China South City Holdings1668 HK - corpasia.net€¦ · Nomura 1 22 January 2010 Any authors named on this report are research analysts unless otherwise indicated. See the important

22 January 2010 Nomura 1

Any authors named on this report are research analysts unless otherwise indicated See the important disclosures and analyst certifications on pages 45 to 48

China South City Holdings1668 HK

PROPERTY | CHINA

Wee Liat Lee +852 2252 1563 weeliatleenomuracom Alan Jin PhD +852 2252 6226 alanjinnomuracom

Bottom fishing Uncertainties largely reflected in the shares We initiate coverage of CSC with a BUY rating and a price target of HK$264 Since its debut on 30 September 2009 the market has questioned CSCrsquos business model project viability and execution capability At the current stock price we believe the market is only factoring in CSCrsquos Shenzhen Phase I and II valuations

We believe it should be valued at HK$264share We are confident of CSCrsquos project viability and progress after conducting visits to its Shenzhen (Guangdong) Nanchang (Jiangxi) and Nanning (Guangxi) sites and acquiring a deeper understanding of local demand for wholesale malls and residential developments Strong sales recorded by its Shenzhen Phase II project (it has met 95 of its FY10 target) and 90 lease renewal secured by Phase I also underscore our view Furthermore projects of CSC receive strong support from local governments In our opinion CSC should be fairly valued at HK$264share Besides the Shenzhen projects we have included one-third NAV of the Nanchang project and 50 NAV of the Nanning and Heyuan projects in our earnings model

Trading at inexpensive PB CSC has the lowest FY09 and FY10F PB ratios among its domestic peers although its ROE is higher than the peer average This seems to suggest that the market is under-valuing CSCrsquos potential capacity to add income-earning assets in FY10-11F

We expect sustainable profitability from FY10F We believe CSCrsquos inconsistent earnings performance will be a past trend now With a more diversified project base CSC should be able to improve its time development cycles and sales to stabilise earnings We see stable profitability from FY10F onwards

Key financials amp valuations31 Mar (HK$mn) FY09 FY10F FY11F FY12FRevenue 224 1891 3994 5983Reported net profit 754 1106 1158 2172Normalised net profit (107) 480 1158 1560Normalised EPS (HK$) (002) 008 019 026Norm EPS growth () (2861) na 1413 346 Norm PE (x) na 189 78 58EVEBITDA (x) na 79 43 38Pricebook (x) 20 10 09 07Dividend yield () 00 00 00 00ROE () 185 166 123 197 Gearing () 271 180 156 129Earnings revisionsPrevious norm net profit na na naChange from previous () na na na Previous norm EPS (HK$) na na naSource Company Nomura estimates

Share price relative to MSCI China

1m 3m 6m 119 (13) na 117 (15) na 74 (19) na

Source Company Nomura estimates

52-week range (HK$)3-mth avg daily turnover (US$mn)

Proficient Success

Stock borrowability

Major shareholders ()Accurate Gain Development 223

Absolute (HK$)Absolute (US$)Relative to Index

Estimated free float ()Market cap (US$mn) 1167

250162131

-100001000030000500007000090000110000

PriceRel MSCI China

Closing price on 20 Jan HK$151

Price target HK$264

Upsidedownside 751Difference from consensus 202

FY11F net profit (HK$mn) 1158Difference from consensus 389Source Nomura

Nomura vs consensus We see better sales and rental growth potential in its Shenzhen Nanchang and Nanning projects

Initiating

N O M U R A I N T E R N A T I O N A L ( H K ) L I M I T E D

Action We initiate coverage of China South City (CSC) with a BUY rating and a PT of

HK$264 Despite large uncertainties surrounding the companyrsquos project execution ability and viability we believe much of these are already reflected in its share price At the current price the market is expecting its Shenzhen projects to fetch low rental growth and ascribing zero value to its Nanning and Nanchang projects

Catalysts Accelerating rental growth once the Shenzhen projects achieve sizeable

occupancy recognition of its Nanchang and Nanning projects and a re-rating of managementrsquos execution capability are potential catalysts

Anchor themes

An innovative business concept of creating a mega multi-industry trade centre and strong support from local governments should allow CSC to deliver strong earnings in the medium to long term

China South City Holdings Wee Liat Lee

Contents

Executive summary 3 An under-valued stock 3 We believe it should be valued at HK$264 3 Peer comparison mdash PB ratio attractive 4

