Poly's Interim Results Show Slow Booking but Higher Margin, Balance Sheet Stretched on Weak Sales

Poly Development reported first-half results with revenue and attributable earnings of CNY 73.7 billion and CNY 10.1 billion, respectively. The top line was up 3.6% compared with the same period a year ago, and earnings were up 1.7%. This is largely unchanged from the preliminary results released in late July. Operating margin and net margin were slightly higher than our projection, though the top line only accounted for one fourth of the full-year projection. On the other hand, weak contract sales to date have resulted in a stretched balanced sheet. We maintain our CNY 16 fair value estimate and no-moat rating.