Yuzhou Properties : Credit Suisse Upgrades Yuzhou Properties to “Outperform” with a Raised Target Price of - HKD5.3 in view of its Successful Brand Build-Up to Attract More Investor Interest

[For Immediate Release]

(21 June 2017, Hong Kong) One of China's top 40 real estate enterprises, Yuzhou Properties Company Limited ("Yuzhou Properties" or the "Company", together with its subsidiaries referred to as the "Group"; stock code: 01628.HK) is pleased to announce that Credit Suisse raised its target price to HKD5.3 and upgraded the rating to "Outperform".

Credit Suisse believed Yuzhou's YTD strong contracted sales (+73% YoY to Rmb18 billion over 5M17) proved its execution capability not only in its traditional markets such as Xiamen, Fuzhou and Hefei but also in some new markets like Shanghai and Nanjing. With this, Credit Suisse forecasted the full-year contracted sales to be Rmb35 billion (vs target of Rmb30 billion). Meanwhile, projects in these newly-entered cities should generate better-than-expected gross profit margin of 30% on average. This, together with those highly-profitable old projects (gross profit margin of 34-35%), should help Yuzhou Properties safeguard the overall profitability over the next two to three years.

Credit Suisse anticipated a satisfactory interim result in coming August, with a revised full-year sales target and first interim dividend. Credit Suisse raised FY17E/18E/19E earnings per share by 4.8%/3.4%/3.6% and the end- 17E NAV by 19% to HK$10.5 to reflect the Group's better sales and higher margin. Given better cash flow, Credit Suisse narrowed the targeted NAV discount to 50% (from 60%) and hence upgraded Yuzhou Properties to OUTPERFORM and derived the target price to HK$5.3.

Many developers have suffered from the latest round of the property tightening. Yet, Yuzhou Properties has continued its strong run and achieved contracted sales of Rmb3,995 million in May (+75% YoY or +3% MoM). Over 5M17, Yuzhou has fetched aggregate contracted sales growth of 73% YoY to Rmb18 billion, representing 60% of its full-year sales target of Rmb30 billion.

Geographically, Yuzhou Properties has kept its leading position in traditional markets such as Xiamen, Fuzhou and Hefei, with aggregate sales of Rmb9.8 billion over 5M17. In the meantime, projects in its newly-entered cities like Shanghai and Nanjing have also done well and achieved contracted sales of Rmb6.5 billion over 5M17. More positively, these new projects should generate better-than-expected gross profit margin of 30% on average. This, together with its existing highly-profitable old projects (gross margin of 34-35%), should help maintain its profitability at high level over the next two to three years.

Credit Suisse expected the Group to deliver a satisfactory interim result in August. Investors are recommended to focus on the company's (1) dividend policy - Yuzhou Properties is expected to first distribute interim dividend; and (2) 2017 sales target - it is believed Yuzhou will revise up its full-year sales target by 15-20%. Having said that, Credit Suisse also revised up the full-year contracted sales forecast to Rmb35 billion from Rmb32 billion.

Credit Suisse fine tuned their FY17E/18E/19E earnings per share by +4.8%/+3.4%/+3.6% to reflect Yuzhou Properties' better sales and higher margin. Hence, Credit Suisse estimated end-2017E NAV is also revised up by 19% to HK$10.5. It is believed Yuzhou Properties has gradually built up its national brand with a successful track record to create more buying interests especially from the mainland investors. Credit Suisse therefore upgraded Yuzhou Properties to OUTPERFORM with a new target price of HK$5.3, based on a 50% (previously 60%) to the NAV estimates.

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About Yuzhou Properties Company Limited (01628.HK)

Yuzhou Properties Company Limited is a national property developer, which is based in Shanghai and continuously expands its business in eight core cities. Yuzhou Properties strives to become a leading property developer in China with a well-defined expansion strategy as Based in Yangtze River Region, Lead West Strait and Expand Nationwide Coverage.

Established in 1994, Yuzhou Properties specializes in the development of high quality residential, retail and commercial projects. As at 31 Dec 2016, the Company had 68 projects under various stages of development in Xiamen, Fuzhou, Shanghai, Tianjin, Nanjing, Hefei, Hangzhou, Quanzhou, Zhangzhou, Longyan, Bengbu and Hong Kong. Sites measuring a total GFA of over 9.54 million sq. m. are under development or held for future development, Yangtze River Delta Region, West Strait Economic Zone, Bohai Rim Region and Central Region accounting of 53%, 36%, 5% and 6% respectively. Known for its outstanding product quality and diversified product portfolio, strong brand awareness and its experienced 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. In May 2017, Yuzhou Properties has been incorporated into one of the constituent stocks of the "Hang Seng SCHK High Dividend Low Volatility Index".

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

For inquiries, please contact:

Yuzhou Properties Company Limited (HKEX: 01628)

Head / Manager / Assistant 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

Yuzhou Properties Investor Relations QR Code:

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

Tel: (852) 3970 2129 / 3970 2223/ 3641 1305

Fax: (852) 2598 1588

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