Valuations at absolute floor price 5 Market questions CSCrsquos business model execution capability 5 At the current price what is the market factoring in 5 What are the upside catalysts 6 What does our valuation include 6 Valuation of CSC Shenzhen Phase I and II alone will be HK$183share 7 NAV breakdown by property type 10 Peer comparison mdash PB ratio attractive 12 Valuation methodology 12 Risks 12

The beginning of stable profitability 13 Choppy earnings in the past 13 Cashflow and debt analysis 14

Business model amp competitive edge 15 Comprehensive services and facilities 15 Macro factors favouring CSCrsquos business model 16

Government nurturing logistics sector 20 CSC sales and leasing strategy 20 Replication of CSC model 20 Existing competition 20

CSC project details 22 CSC Shenzhen Phase I 22 CSC Shenzhen Phase II 24 CSC Shenzhen comparables 25 ASEAN Logistics City Nanning 26 China South City Nanchang 29

Risks to our view 32

Company background 33 What is the market pricing in A simulation 35 Our assumptions in deriving our NAV PT of HK$264share 37

Financial statements 42

An under-valued stock

Executive summary An under-valued stock After our site visits which also afforded us a deeper understanding of local demand for wholesale malls and residential developments we believe the shares of CSC are under-valued especially given that the companyrsquos projects receive strong support from the local governments

Since its trading debut on 30 September 2009 investors have questioned CSCrsquos business model project viability and execution capability At the current share price we believe the market is valuing the stock based on 1) its Shenzhen Phase I and II projects and 2) an assumed rental growth rate of 5 per annum for Phase I before it is to accelerate to 10 from FY16F onwards This suggests that the average effective rental of Phase I will increase from current RMB234sqm to RMB48sqm by FY18F and the average effective rental of Phase II will increase from HK$33sqm to HK$76sqm by FY18F still at one-fifth the current average market rental of RMB400-500sqm We believe the market has totally excluded the valuations of the companyrsquos ASEAN Logistics City and projects at Nanchang and Xirsquoan although the company has acquired land titles for 50 of the Nanning ASEAN Logistics City project and 33 of the CSC Nanchang project

We believe it should be valued at HK$264 Based on our earnings model the NAV of CSC is HK$1580bn or HK$264share Our valuation includes 1) CSC Shenzhen Phase 1 and II 2) 50 of the ASEAN Logistics City in Nanning which is currently under construction 3) 33 of CSC Nanchang and 4) the Heyuan project which has approximately 803550sqm of residential development adding HK$013 to NAV

We assume that Shenzhen Phase I and II would witness rental growth of 5 per annum when the occupancy rate is below 95 and record yearly rental growth of 20 or more if the occupancy rate reaches 95 and above We expect the average effective rental of Phase 1 to reach RMB118sqm by FY18F and for Phase II to reach RMB140sqm by FY18F We believe our robust rental growth assumptions are justified given that Phase I and II currently have very low effective rental of RMB24sqm and RMB33sqm respectively versus the average rental of RMB400-500sqm seen in mature wholesale centres

Note that even if we were to include only CSC Shenzhen Phase I and II the NAV of CSC would have already reached HK$1095bn or HK$183share based on our estimates

Exhibit 1 NAV valuation (RMBmn) (HK$mn) NAVshare (HK$)CSC Shenzhen Phase 1 amp 2 9648 10950 183 13 of Nanchang project 1145 1300 022 frac12 of Nanning project 1654 1877 031 Heyuan project 711 807 013 Net debt 8164 9266 015 Total NAV 13975 15862 264 Total number of shares 6000 6000NAV per share 233 264

Source Nomura estimates

CSC projects receive strong support from the local governments

Including only CSC Shenzhen Phase I and II the NAV of CSC would have already reached HK$1095bn or HK$183share

Peer comparison mdash PB ratio attractive

Exhibit 2 Comparative valuations EPS (RMBshare) EPS growth () ROE ()

Company Ticker Rating 2009F 2010F 2011F 2009F 2010F 2011F 2009F 2010F 2011FChina South City 1668 HK (HK$) BUY 008 019 026 na 1413 346 166 123 197 Mingfa Group 846 HK Not rated 010 028 na 180 165 Franshion Property 817 HK (HK$) Not rated 013 015 012 na 15 (20) 78 80 66Renhe Commercial 1387 HK BUY 020 028 038 na 40 36 453 427 352Powerlong 1238 HK Not rated 045 035 045 na (22) 29 305 221 263GZI Reit 405 HK (HK$) Not rated 024 026 028 na 83 77 62 65 66

