China Property:Site visit

Sales slow amid tightening; market is short of supply at low inventory level.

    We visited 11 projects by Sunac, Risesun, Evergrande, Country Garden andVanke in Tianjin/Tangshan, and met with their local sales managers. Tianjinmarket is largely in line with our expectation that sales began to slow downamid strict HPR policy and a rise in down-payments. Prices have been upsignificantly but have stabilized since March 2017. However, Tangshan marketsurprised on the upside in that ASP has been up 15% y-y with healthyinventory level (~10 months). The accumulated inventory since 2013 has beenlargely digested since 4Q16. Local sales teams expect that supply and demandshould be balanced going forward with mild price appreciation.

    Tangshan market surprised on the upside