23.56% YOY Net Profit Increase

In 1H 2008, the company's revenue was RMB 17.26 bln and its net profit was RMB 2.06 bln, representing a 55.50% YOY increase and a 23.56% YOY gain respectively. Concurrently, it reached a sales income of RMB 24.13 bln, representing a 38.1% YOY gain, with housing property of 2.66 mln sq. meters being sold, a 15.0% YOY increase. However, a 3.2 mln sq. meter area has not yet been calculated, which is contractually valued at RMB 28.64 bln.

The company adds its land reserve of 3.87 mln sq. meters, with a value of RMB 7.41 bln. The asset-liability ratio of the company is 67.76%, of which accounts received in advance makes up 35%, and the debt to net worth ratio is 37.1%. In addition, the company forecasts a total cash payment of RMB 45 bln for 2008, and compared with the performance in 1H 2008, the company will realize a cash flow of RMB 48 bln for 2008. In addition, the issuance of RMB 5.9 bln in corporate bonds has been approved.

The company has cut its new construction volume by 19.5% and completion targets by 14.9%, from the original targets set at the beginning of the year.

Investment Highlights:
The company estimates an EPS of RMB 0.655 for 2008 and RMB 0.917 for 2009. Clouded by the short-term gloom of the market, the evaluation on the company has been impacted. But the stable demand growth of the company can support its operation in the long term, thus the company has been rated 'Buy'. The target price of its stock is RMB 12.00.

Risks and Warnings:
The market adjustment and the tightening monetary policy have placed pressure on capital and sales of the entire industry.


Source: www.gf.com.cn

Date: 7 Aug 2008

CN01/RL/JL/MR/KM