1H16 results beat our forecast by 58.7%
　　R&F Properties announced its 1H16 results: revenue wasRmb22,389mn, up 76% YoY; core net profit was Rmb1,597mn,up 169% YoY, with a core diluted EPS of Rmb0.50. An interimdividend of Rmb0.30/share was declared.
　　The surge came from an aggressive delivery in 1H, as thefirm booked GFA of 1.87mn sqm and ASP of Rmb10,900/sqm,corresponding to YoY growth of 50% and 22%. GPM was25.4%, down 4.1ppt YoY; CNPM came in at 7.1% up2.5ppt. OPEX as a percentage of revenue fell 4ppt YoY reflectingthe improved executive capacity.
　　Net gearing sustained at 168.6% while effective interestrate dropped by 1.19ppt to 6.81%, from 1) pay-off of PCS,offshore debts and trust; and 2) beneficial bond market in 1H.
　　Trends to watch
　　Abundant saleable resources of Rmb116bn give strongsupport to FY16 sales target (Rmb60bn), at a sell-throughof 51.7%. In 7M16, 57% of this target was reached, +35% YoY.
　　GPM to ramp up in 2H16/FY17. ~Rmb57bn in products inhand (pre-sold but undelivered) contain a GPM >30%, bodingwell for a GPM recovery in the near future.
　　Based on the payout ratio of 40%, we estimate FY16dividend per share will reach Rmb0.90 (HK$1.05),implying a generous 2016e dividend yield at 7.78%.
　　Earnings forecast
　　We raise our 2016/17 EPS forecasts by 16.8%/13.09%to Rmb2.25/2.37. The adjustment is based on a positivedelivery estimate in FY16.
　　Valuation and recommendation
　　The stock is trading at a 42% discount to 2016e NAV. Wemaintain our BUY rating, but raise our target price11.01% to HK$16.23, implying 20.22% upside. TP is basedon 30% discount to 2016e NAV and 6.2x 2016e P/E.
　　Risks
　　Delivery of 2H16 disappoints.