Poly Developments 1Q earnings In-Line, Moderate Growth and Continued Deleveraging Ahead

Poly Developments and Holdings Group reported first-quarter revenue and earnings of CNY 22.6 billion and CNY 2.3 billion, respectively. The top line and earnings were up 12% and 23% year on year. The strong earnings growth was mainly due to lower operating expenses. Net gearing was lower for the quarter, reflecting the deleveraging trend seen over the past two years. First-quarter results accounted for 9% and 10% of our full-year revenue and earnings estimates, in line with the run rate seen a year ago. We maintain our fair value estimate of CNY 15, along with our no-moat rating for the company.