保利地产：One of the fastest growing developers

The reported net profit of RMB28bn was 13.2% higher than our forecast ofRMB24.7bn because of higher than our expected gross margin and morecontribution from JCE. We raise our 2020earnings forecast by 7.1% and raise TP toRMB22.16, which is equivalent to 8.0x 2020E P/E. Reiterate BUY recommendation.n Net profit surged 48% in 2019. Revenue and net profit surged by 21.3% toRMB235.9bn and 47.9% to RMB28.0bn in 2019, respectively. The robustresults were driven by increase of delivery GFA and margin improvement.GM for property development expanded by 2.7ppts to 35.4% in 2019. Thereported net profit was 13.2% higher than our forecast of RMB24.7bnbecause of higher than our expected gross margin and more contributionfrom JCE. The Company declared final dividend of RMB0.82per share,representing increase of payout ratio to 35%.n Top five in contracted sales in 2019. Contracted sales amount increasedby 14.1% to RMB461.8bn in 2019, respectively. Market share climbed to2.89%. Cash collection ratio was 93% and cash collection from contractedsales amounted to RMB431.2bn in 2019. So net gearing ratio improved by23.6ppts to 56.9% and cash on hand amounted to RMB139.4bn as at Dec2019. Cost of debt reduced by 8bp to 4.95% in 2019. Balance sheet wasstrong. Although contracted sales dropped by 35% to RMB71bn in 1Q20, weexpect Poly Development achieved 5% sales growth in 2020due to itsstrong saleable resources.n 213mn sq m land bank. Poly Development acquired 127projects of 26.8mnsq m land bank for considerations of RMB155.5bn in 2019. Meanwhile,attributable ratio for new land increased from 68% in 2018to 71% in 2019. Asat Dec 2019, GFA under development and for future planning were 132mn sqm and 81mn sq m, respectively. We estimate NAV to be RMB27.73per share.n Leading property management company. Poly Property Development(6049HK, BUY) posted 49% net profit growth to RMB491mn in 2019. As atDec 2019, it managed 1,490properties projects in 170cities. Totalcontracted GFA reached 498mn sq m as at Dec 2019.n Raise TP and forecast. We raise our earnings forecast by 7.1% toRMB33.0bn in 2020and 8.5% to RMB38.4bn in 2021. Accordingly, we raiseour target price from RMB20.72to RMB22.16, based on 8.0x 2020E P/E.Maintain BUY recommendation.