China Property Monthly
Feb-09 update: Sales recovered strongly, likely to be
sustained
China
Property
Raymond Ngai, CFAAC
(852) 2800-8527
raymond.ch.ngai@jpmorgan.com
Lucia Kwong, CFA
(852) 2800-8526
lucia.yk.kwong@jpmorgan.com
Sunny Tam, CFA
(852) 2800-8524
sunny.wy.tam@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
See page 33 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
China developers’ share price index
0
50
100
150
200
250
300
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: Datastream.
Primary transaction volume estimates
MM sqm
Feb-09 Jan-09 M/M Y/Y
BJ 0.92 0.73 26% 135%
SH 1.22 0.81 51% 69%
HZ 0.20 0.13 51% 122%
GZ 0.57 0.46 23% 147%
SZ 0.49 0.40 22% 658%
CQ 1.41 0.70 102% 166%
CD 0.85 0.58 46% 162%
Source: J.P. Morgan estimates.
• Primary sales picked up strongly in February: Property sales in the
seven major cities we keep track of rose 50% M/M and 141% Y/Y in
February to 5.7 million sqm. If we take the first two months together,
they recorded 29% Y/Y sales growth compared to the same period last
year. The strong sales were encouraging in the absence of new launches.
Except for Shanghai and Beijing where sales were triggered by price
cuts, prices in Shenzhen and Guangzhou were stable. Our weekly sales
update shows sales have continued to pick up in March.
• Sales recovery will likely be sustained: We believe the sales recovery
is likely to be sustained as buyers’ confidence has been boosted by the
local and central governments’ positive measures to revive the industry,
a 26% rebound in the stock market year-to-date and release of pent-up
demand as potential buyers are now entering the market after a 20%-30%
price decline from the peak. With more launches in 2Q09, we believe
sales momentum could be sustained, barring an unforeseen sharp
economic downturn.
• We prefer CR Land and R&F: We maintain our view that if a recovery
in the property market could be sustained, high beta mid- and small-cap
China property companies will likely outperform. Most of them are still
trading at depressed valuations—60%-70% discount to NAVs; 5-10x
FY09E P/E; and discount to book values. Their share prices do not
reflect strong sales YTD as the market is uncertain about a recovery.
From the perspective of valuation, liquidity and management, CR Land
(Dec-09 PT: HK$10.5, 14% potential upside) and R&F (Dec-09 PT:
HK$10, 48% potential upside) are our top picks in the sector.

Table of Contents
China market review.................................................................3
Share price performance ..............................................................................................3
Our key calls ................................................................................................................4
Trading ideas................................................................................................................8
Key measures recently announced.............................................................................12
Major corporate actions.........................................................13
Land acquisitions .......................................................................................................13
Other actions/news.....................................................................................................13
National macro and industry movements ............................15
Shanghai and Hangzhou........................................................18
Shanghai ....................................................................................................................19
Hangzhou...................................................................................................................20
Beijing .....................................................................................21
Guangzhou..............................................................................24
Shenzhen ................................................................................27
Chongqing and Chengdu.......................................................29