Yuzhou Properties : rsquo; Investment in Yangtze River Delta is Paying Off, CMBI Raised Target Price to HKD5.40 and Upgraded to “BUY”

[For Immediate Release] Yuzhou Properties' Investment in Yangtze River Delta is Paying Off CMBI Raised Target Price to HKD5.40 and Upgraded to "BUY"

(29 August 2017, Hong Kong) One of China's top 40 real estate enterprises, Yuzhou Properties Company Limited's ("Yuzhou Properties" or the "Company"; together with its subsidiaries, collectively the "Group"; stock code: 01628.HK) investment in Yangtze River Delta pays off, leading CMBI to raise the target price to HKD5.40 and upgrade the rating to "BUY".

Aim to Achieve RMB100 Billion Sales in 3 Years

In 1H17, Yuzhou recorded contracted sales of RMB21.5 billion, up 66.9%, completing 72% of 2017 full year target of RMB30 billion. Corresponding ASP was up 31.4% to RMB16,744/sq.m (1H16: RMB12,738/sq.m). Driven by the growth of property sales, revenue of 1H17 amounted to RMB7,246.8 million, up 74.90%, and gross profit margin remained stable at 32.95% (1H16:32.47%). Net profit of the period increased by 13.3% to RMB785.6 million and core profit was up 40.0% to RMB919.8 million. Given saleable resource valuing at RMB35.8 billion in 2H17, the Company upward adjusted its 2017 sales target to RMB40 billion. Furthermore, Yuzhou aims to achieve RMB100 billion contracted sales in 2020, with CAGR of over 40%. The Company declared an interim dividend of HK$8.5cents per share (1H16: nil).

Maintain Healthy Financial Status While Expanding

As of 30 Jun 2017, the Company's cash on hand was RMB19,604 million, while current debt totaled to RMB5,387 million. Yuzhou further lowered its costs of debts to 5.99% as of 30 Jun 2016 (end-16FY: 6.08%). Net gearing of the Company was 72.6%, 0.9% higher than that at end-FY16. As at 31 Jul 2017, total land banks increased by 0.59 million sq.m from end-16FY to

10.12 million sq.m. Average land cost was RMB5,879/sq.m, up 16% from end-16FY. In 7M17, the Company has acquired 11 parcels of land with total attributed GFA of 0.74 million sq.m with average cost of RMB10,625/sq.m.

Investment in Yangtze River Delta is Paying Off

In 2016, Yuzhou Properties adjusted its strategic guideline to focus more on Yangtze River Delta (YRD) and relocated its headquarter to Shanghai. Since then, the Company has been actively investing in YRD market. As of 31 Jul 2017, 53% of the land banks are located in YRD.

Furthermore, YRD contributed 57% of contracted sales in 1H17, comparing it only made 38% of contracted sales in FY15. In terms of revenue, 47% of recognized property sales in 1H17 came from Shanghai with only taking 21% of recognized GFA. Investment in YRD is paying off. CMBI expects the Company will make more of its presence and further improve its market position in the Region.

Raise Forecasts and Target Price

Due to the better than expected profitability and raised target sales, CMBI raises its profit forecast by 15.5%, 22.3% and 27.5% to RMB2,778 million, RMB3,344 million and RMB3,864 million in 2017-19, respectively. Furthermore, due to the higher profitability and quality land bank, CMBI adjusts upward its end-17 NAV forecast from HK$7.20 to HK$9.00. Accordingly, its Target Price is raised from HK$3.60 to HK$5.40, representing a 40% discount to NAV. Upgrade to BUY.

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Yuzhou Properties Company Limited (01628.HK)

Established in 1994, Yuzhou Properties is a 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

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

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