Revenue and net profit grew by 5.0% to RMB146.4bn and 5.6% to RMB12.5bnin 1H20, respectively. We maintained earnings forecast unchanged but cut TPfrom HK$36.69 to HK$33.92. Maintain BUY recommendation.
　　Mild growth in 1H20. Revenue gained by 5.0% to RMB146.4bn in 1H20.
　　Delivery GFA surged 24% to 10.5mn sq m. But a 19% decline of recognizedASP (RMB12,668 per sq m) dragged down growth for revenue of propertydevelopment. On the other hand, other businesses grew robustly. Revenueof construction, property services, rental and other jumped 65%, 27%, 25%and 53% in 1H20, respectively. Gross margin retreated 4.4 ppts to 31.8%but declining reduction from minority interests pushed net profit to grow 5.6%to RMB12.5bn in 1H20.
　　Contracted sales down 4% in 1H20. Contracted sales amount and areatumbled by 4.0% to RMB320.5bn and 3.4% to 20.77mn sq m in 1H20,respectively. Shanghai Region is the largest contributor and accounted for41.3% of contracted sales in 1H20. Contracted sales in Hangzhou, Shanghai,Ningbo, Suzhou and Nanjing exceeded RMB10bn in 1H20. Sales pacestarted to accelerate in Jul. Contracted sales increased by 22.5% YoY toRMB59.02bn in Jul 2020. We maintain our sales forecast of RMB650bn in2020, up 3% YoY.
　　Attributable land bank of 94mn sq m as at Jun 2020. In 1H20, Vankeacquired 55 projects with attributable GFA of 5.05mn sq m. Average landcost was RMB6,368 per sq m. As at Jun 2020, attributable land bank underconstruction and for future planning were 65.95mn sq m and 28.03mn sq m,respectively. Vanke plans to have new start of 29.21mn sq m in 2020.
　　Construction work was affected by COVID-19 but now returns to normal.
　　Ample property management space. Vanke services had 680mn sq mcontracted GFA and 520mn sq m managed GFA as at Jun 2020. It signed53mn sq m new contracted GFA in the period.
　　Trim TP to HK$33.92. Presold and unbooked properties amounted toRMB695.3bn as at Jun 2020. Completion GFA was 10.75mn sq m in 1H20and expected to be 22.44mn sq m in 2H20. So earnings growth will beaccelerated in 2H20. We maintain earnings forecast unchanged but cut end-20 NAV forecast from HK$52.42 to HK$48.46. As a result, we change TPfrom HK$36.69 to HK$33.92, representing a 30% discount to NAV.