We initiate coverage on LAIFNG 9.125% 14, CHINPR
9.125% 14 (11c) and ZENDA 10% 12. Our Overweight
recommendation on LAIFNG 14 reflects low leverage
versus peers, stable rental income, and project locations.
Our Underweight recommendations on CHINPR 14 (11c)
and ZENDA 12 reflect concentration risk and high leverage
versus peers, respectively.
China property
developers
The party has just begun
Undersupply squeezes price. We expect China’s property prices to
rise further in the next 12 months. The cooling measures in 2006 have led
to tightening land supply and slowing construction, both of which contribute
to rising property prices in our view.
Managing regulatory uncertainty. We recommend investors to
overweight developers with higher financial flexibility, longer track record
and more diversified land bank.
Overall positive on “BB” names. We maintain our Overweight
recommendations on AGILE 9% 13 (10c), HPDLF 8.125% 12 (09c),
SHIMAO 8% 16 (11c) and SHIMAO FRN 11.
More selective in single “B” names due to smaller scales of
operation. We see more upside on Lai Fung and SRE.

Contents
Recommendation 3
Key features of the notes 7
Industry outlook 9
Regulatory update 13
Agile: Accelerating growth 16
Greentown: Buying spree 17
Hopson: Steady expansion 18
Shimao: Strength from diversity 19
SRE: Expanding into Shenyang 20
China Properties Group: Concentration risk 21
Lai Fung: Small but beautiful 28
Zendai: Shanghai strength 35
Peer comparison 41
Disclosures Appendix 44