Note unlike China South City whose fiscal year ends in March all other companies listed above have fiscal years ending December Therefore data corresponding to 2009F is actually 2010F data for China South City

Source Company data Bloomberg consensus estimates for not rated stocks Nomura estimates

Exhibit 3 Comparable valuations Closing Price PE (x) PBV (x)

Company Ticker (HK$) 2009 2010F 2011F 2009 2010F 2011FChina South City 1668 HK (HK$) 151 189 78 58 1 09 07Mingfa Group 846 HK 221 189 69 Franshion Property 817 HK (HK$) 276 212 183 223 16 15 15 Renhe Commercial 1387 HK 200 88 63 47 34 27 23 Powerlong 1238 HK 243 47 60 47 12 10 09 GZI Reit 405 HK (HK$) 304 126 118 107 08 07 07 Pricing date 20 Jan 2010

From a PE perspective CSCrsquos valuations (both FY09 and FY10F) appear relatively reasonable versus the domestic peer group Nevertheless its expected EPS growth in both FY10F and FY11F is one of the strongest among its peers More important it has the lowest FY09 PB and FY10F PB ratios among its peers despite having a higher-than-average ROE This seems to suggest that the market is under-valuing CSCrsquos potential capacity to add income-earning assets in FY10 and FY11 which could have a significant positive impact on its share in FY10F and FY11F in our opinion

We expect sustainable profitability from FY10F We believe CSCrsquos inconsistent earnings performance will be a past trend now The company recorded a net loss of HK$29mn in FY07 and net loss of HK$107mn in FY09 The volatile earnings results were due to the companyrsquos lack of properties for sale mdash it only has Shenzhen Phase I over the past few years which caused inconsistent revenue booking Nevertheless we believe CSC is likely to witness stable profitability from FY10F given its more diversified project base We expect CSC to improve its time development cycles and sales to stabilise earnings

CSCrsquos EPS growth the strongest among its peers

We believe CSC is likely to witness stable profitability from FY10F onwards given its more diversified project base

Competitive edge

Valuations at absolute floor price Market questions CSCrsquos business model execution capability CSCrsquos shares fell 33 from their offer price to HK$162 on their trading debut due to uncertainties surrounding the companyrsquos business model and execution capability CSC has a non-conventional business model Traditional wholesale malls are usually located in city centres which have efficient transportation and infrastructure facilities In addition for a wholesale centre to be successful it needs many years to build up a reputation of reliable and quality tenants to attract buyers

Given that CSCs plan is to build mega-sized malls and that there is limited space in mature wholesale centres CSC will need to build a wholesale mall by itself In our opinion this could work to CSCrsquos advantage as the area chosen to construct the new mall could turn out to be a new transportation hub given local governmentsrsquo intent to develop infrastructure and transportation networks

To attract reliable and quality tenants CSC management has adopted several strategies 1) bring together five inter-related light industry (raw materials and finished goods) wholesalers into one mall to create a one-stop shop 2) create extensive supporting facilities such as warehouses exhibition and transportation facilities to lower wholesalersrsquo operating costs and retainattract tenants and 3) offer an extended period of free rent (a three-year rental contract with two years of free rental) which will significantly lower the monthly effective rent by RMB20-30sqm from the market rate of RMB400-500sqm Clearly to create a whole new wholesale centre will involve significant risk and time which are key investor concerns

Execution capability is another concern Despite the success of CSCrsquos Shenzhen Phase I trade centre investors are concerned about execution risk as CSC moves to operate wholesale malls that are several times the scale of Shenzhen Phase I CSC Shenzhen Phase I measures 359000 sqm while CSC Phase II consists of a 116mn sqm of wholesale mall almost three times larger than Phase I Its planned ASEAN Logistics City in Nanning and CSC Nanchang are even larger with the wholesale malls measuring 18mn sqm and 11mn sqm respectively As such it is not a surprise that investors question the companyrsquos ability to execute the projects given that it has no prior experience in managing large-scale malls In addition investors question whether there will be adequate demand for a wholesale mall in tier-2 cities such as Nanning and Nanchang Furthermore as mega-sized developments need sizeable cash outlays over the next few years there is concern over CSCrsquos funding capability

The losses posted by CSC in FY07 and FY09 also weakened appetite for CSC shares

At the current price what is the market factoring in From our constructed financial model we believe the market is valuing CSC as follows

1 The market is valuing Shenzhen Phase I and II only

2 The market has totally excluded the valuations of its ASEAN Logistics City and both projects at Nanchang and Xirsquoan although the company has acquired land titles for 50 of the Nanning ASEAN Logistics City project and 33 of the CSC Nanchang project

