Revenue and core net profit gained by 14.9% to RMB31.0bn and 18.6% toRMB5.25bn in 1H20, respectively. Contracted sales grew 13.5% to RMB57.4bn in7M20 and hit rate reached 52.2%. Logan actively participates urban redevelopmentprojects and expects it will contribute about 20% of core profit each year in 2021-23. Balance sheet was healthy with net gearing ratio of 68.3% as at Jun 2020. Weraise TP to HK$17.42 due to narrowing NAV discount to 40%. Reiterate BUY.
　　19% core earnings growth in 1H20. Revenue and net profit rose by 14.9%to RMB31.0bn and 20.4% to RMB6.07bn in 1H20, respectively. Due to 42%increase in delivery GFA to 1.26mn sq m, revenue from property sales gainedby 27.1% to RMB20.6bn in 1H20. The Company also booked RMB6bnrevenue from urban development, up 22.4% YoY. GM increased by 0.5pptsto 35.2%, of which GM for property sales declined 1.3ppts to 28.1% in theperiod. Core earnings after perpetual interests gained by 18.6% toRMB5.25bn in 1H20. Logan declared to pay HK$0.43 as interim dividend.
　　Aiming at 20% sales growth each year. Logan achieved RMB46.4bnattributable contracted sales in 1H20, up 12.1% YoY. But attributablecontracted sales area slightly retreated from 3.14mn sq m in 1H19 to 3.04mnsq m in 1H20. It further captured RMB11.1bn attributable contracted sales inJul 2020. Till Jul 2020, hit rate was 52.2% based on RMB110bn sales target.
　　The Company will launch RMB134bn saleable resources in 2H20 and it isconfident to complete full year sales target. Looking forward, Logan expectsto have a 20% sales growth each year.
　　Urban redevelopment projects will provide 20% of core profit. Loganacquired 17 new projects with total GFA of 2.96mn sq m in 1H20. As of Jun2020, total land bank amounted to 39.20mn sq m, of which 59% in GBA.
　　Average land cost was RMB4,518 per sq m. This land bank is estimated toprovide RMB479.1bn saleable resources. Furthermore, Logan activelyparticipates in 87 urban redevelopment projects with total GFA of 24.81mn sqm in 11 cities. If all projects can be successfully converted, its total value isestimated to be RMB454.9bn. The Company expects about RMB150bnsaleable resources from urban redevelopment projects can be converted nextthree years and they will contribute about 20% of core profit each year.
　　Raise TP and maintain BUY. Net gearing ratio stayed at healthy level of68.3% as at Jun 2020. Furthermore, presold and unbooked propertiesamounted to RMB93bn, which offer high earning visibility. We slightly raiseour earnings forecast. We also raise our FY20-end NAV estimate fromHK$29.00 to HK$29.05. We raise our TP from HK$14.50 to HK$17.42, due tonarrowing NAV discount from 50% to 40%. Maintain BUY.