What’s new
　　R&F published its sales data for January~July (7M16), whichrose 35% YoY, attributable to the 37% rise in GFA sold, but wasdragged slightly by a 1% decline in ASP. The company met 57%of its full-year sales target, which lagged behind peers. Weexpect R&F to continue to implement its sales plan and meet its2016 target, with margins improving steadily.
　　Comments
　　Still influenced by structural adjustments. The share ofsales from tier-2/-3 cities was maintained at 73% in 7M16 (vs.
　　56% in 2015 and 73% in 6M16), which explains the change inASP during this period.
　　To smoothly follow its sales plan in 2H16. Saleableresources at ~Rmb70.7bn YTD, whereas Rmb8.47bn in brandnew properties will be aggressively released in October. The mainfocus this year will still be the de-stocking of existing projectsand we believe R&F will continue to implement its original salesplan in the coming 5 months. As the progress towards meetingits 2016 sales target has been mediocre (50% in 1H16 vs. theindustry average of 56%), we do not expect the company to beatits target this year. Moreover, we believe the cash collection ratewill be improved to ~85%.
　　Debt structure undergoes a major improvement. R&F had put in a great deal of effort intoissuing a string of onshore corporate bonds in 2015/16(Rmb43.3bn at 3.48~5.2%) to refinance several expensive tools(Rmb19.1bn at 10~10.875%). The positive adjustment will be amajor support to the performance of its bottom line, as we haveforecasted it may possibly beat expectations during our previewof 1H16 results.
　　Valuation and recommendation
　　Keep earnings forecasts unchanged. Maintain BUY and raiseTP by 23% to HK$14.62 on the back of the H-share stockmarket re-rating, implying 6.5x 2016e P/E and a 32% discount to2016e NAV. Risks: The company significantly deviating from itsplan.