SUMMARY. Driven by the growth of delivery GFA and ASP, net profit advanced by29.8% to RMB11.8bn in 1H19. We estimate end-20 NAV to be HK$44.87. As a result,we raise TP from HK$35.48 to HK$35.90. Maintain BUY recommendation.
　　Net profit surged 30% in 1H19. Driven by 20.7% growth in delivery GFA and10.7% growth in ASP, revenue increased by 32.9% to RMB139.3bn in 1H19. GMimproved from 33.7% in 1H18 to 36.2% in 1H19. SG&A expenses to revenue ratiostayed flat at 8.0%. So net profit increased by 29.8% to RMB11.8bn in 1H19. Asat Jun 2019, properties pre-sold and unbooked amounted to RMB621.6bn.
　　Contracted sales grew by 10% in 1H19. Contracted sales amount and areasurged by 9.6% to RMB334bn and 5.6% to 21.50mn sq m in 1H19, respectively.
　　In terms of geographical breakdown, sales amount in Shanghai Region andCentral & Western Region accounted for 35.9% and 22.1% of totalcontracted sales in 1H19. Meanwhile, small and medium flats under 144 sqm accounted for 91% of residential sold in 1H19. Majority buyers were firsttime buyers or first time upgraders. In 1H19, 10.6mn sq m of properties werecompleted, up 15.6% YoY, and represented about 34.5% of full year plan.
　　Acquired 13.73mn sq m land bank in 1H19. In 1H19, Vanke acquired 54 plotsof land with total GFA of 13.73mn sq m （or attributable GFA of 9.42mn sq m） in1H19. As at Jun 2019, total and attributable land bank amounted to 153mn sq mand 92.93mn sq m, respectively. Moreover, Vanke participated in several urbanredevelopment projects with aggregate attributable GFA of 3.41mn sq m. Currentland bank is sufficient for next three years’ development.
　　Robust growth in rental and property management. Rental income andrevenue for property management increased by 82.1% to RMB2.09bn and 28.4%to RMB5.28bn in 1H19, respectively. As at Jun 2019, 82,000 leasing apartmentsin 35 cities were in operation. Furthermore, more than 13.5mn sq m of retailproperty were under Vanke’s management, of which 9.15mn sq m of retailprojects （6.43mn sq m in operation） were under SCPG management.
　　Raise TP to HK$35.9. Net gearing ratio was 35.0% as at Jun 2019. The balancesheet was healthy. We fine tune our earnings forecast and adjust upwards slightly.
　　In addition, we estimate end-20 NAV forecast to be HK$44.87. As a result, weraise TP from HK$35.48 to HK$35.90, representing a 20% discount to NAV.
　　Upside potential is 28.9%. Reiterate BUY recommendation.