The Company missed its 2021 sales target despite being the developer with the highest sales in 2021. Sales slightly improved in March, but is still considered weak. In view of current relatively high sales pressure and industry consolidation and clearing, as well as recent COVID-19 resurgences in mainland China, we expect the Company's revenue growth to record mid-to-low single-digit growth in the next few years. Overall gross profit margin slipped by 4.1 ppts YoY to 17.7%, mainly because some property developers sold assets at low prices due to cash flow difficulties, resulting in low market sales price. Thus, we expect overall gross profit margin to stay around 18.0% in 2022-2024, as we expect that the liquidity crisis has not been fully mitigated.
　　The Company’s financial performance and business operations in 2021 reflected resilience to some extent. Revenue grew by 13.0% YoY to RMB523,064 mn, mainly due to solid growth in sales of properties, up 12.9% YoY. Land bank structure has been optimised by shifting some development focus to higher-tier cities with around 81.0% of newly acquired land parcels located in five metropolitan areas. Debt condition also has further been improved with only liabilities asset ratio (excluding contract liabilities) violating the red line, but has improved by 4.8 ppts YoY to 75.7%.
　　The overall key tone of real estate policy in 2022 will remain unchanged, but most cities have implemented marginal relaxation on policies in 1Q2022. Given that the Company still shows strong resilience in its operations, we set TP at HK$7.35 per share, with "Buy" investment rating, representing 4.3x 2022 underlying PER and 0.6x 2022 PBR, corresponding to a 50% discount to 2022E NAV of HK$14.70 per share. Risk factors include: 1) sales remaining under pressure; and 2) increasing industry competition.