Beijing Capital Development Co.:Proxy for Beijing mass demand recovery; add to Conviction Buy list

Source of opportunity

We reiterate our Buy rating on BCD and add it onto our Conviction list.

Following the 14% rise in 2012E contract sales (to Rmb14.2bn), we raiseour 12-month NAV-based target price to Rmb18.0 (from Rmb16.5), offering32% potential upside. We like BCD as we believe: 1). It stands to benefitsthe most from any Beijing mass market demand recovery, given itsleading position in Beijing and its mass-market product focus; 2). It standsto benefits more than peers as it has de-rated relative to peers sincetightening began in May 2010; and 3). It has good potential to become anationwide player given its well-established footprint across China.