Yuzhou Properties : Possesses Solid Fundamentals with Decent Growth CIMB Raised Target Price to HKD6.0 and Reiterated “ADD”

[For Immediate Release] Yuzhou Properties Possesses Solid Fundamentals with Decent Growth CIMB Raised Target Price to HKD6.0 and Reiterated "ADD"

(25 August 2017, Hong Kong) One of China's top 40 real estate enterprises, Yuzhou Properties Company Limited ("Yuzhou Properties" or the "Company"; together with its subsidiaries, collectively the "Group"; stock code: 01628.HK) 's target price is raised to HKD6.0 and the rating is reiterated "ADD" by CIMB, due to reflect the Company's solid fundamentals with decent growth.

Strong Set of Results Interim Dividend a Surprise

Yuzhou reported strong first half 2017 results, with core net profit rising 40% to RMB920 million mainly due to strong property sales. The company proposed its first ever interim dividend of HK$0.085. Net gearing edged up from 71.7% to 72.6%, well below management's guidance of net gearing of no more than 80%.

Raised Contracted Sales Target to RMB40 Billion

Yuzhou's contracted sales grew 63% to RMB24 billion in Jan-Jul 2017, accounting for 80% of its initial 2017 sales target. Management raised its 2017 sales target to RMB40 billion and reiterated its mid-term sales target of RMB100 billion in 2020, implying a 40% CAGR in 2017- 2020.

Gross Profit Margin to Remain at 33-34% in FY17-19F

Property sales recognized in first half 2017 increased by 75% year-on-year to HK$7 billion, mainly driven by higher ASP (+47%) and volume growth (+19%). Gross profit margin expanded by 0.5% to 32.95% in first half 2017, and management expects it will remain at 33-34% in 2017-2019. Despite the government's price controls on new launches and increasing land costs due to supply shortage, management is confident of maintaining the company's high margin levels and outperforming peers given its good market timing and merge and acquisition.

Proactive Land Banking

Yuzhou replenished 11 land sites with a total GFA of 1.1msf in Jan-Jul 2017 for a total land

cost of RMB12 billion or an average land cost of RMB10,625/sqm. Other than growing the saleable resources in cities with existing projects (e.g. Tianjin Hangzhou, Nanjing), Yuzhou also ventured into new cities like Huizhou - which is its first project in the Big Bay Area (ex-HK). Management is keen to have more projects in the Big Bay Area, which will be primarily done via merge and acquisition.

No Equity Financing and Open to Introduction of Strategic Investors

The Chairman guided that he has no intention of doing an equity financing, given the limited proceeds raised and the downside risk to share price. However, he is open to the introduction of strategic investors as there may be synergies between Yuzhou and strategic investors which can benefit the company in the mid-to-long term. He mentioned that a number of funds and insurance companies have approached him for share placements.

Maintain Add and Raise TP to HK$6

CIMB raises the 2019 core EPS by 12% after updating the completion schedule. While the share price is up 69% year-to-day, Yuzhou is still trading at a 54% discount to NAV, way below the sector average of 25%. CIMB raises its target price to HK$6 as it narrows the discount to NAV to 40% (from 50% previously) to reflect the better market sentiment in China property market.

-END-

Yuzhou Properties Company Limited (01628.HK)

Established in 1994, Yuzhou Properties isa property developer headquartered in Shanghai with a national foothold. Adhering to its strategy of Cultivating in Regions Leading the Market, Yuzhou Properties strives to develop residential and commercial properties which align with market trends in first-and second-tier cities. As at 30June2017, the Company had 79projects under various stages of development in Xiamen, Fuzhou, Shanghai, Tianjin, Nanjing, Hefei, Hangzhou, Suzhou, Quanzhou, Zhangzhou, Longyan, Bengbu and Hong Kong. It had a over

9.54 million sq.m. in aggregate GFA under development or held for future development, with Yangtze River Delta Region, West Strait Economic Zone, Bohai Rim Region and Central Region accounting of 54%, 35%, 5% and 6% respectively, of the total. Renowned for its outstanding product quality, diversified product portfolio, strong brand awareness and seasoned management team, Yuzhou Properties has been named "Top 100 China Real Estate Enterprises" for eleven years in a row; and Top 50 China Real Estate Enterprises from 2011 to 2017.

For more information about Yuzhou Properties, please visit the Company's website: http://www.yuzhou-group.com

For inquiries, please contact:

Yuzhou Properties Company Limited (HKEX: 01628)

Head / Senior Manager / Manager / Assistant Manager of Corporate Finance & Investor Relations Camille Xiong/ Shikai Wu/Christine Huang/Jessica Li

Tel: [phone]

Fax: [phone]

Email: [e-mail]; [e-mail]; [e-mail]; [e-mail]

Yuzhou Properties QR Code:

Media enquires:

Wonderful Sky Financial Group Holdings Limited (HKEX: 01260) Iris Au Yeung/ Mel Lai

Tel: [phone]

Fax: [phone]

Email: [e-mail]/ [e-mail]