COGO 9-month sales hit 91% target

An expert however cautions sales slowdown looming from Nov-Dec in Northern China.

COGO said its 9M12 sales revenue was HK$8.0bn (+146% yoy) and operating profit was HK$3.3bn (+60% yoy).

Here's analysis from CIMB:

The topline made up 86% of our full-year forecast of HK$9.2bn, while the core operating profit of about HK$3.1bn was 85% of our full-year estimate of HK$3.6bn.

COGO achieved contracted sales of  HK$11.8bn in 9M12, representing 91% of its sales target and beating the sector average of 79% sales target  lock-in. Looking ahead, management expects more new phase launches
from existing projects in Oct, but Nov-Dec could see a sales slowdown in northern China. We still project
2012 sales to hit HK$14bn vs. management's revised target of HK$13bn.

In 2013, the major new project  launches will include Beijing Tonghui River Project, Hefei Gaoxin District Project, and Guilin Environment Garden, as well as the three newly-acquired projects in 2H so far, namely Yangzhou, Jilin and Nantong. Management is still keeping unchanged its 30% CAGR target for both sales and earnings.

We expect 2013’s contracted sales to be above HK$18bn. COGO recently added one new project in Nantong, Jiangsu Province, with a total GFA of 592k sq m and land cost of Rmb869m. We estimate that the project will see a lucrative GPM of 40% based on the current achievable ASP of c.Rmb8,000/sq m.

Management had indicated that its 2H12 land purchase budget was HK$5bn; this implies the possibilityof a further HK$2.7bn worth of land replenishment for the rest of 2012.