Credit Suisse: Forecasted Yuzhou Properties’ Strong Growth for 2H17, Raised Target Price to HKD6.0 and Maintained OUTPERFORM

(1 September 2017, Hong Kong) One of China's top 40 real estate enterprises, Yuzhou Properties Company Limited's ("Yuzhou Properties" or the "Company"; together with its subsidiaries, collectively the "Group"; stock code: 01628.HK) target price is raised to HKD6.0 and the rating is maintained "OUTPERFORM" by Credit Suisse, which reflects the outstanding achievements made by Yuzhou Properties.

According to Credit Suisse:

• Yuzhou Properties hosted a post-results analyst briefing in Shanghai on 29 August. Mainland investors are more interested in contracted sales growth and scalability.

• Yuzhou Properties revised up its contracted sales target by 33% to Rmb40 billion, implying a 72% YoY growth. During 1H17, the contracted sales of the Group was Rmb21.5 billion (up 67% YoY), completing 72%/54% of its original /new target. In the medium term, Yuzhou Properties set a contracted sales target of Rmb100 billion by FY20, suggesting a 36% CAGR during FY17-20.

• The existing land reserve with saleable resources of around Rmb200 billion should be able to support the development in the next 2-3 years. Yuzhou Properties needs to replenish landbank to fuel the growth in FY20 and after.

• Credit Suisse believes the Company is prudent in financial management and keeps gearing below 80% (vs 72.6% in Jun-17). Gross margin should be maintained at high level of over 30%. Credit Suisse revises up FY17E/18E/19E EPS by 1.8%/7.8%/17.3%, taking into account better sales and margin assumptions. Credit Suisse raises the target price to HK$6.0 (from HK$5.3) and maintains OUTPERFORM.

Revenue grew 75% YoY to Rmb7.2 billion. Of this, revenue from property development increased by 75% YoY to Rmb7.0 billion. Unbooked sales amounts to Rmb30 billion, which

will be recognized as revenue in the next few years. On a full-year basis, Credit Suisse forecast a 31% revenue growth for FY17.

Gross margin expanded to 33.0%, from 1H16's 32.5%. The Company expects that full-year margin should remain at the current level.

Core profit increased by 40% YoY to Rmb0.92 billion with core profit margin of 12.7%. Core EPS was also up 39% YoY to Rmb0.24. Yuzhou Properties declared an interim dividend of HK$0.085, representing a 30% payout.

Net gearing was stable at 72.6% (vs Dec-16: 71.7%) and it will be contained below 80%. Average funding cost further improved to 5.99% from 6.08% in FY16.

Total landbank amounted to 10.13 million sqm GFA as at Jul-17. The average land cost is Rmb5,879 per sqm. During 7M17, Yuzhou Properties purchased 1.1 million sqm of landbank with a total land premium of Rmb12.1 billion (or AV of Rmb10,625 per sqm).

Contracted sales target for FY17 was revised up to Rmb40 billion, 33% higher the previous guidance and implying 72% YoY growth. During 1H17, Yuzhou Properties achieved contracted sales of Rmb21.5 billion (up 67% YoY), representing 72%/54% of its original/new target. Saleable resources for 2H17 amounts to Rmb35.8 billion, which is sufficient for completing full year budget or Rmb18.5 billion for 2H17.

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Yuzhou Properties Company Limited (01628.HK)

Established in 1994, Yuzhou Properties is a property developer headquartered in Shanghai with a national foothold. Adhering to its strategy of Cultivating in Regions Leading the Market, Yuzhou Properties strives to develop residential and commercial properties which align with market trends in first-and second-tier cities. As at 30June2017, the Company had 79projects under various stages of development in Xiamen, Fuzhou, Shanghai, Tianjin, Nanjing, Hefei, Hangzhou, Suzhou, Quanzhou, Zhangzhou, Longyan, Bengbu and Hong Kong. It had a over 9.54 million sq.m. in aggregate GFA under development or held for future development, with Yangtze River Delta Region, West Strait Economic Zone, Bohai Rim Region and Central Region accounting of 54%, 35%, 5% and 6% respectively, of the total. Renowned for its outstanding product quality, diversified product portfolio, strong brand awareness and seasoned management team, Yuzhou Properties has been named "Top 100 China Real Estate Enterprises" for eleven years in a row; and Top 50 China Real Estate Enterprises from 2011 to 2017.

For more information about Yuzhou Properties, please visit the Company's website: http://www.yuzhou-group.com

For inquiries, please contact:

Yuzhou Properties Company Limited (HKEX: 01628)

Head / Senior Manager / Manager / Assistant Manager of Corporate Finance & Investor Relations Camille Xiong/ Shikai Wu/Christine Huang/Jessica Li

Tel: (852) 2508 1718

Fax: (852) 2510 0265

Email: camille.xiong@xmyuzhou.com.cn; shikai.wu@xmyuzhou.com.cn; huangl3@xmyuzhou.com.cn; jessica.li@xmyuzhou.com.cn

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Media enquires:

Wonderful Sky Financial Group Holdings Limited (HKEX: 01260) Iris Au Yeung/ Mel Lai

Tel: (852) 3970 2129 / 3641 1305

Fax: (852) 2598 1588

Email: po@wsfg.hk/ yuzhou@wsfg.hk