When to go shopping?
We foresee better prospects for China’s property sector
in 2H09. We like China Overseas Land, CR Land, and
SOHO China for their high earnings visibility. In Jan09,
these companies have secured 29%, 35%, and 66% of
our estimated FY09F development revenue because of
strong sales performance in 2008.
Better outlook in 2H09. As developers continue to cut
prices, we foresee sales volume picking up in the April-June
sales season. Inventory is likely to drop on the back of
growing demand and falling new supply, and asset prices
should stabilize in 4Q. We also anticipate more M&A
activities in 2H09 as asset prices bottom out, while better
economic data should improve market confidence.
But 1Q/early 2Q will still be dampened by negative
news flow. Weak sales, aggressive price cuts by developers,
earnings downgrades, and a lack of stimulus plans will
continue to weigh down on share prices in the near-term.
1Q - pick stocks with limited downside risk. We
recommend companies with proven track records and high
earnings visibility. Our top picks are COLI, CRL, and SOHO
China, which saw 2008 sales grow 13% (off a large base),
40% and 90%, respectively. They have also locked in 29%,
35% and 66% of our estimated 2009 development
revenue as of Jan09. Additionally, their solid financial
positions will support expansion during the property
downcycle.
Late 2Q - buy on weakness. We recommend to start
bottom fishing post-result season, when most of the
negative news should have been out. We suggest
accumulating other property plays when valuations reach
our bear-case NAV estimates (assuming asset prices to drop
30% in 2009 from Dec08 level and flat sales volume), as a
better outlook for 2H09 will underpin improving risk-reward
profiles.

Table of Contents
Investment summary 3
Near-term negative news flow 4
Better outlook in 2H09 10
Stock selection 17
Stock Profiles 19
China Overs eas 20
China Res ources Land 24
Shimao Property 28
Shui On Land 32
Sino-Ocean Land 36
SOHO China 40
Appendix 1: Revenue and GAV breakdown by
cities 44
Appendix 2: Polices from national level 46
Appendix 3: Monthly sales in major Chinese
cities 47
Appendix 4: Affordability in major Chinese cities
49