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A. Stotz Investment Research

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Poly (119 HK): High Rise in Growth as Buildings Keep Going Up

Poly (119 HK): Good Margins from Chinese River Delta Properties

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Equity Bottom-Up

<ul><li>Low price-to-sales, improving asset turnover, and low correlation with western stock markets relative to its sector</li><li>Gross margins are set to improve as Poly has US$2.5bn in unrecognized higher margin projects that should be booked in 2017 and an increasing ASP, up 7% YoY</li><li>Kai Tak (Hong Kong) is expected to be fully completed by 2018, 1/3 of the project was launched in April and recorded a huge success when almost 80% of the units were sold at launch</li><li>Trades at premium 17CE* 34.5x PE but still looks attractive as earnings are expected to recover and grow well</li><li>Risks: Slower than expected increase in margins</li></ul>* Consensus Estimates

Low price-to-sales, improving asset turnover, and low correlation with western stock markets relative to its sectorGross margins are set to improve as Poly has US$2.5bn in unrecognized higher margin projects that should be booked in 2017 and an increasing ASP, up 7% YoYKai Tak (Hong Kong) is expected to be fully completed by 2018, 1/3 of the project was launched in April and recorded a huge success when almost 80% of the units were sold at launchTrades at premium 17CE* 34.5x PE but still looks attractive as earnings are expected to recover and grow wellRisks: Slower than expected increase in margins* Consensus Estimates

Poly (119 HK): Chinese Property Projects Keep Growing

Poly Property Group

Poly (119 HK): Chinese Property Projects Keep Growing