Summary of Conference Call on China Real Estate Equities Industry Overview - The focus is on the **China Real Estate** sector, particularly the impact of recent policy changes and market dynamics on property sales and valuations [2][3][4]. Key Points and Arguments 1. **Policy Stimulus**: A stronger dose of stimulus has emerged to revive the property market, laying the groundwork for renewed sales momentum after a slowdown. Quality new home prices in tier-1 and tier-2 cities are expected to show modest growth in the next 12 months [2][3]. 2. **Shanghai's Easing Package**: On August 25, Shanghai introduced a comprehensive easing package, including the removal of restrictions on home purchases for eligible households outside the outer ring road. This policy primarily benefits quality developers with strong exposure in tier-1 cities [3]. 3. **Capital Flows**: There has been a strong capital flow into the Hong Kong stock market, rejuvenating interest in the real estate sector. The recent rally in the A-share market is expected to provide a fundamental boost to the residential market [4]. 4. **Risks of Disconnection**: Despite the positive outlook, there are concerns that the current rally may be disconnected from reality, leading to potential downgrades of certain stocks as the re-rating could be ahead of the base-case forecast [5][8]. 5. **Preferred Stocks**: The report highlights **CR Land (1109 HK)** and **C&D International (1908 HK)** as key picks, both showing clear signs of fundamental recovery. Additional supportive policies could further enhance their earnings potential [5][8]. Additional Important Insights - **Sales Momentum**: Policies and the wealth effect are anticipated to spur sales momentum after a temporary slowdown, although caution is advised regarding the sector's re-rating [8]. - **Valuation Metrics**: The report includes detailed valuation metrics for various property developers, indicating target prices and potential upside. For instance, CR Land has a target price of HKD 43.20, implying a 37.3% upside from its current price of HKD 31.46 [26]. - **Market Dynamics**: The report discusses the dynamics of home purchase restrictions and loan policies, which have been adjusted to facilitate home buying, particularly for families with multiple children [9][10]. Conclusion - The China real estate sector is experiencing a significant policy-driven recovery, with specific developers positioned to benefit from these changes. However, investors should remain cautious of potential disconnections between market performance and underlying fundamentals.

Investment Rating - The report maintains a "Buy" rating for C&D International, CR Land, and China Jinmao, while holding a "Hold" rating for COLI [27][29]. Core Insights - The strong share price momentum in the China real estate sector is attributed to the market's rapidly rebuilding of policy expectations, with investors optimistic about government efforts to stabilize the housing market [2][3]. - A bottom-up approach is emphasized, focusing on stocks that can remain resilient despite potential sales slowdowns, particularly state-owned enterprises (SOEs) that can monetize their assets effectively [3][4]. - The report highlights three key stocks: CRL for its quality investment property portfolio, C&D for its young landbank, and China Jinmao for its luxury project track record [4][8]. Summary by Sections Market Overview - Recent sales data shows a mixed performance across different tiers of cities, with Tier-1 cities experiencing a 36% year-on-year decline in sales, while Tier-2 and Tier-3 cities showed smaller declines of 19% and 18% respectively [9]. Stock Analysis - CR Land is noted for its strong sales momentum and solid execution track record, with a target price of HKD 36.30, implying a 26.5% upside [29]. - C&D International is highlighted for its competitive edge and expected margin recovery, with a target price of HKD 21.20, indicating a 27.4% upside [29]. - China Jinmao is recognized for its turnaround story and ambitious sales targets, with a target price of HKD 1.60, suggesting a 28% upside [29]. - COLI faces uncertainty regarding its investment thesis, leading to a "Hold" rating, with a target price of HKD 14.80, reflecting a 10.8% upside [29]. Valuation Metrics - The report provides a valuation summary for various property developers, indicating significant discounts to net asset values (NAV) for several companies, with CR Land and C&D International showing promising upside potential based on their current valuations [27][29].