What's new
　　Aoyuan announced sales value of Rmb10.25bn in May (+17% YoY).
　　Comments
　　Expecting double-digit earnings growth in 1H20. We project doubledigitYoY growth in 1H20 core net profit given an expected topline ofover Rmb30bn (+27% YoY) and potential primary land developmentprofit of about Rmb0.2bn. The sizable unbooked sales (Rmb170.5bnat end-2019) with solid GPM (about 28%) provides firm support.
　　Sales completion temporary behind peers, watch 2H20 performanceclosely. Sales value recorded a 13% YoY decline over January-May (vs.
　　-5% on average at our covered developers) to Rmb33bn, fulfilling 25%of the company’s annual target (Rmb132bn, +12% YoY) but still belowpeer average around 30%. We think 1H20 sales completion will reach35%, and 2H20 sales supported by over 70% of full-year newlaunches.
　　Smooth progress in YTD land replenishment, but product supply stilltight. Aoyuan budgets saleable resources of Rmb220bn for 2020 (vs.
　　total Rmb290bn on hand at end-2019). We estimate new resourcereplenishment of over Rmb50bn in January-May (vs. Rmb33bn sold),and some alternative sources might also contribute to product supplyin 2H20, including urban renewal projects (adding over Rmb5bn ofsaleable resources) and acquisition of Kinghand (likely adding aboutRmb10bn of new launches within 2020, but with lower stake at 30%).
　　Valuation and recommendation
　　We keep our earnings forecast, maintain OUTPERFORM and TP ofHK$11.2 (4.5x 2020e P/E, 40% NAV discount, 21% upside) given solidinterim results likely and improvement in market sentiments. Aoyuanis now trading at 3.7x 2020 e P/E and 51% NAV discount, a defensivevaluation in our view.
　　Risks
　　Interim earnings and 2H20 sales fall below our expectations.