Latest Data Supports China Real Estate Recovery View; Tweaking CR Land's FVE Slightly

After pushing some revenue to 2023 from 2022 and raising working capital needs slightly, our fair value estimate for China Resources Land, or CR Land, is marginally lowered to HKD 43 from HKD 44. We continue to like CR Land at this share price level and see the developer as a key beneficiary of a recovery in China's real estate market, especially given its strong financial position and access to prime landbank. CR Land hasn't released its February contracted sales data yet, but we expect a continuation of the positive trend in its precontracted sales, which were up 5% year on year in value terms in January 2023. This marks a return to growth that is in line with the broader industry, part of which is due to the low base in 2022, but also as the lifting of lockdowns is allowing visitors to property launch showrooms, which we think will boost sales.