Property Sales Slow in January, but Full-Year Prospect Unchanged

Major Chinese property developers under our coverage mostly showed declining sales in January compared with a year ago. The coronavirus situation has exerted considerable impact. The decline was also partially attributed to the timing of the lunar new year, falling on end of January this year, compared with early February a year ago. On the positive side, the first quarter of the year is generally a light period in terms of property sales. The residential property market in China tends to be weighted toward the second half of the year, with the first quarter contributing 15% and the first half contributing 40% over the past decade or so. Further, home purchase, as a big-ticket expenditure, is not subject to frequent or impulse buying. Hence, if a planned purchase is deferred, the purchase is likely to be consummated at a later time, pointing to a strong rebound for the property market ahead as the virus situation passes. We maintain our fair value estimates and moat ratings for Chinese property developers under our coverage.