4x 18E PE/4.2x 19E PE. Wesee 40% upside potential from the current price and encourage investors to take a closer look on thecompany.
　　Contracted sales growth has started picking up.
　　According to the February sales number released by the company, the company has recordedcontracted sales of around CNY 5.23 billion, up 154.9% YoY. Selling area reached 390,700 squaremeters, up 64.8% YoY. In the first two months, the company's cumulative sales revenue reached CNY10.12 billion, up 59.7% YoY. The cumulative selling area covers 726,400 square meters, up 7.95% YoY.
　　We believe the company will highly likely attain the CNY 85 billion contracted sales goal for 2017, givenits sound project planning.
　　The rating upgrading will help bring down financing costs.
　　The world-renowned rating agency Moody upgraded outlook for the company to 'positive' from'stable' and maintained credit rating at Ba3 and rating for the bond at B1. The rating upgrading will helpbring down financial costs for the company. In the past few years, with steady business expansion andincreasing issuance of corporate bonds, the company's average financing costs dropped from 9.3% in2014 and 5.7% in 2016; the figure will very likely drop to 5% in the future – a sharp reduction onfinancing expenses.
　　The company is actively supplementing new land plots.
　　In the first two months of 2017, the company has cumulatively spent CNY 11.2 billion on land plotpurchase, 1.11 times the cumulative sales. The cost of new land reserves averages CNY 5,519 persquare meters. Huainan, Gourong, Taizhou Qidong and Nanjing respectively accounts for 17.4%, 17.3%,15.8%, 10.7% and 8.9% of total new land plot areas. Of new land investments, Hefei, Nanjing, Tianjinand Gourong respectively accounts for 31.5%, 22.7%, 12.8% and 10.8%. At the same time, the companyis actively expanding presence in the satellite towns around the first-tiered cities and the promisingthird-tiered cities.