Poly's Full-Year Preliminary Results Slightly Below Estimate; Net Gearing Should Remain Steady

Poly Developments and Holdings reported preliminary full-year 2018 results with revenue and earnings of CNY 194 billion and CNY 18.1 billion, respectively. The top line is 2% below while earnings are 3% below our estimate. Compared with a year ago, the top line was up 32% year on year, while earnings were up 17%, unchanged from the trend seen during the third quarter. The lower growth in earnings was probably due to a bigger share of minority interest as the company undertook more joint ventures during the year to scale up its operation. We maintain our fair value estimate of CNY 13 along with our no-moat rating.