Real Estate Developers:ASPs headed south but volumes rose in the fourth week of June

June 21–27, 2010 transaction volume and ASP。

On a wow basis, 14 of the 15 cities with data available saw volumesincrease, with a group median of 55% (versus a 29% decrease for the weekended June 20). On a yoy basis, 13 of 14 cities saw volumes decline, witha group median of -64% (versus a 75% decrease). Compared with the May2010 weekly average, 9 out of the 15 cities saw volumes go down, with agroup median of -7% (versus a 35% decrease).

In terms of ASP, on a wow basis, 11 out of the 15 cities with data availablesaw price depreciation, with a median of -4% (versus 0% decrease forthe week ended Jun 20). On a yoy basis, 11 out of 13 cities saw pricesincrease, with a group median of 28% (versus 26%). Compared with theMay 2010 average price, 9 of the 15 cities saw prices down, with a groupmedian of -6% (versus -1%).

Ytd performance。

Ytd as of the week ended June 27, 13 of the 15 cities saw volumes declinewith a group median of -29% yoy (versus a 29% decline as of the weekended Jun 20). Compared with 2008, 12 of the 15 cities with data availablesaw volumes increase, with a group median of 27% (versus 32%).

Inventory levels。

According to the rolling 12-month GFA sold, the average inventory take-uptime (for the 10 cities we track) increased to 7.1 months (from 7.0 monthsof last week). Currently, Shanghai, Nanjing, Suzhou, Hangzhou,Chongqing, and Xiamen are lower than 6 months; Dongguan is higher than12 months, while Beijing, Guangzhou and Shenzhen are in between.

Investment view。

Our Buy ideas: Evergrande (3333.HK; on Conviction list); Vanke (A)(000002.SZ; on Conviction list), Fantasia (1777.HK), Vanke (B) (200002.SZ),Poly (600048.SS), Gemdale (600383.SS), Agile (3383.HK), Poly HK (0119.HK),Powerlong (1238.HK) and China Resources Land (1109.HK). Our Sell ideas:Shenzhen Investment (0604.HK; on Conviction List), IFM (CTC; on ConvictionList), Greentown (3900.HK), OCT (000069.SZ), Forte (2337.HK) and CWTC(600007.SS). Key downside risk: Government over-tightening that inducesmacro hard landing. Key upside risk: Better-than-expected property sales.