05年中國房地產行業市場分析報告(pdf 56頁)

Play on second-tier cities. In 2006-2007, we expect higher growth potential in second-tier cities/Shenzhen than in other firsttier cities. We believe developers with existing landbank in these cities will maximize NAV accretion. Sector policy risk remains high near term. We initiate a Neutral coverage view; top pick: COLI.

Initiate sector with Neutral coverage view; prefer COLI (Outperform) We believe developers that have existing exposure in second-tier cities and Shenzhen will be able to capture the higher growth potential in these markets, which will translate into faster NAV accretion in 2006-2007. We prefer China Overseas Land (COLI, OP), and estimate that 44% of the company’s end-2006E GAV and half of its 2006E-2007E profits will be generatedfrom second-tier cities and Shenzhen, compared with the sector averages of 33% and 22%.

We expect average 24%/32% price rises in 2nd-tier/Shenzhen in 2006-2007 Affordability in most second-tier cities is generally better than in first-tier cities, which we believe will drive faster urbanization and resettlement. We expect an average 24% price rise in 2006-2007 for most second-tier cities. Given limited supply and increasing affordability, we forecast a 32% price increase in Shenzhen during the same period.

Second-tier cities less vulnerable to near-term risks than first tier Although policy risk is high in all geographical regions, we believe growth in second-tier cities will be less affected by government policies than that in first-tier cities.

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