3 For Phase I the market is assuming annual rental growth of 5 until FY11F before it accelerates to 10 thereafter For Phase II the market is assuming annual rental growth of 5 before expecting it to increase to 10 from FY16F onwards This suggests that the average effective rental of Phase I will grow from the current RMB234sqm to RMB48sqm by FY18F and the average effective rental of Phase II will increase from HK$33sqm to HK$76sqm by FY18F still at one-fifth of the current average market rental of RMB400-500sqm

We believe the market values CSC based on Shenzhen Phase I and II only

CSC has a non-conventional business model causing uncertainties over its model and execution ability

4 Phases I and II are able to achieve a 95 occupancy rate by FY14F

5 The selling price of Shenzhen Phase II to increase 10 per annum from FY11F

If all the above-mentioned hypothetical assumptions are true the NAV of CSC Shenzhen Phase I and II would drop from HK$1095bn to HK$818bn or NAVshare of the project will decline from HK$183 to HK$136 Despite the fact that CSC acquired 52 or 890177sqm of the ASEAN Logistic City on 19 October 2009 and further acquired 105mn sqm (site area) of CAC Nanchang in December 2009 the market has essentially ignored the potential for enhanced NAV in our view (Please see the Appendix for our full assumptions)

What are the upside catalysts We see several catalysts that could push CSC stock prices higher over the next few months

1 Market recognition and acceptance of ASEAN Logistics City in Nanning given that 50 of the land title had been acquired As the construction work goes into late phases we expect the market to start factoring in this project Nevertheless we see a need for CSC to educate investors on demand rentals and selling prices of its wholesales malls in Nanning given that this is a relatively unknown market

2 The acquisition of the land title of CSC Nanchang Phase I This should prompt investors to factor one-third of CSC Nanchang project into their valuation

3 Strong sales and leasing of its Shenzhen Phase II project which would warrant an upward revision to assumed rental growth selling prices and occupancy rates

In the next two to three years we believe potential key catalysts for an upward revision of CSCrsquos valuation are

1 An eventual acceptance and recognition of CSCrsquos stronger execution capability in Shenzhen Nanchang Nanning and Xirsquoan projects

2 Inclusion of the whole ASEAN Logistics City project in Nanning and CSC Nanchang and the Xirsquoan logistics centre project

3 Easing of market concern about potential demand for wholesale space in Nanning and Nanchang As CSC starts to sell and lease its wholesale mall space we believe clearer demand visibility will emerge

What does our valuation include We value CSCrsquos NAV at HK$1578bn or HK$264share Our valuation includes

1 CSC Shenzhen Phase 1 and II

2 50 of the ASEAN Logistics City in Nanning for which CSC has acquired the land title and construction is underway

3 33 of CSC Nanchang for which the company already obtained land title in December 2009 and

4 the Heyuan project which consists of approximately 803550sqm of residential development

We also assume that Shenzhen Phase I and II would see rental growth of 5 per annum when the occupancy rate is below 95 and 20 or more if it reaches exceeds 95 We expect the average effective rental of Phase 1 to be RMB118sqm by FY18F and for Phase II to reach RMB140sqm by FY18F We believe our robust rental growth assumptions are justified as Phase I and II currently have very low effective rental of RMB24sqm and RMB33sqm respectively versus the average rental of RMB400-500sqm seen in mature wholesale centres

Our valuation = 1CSC Phase IampII one-half of the ASEAN project and one-third of Nanning project

Valuation of CSC Shenzhen Phase I and II alone will be HK$183share Note that even if we were to include only CSC Shenzhen Phase I and II the NAV of CSC would be HK$1095bn or HK$183 based on our estimates

Are we too aggressive in our assumptions We are comfortable with our assumptions in terms of construction sales and lease progress average selling price (ASP) and rental growth after our visits to the Nanning and Nanchang sites in early December and our meetings with the general managers of the two sites We are confident that the residential proportion of both projects will be available for pre-sale in 2011 and leasing of the trade centres will start by 2012

We list below our findings from the Nanning visit

1 The site has been cleared and foundation work has already started

2 Construction of a show flat and a sales office on its site is almost completed

3 The Nanning government has constructed additional roads near the site to facilitate future traffic flows

4 A residential comparable that is just next to the CSC project Guong Yuan Da Dao developed by an unlisted Fujian developer currently has an ASP of RMB5600sqm Our model assumes the CSC project will have an ASP of RMB5200sqm in FY11F

