瑞士信贷-中国房地产市场报告pdf4(1)

15February2006AsianDailyANALYSTCERTIFICATIONSAREINTHEDISCLOSUREAPPENDIX.FOROTHERIMPORTANTDISCLOSURES,visitwww.credit-suisse.com/researchdisclosuresorcall+1(877)291-2683.U.S.Disclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ChinaPropertySector-----------------------------------------------------------------------------------------Easytoenter,difficulttoexecuteKarenaFung/ResearchAnalyst/85221016956/[e-mail]/ResearchAnalyst/85221016437/[e-mail]●Chinarealestatemarketseemstohavecaughtinvestorsandpropertycompanies’imaginationofinsatiabledemand,yetitiseasytobeinbutdifficulttobesuccessful.●HongKongandSingaporepropertycompanieshavebranchedouttosecondarycities,althoughtheformercontinuetoinvestinShanghaidespitetheslowdowninthecity.●Intermsofassetclass,mostdevelopersbuildmix-useprojects,aspropertymanagementhasbeentheirforte,whereasCheungKong,KeppelLandfocusmainlyonresidentialandHangLungProperties,Capitalandoncommercial.●RecententrybyHongKongheavyweightandeasyaccesstocapitalbyChinesedevelopersmeanincreasingcompetitiontothelikesofKerryProperties,whicharenotuniqueplaysonthesector.●ItiseasytotalkabouttheimmensepotentialoftheChineserealestatemarket,butthetestiswithexecution,anditistooearlytojudgewhichdeveloperswillsucceed.Shanghai,Beijing,orsecond-tiercities?HongKongandSingaporeandevelopershavebeenaggressivelylookingforopportunitiesinChina,especiallyafterthehousingreformin1998.Initially,foreigndevelopersoftenwentintoShanghaiandBeijing,thetwomajorcitiesinChina.However,foreigndevelopersarestartingtogointosecondarycities,citingthestrongeconomicgrowthandhousingdemand,andmoreimportant,lesscompetitiveenvironment.WecomparethedifferentinvestmentstylesandtimingofHongKongdevelopersthathaveinvestedinChina.Figure1:HongKongdevelopers'investmentinShanghaisince2005AttribStakeGFADateDeveloperCity(%)(sqm)UseJan-06CKH/HutchLuxiangyun,PuxiShanghaiJV360,000R/C/HOct-05CKH/HutchXingzhaRd,PudongShanghaiJV164,000R/CNov-05KerryXiachengdistrictHangzhou100170,000R/COct-05KerryShanghaiExpositeShanghai40.8230,000O/C/H/SAFeb-06OOILKaixuanRdShanghai95242,803O/C/H/SAOct-05SHKPPudongShanghai100160,000R/CSep-05SHKPJiangGandistrictHangzhou40274,900R/CSource:Companydata,CreditSuisseAlthoughthegovernment’sausteritymeasureshaveaffectedtheShanghaipropertymarketandnearbycities,HongKongdevelopersarestillkeentoinvestinthiscity.Forexample,SunHungKaiProperties(0016.HK,HK$77.0,NEUTRAL,TPHK$79.00)announceditwillinvestinonemixed-usedevelopmentprojectineachShanghaiandHangzhou;totalinvestmentisestimatedtomountoverRMB4bn.Similarly,KerryProperties(0683.HK,HK$23.6,UNDERPERFORM,TPHK$20.00)alsoboughttwosites,oneeachinPudong,ShanghaiandHangzhou.Bothsitesareexpectedtoincludehigh-endresidentialandcommercialproperties,whichhaveatotalinvestmentofaboutRMB4.2bn.However,mostSingaporeandevelopershavebeenavoidinginvestinginShanghaiandnearbycities,exceptAllgreenProperties(AGRN.SI,S$1.30,OUTPERFORM,TPS$1.47)tooka16%stakeinKerry’sPudonginvestment.NotethatnotonlyhaveHongKongdevelopersstartedinvestinginsecond-tiercities,likeChengdu,Tianjin,Xi’an,theSingaporeanplayershavebeenexpandingbeyondthelargecities,probablycitingthefirst-moveradvantageinthelesscompetitivemarkets.Residentialornonresidential?MostHongKongdevelopersexcelinpropertymanagementandarenowinthedevelopmentofbothresidentialandnonresidentialproperties.Hence,oneisnotsurprisedtoseethatthelandmarkgradeAbuildingsinShanghaiandBeijingarebuiltbyHongKongdevelopers.WenowexpectSHKPandKerryPropertieswilleachdevelopamegamixed-useprojectinShanghai,includinghotel,office,retailandservicedapartmentuse,whilePCPD(0432.HK,HK$2.275,NOTRATED)recentlyalsoboughtalandsite(inthevicinityofPacificCenturyPlace)throughlandauctioninChaoyang,Beijingforamixed-useproject.Landcost,however,wasextremelyhighataboutRMB11,000/sqm.HangLungProperties(0101.HK,HK$13.95,NEUTRAL,TPHK$13.40)iscommittedtodohigh-qualityretailmalls,aimingtodevelop10retailmallsinsecondarycitiesinthenextfewyears.Sofar,HLPannounceditsTianjinandShenyangacquisitions.Capitaland(CATL.SI,S$4.06,OUTPERFORM,TPS$3.61)isalsoinvestingaggressivelytobuildupaportfolioof21mallswithatotalGFAofabout926,000sqm,andWal-Mart(WMT,$45.75,OUTPERFORM,TP$55.00,MW)willbetheanchortenant.Thatsaid,webelieveCapitaland’spositioningwillbesomewhatlessprimethanHangLung’s,astenantmixwithWal-Martbeingtheanchortenantismorecommonplace,inourview.CheungKong(0001.HK,HK$78.3,OUTPERFORM,TPHK$96.00),NewWorldChina(0917.HK,HK$3.425,NOTRATED),andKeppelLand(KLAN.SI,S$4.06,OUTPERFORM,TPS$4.49)aretheonesthatfocusmainlyonresidentialdevelopment,especiallyinsecondarycities.NWCboughtthelandsitestooearlyandhenceaveragegrossprofitmarginisexpectedatabout20%,whileCheungKongandKeppelLandmainlyacquiredtheirlandbankinthelasttwoyearsandwebelievethetwodeveloperscanachieveagrossprofit