5 There are already several trade centres although quality of the premises varies significantly The intention of CSC trade centre sales and leasing at the beginning phase is to tap relocation demand as some tenants are dissatisfied with the quality of their current premises

Both Nanning and Nanchang projects have started

Exhibit 5 Show flatsales office almost completed

Source Nomura research

Exhibit 6 Project site cleared foundation work begun

Exhibit 7 New road to facilitate future traffic flows

Exhibit 8 Residential comp ldquoGong Yuan Da Daordquo

Exhibit 9 Existing wholesale mall in Nanning

Likewise we list below our key findings from the Nanchang site

1 The site has been cleared and foundation work has started

2 The project is well connected by several expressway lines

3 A train station (West station) about 1km from the project site is under development and will be completed in 2011 Trains run from Nanchang to Shanghai and other cities in Yangtze River Delta as well as to Fujian

4 The site is located at a second ring road and is near a university town about 3km away The good location should support strong residential take-up in our view

5 There is a mature wholesale centre located at the first ring road Hong Cheng Big Market has 30000 shops and reported turnover of RMB30bn in 2008 The Nanchang government has plans to relocate tenants in this market to newer malls We believe this will create strong demand for the CSC Nanchang trade centre

Exhibit 11 Land site cleared foundation work begun

Exhibit 12 Support by comprehensive expressways

Exhibit 13 Hong Cheng Grand Market in Nanchang

Potential longer-term upside to our valuations We see further longer-term upside to our valuations

1 Market recognition and inclusion of the full valuation of CSC ASEAN Logistics City after CSC further acquires the remaining 50 of land use rights and demonstrates strong execution capability (development sales and leasing of the project) over time

2 Inclusion of the full valuation of the Nanchang project after CSC acquires the other two-thirds land use rights and demonstrates strong execution capability (development sales and leasing of the project) over time

3 Further upward revision in rental growth trends of CSC Shenzhen Phase I and II

4 Inclusion of the Xirsquoan project when the acquisition timeline and development plans are ascertained

Based on our earnings model the full inclusion of CSC ASEAN Logistics City and CSC Nanchang would push the NAV to HK$338share This valuation still excludes the Xirsquoan project

Exhibit 17 NAV valuations (RMBmn) (HK$mn) NAVshare (HK$)CSC Shenzhen Phase 1 amp 2 96480 10950 183Full valuation of Nanchang project 1145 1300 022Full valuation Nanning project 1654 1877 031Heyuan project 711 807 013Net debt 8164 927 015Total NAV 139749 158615 264Total number of shares 6000 6000NAV per share 233 264

NAV breakdown by property type According to our valuations the Shenzhen project accounts for 75 of the NAV while the other three projects Nanning Nanchang and Heyuan account for 12 8 and 5 respectively of the NAV

By project type the residential proportion of the three projects accounts for 15 of total NAV while commercial accounts for 85 of the NAV This is because the NAV is dominated by the Shenzhen project which has no further residential development in the pipeline For both Nanchang and Nanning projects the residential proportion accounts for nearly half of their NAVs

Upside potential

Exhibit 18 NAV summary Value Per share2010 year-end valuation (RMBmn) (HK$mn) (HK$)Shenzhen CSC Phase I amp II 96480 10950 183 - residential 61 70 001 - commercial 9587 10881 181 Potential Projects Nanning Project 1654 1877 031 - residential 774 878 015 - commercial 881 999 017Nanchang Project 1145 1300 022 - residential 571 648 011 - commercial 574 652 011Heyuan 711 807 013 - residential 711 807 013 - commercial - - -Total GAV 131585 149350 249Net debt 8164 927 015Total NAV of projects 139749 158615 264Residential 2117 2403 040Commercial 11858 13459 224 Total outstanding shares 60000 60000NAV (RMBshare) 233 264

Exhibit 19 NAV breakdown by product type

Residential15

Commercial85

Exhibit 20 Comparative valuations EPS (RMBshare) EPS growth () ROE () Company Ticker Rating 2009F 2010F 2011F 2009F 2010F 2011F 2009F 2010F 2011FChina South City 1668 HK (HK$) BUY 008 019 026 na 1413 346 166 123 197 Mingfa Group 846 HK Not rated 010 028 na 180 165 Franshion Property 817 HK (HK$) Not rated 013 015 012 na 15 (20) 78 80 66Renhe Commercial 1387 HK BUY 020 028 038 na 40 36 453 427 352Powerlong 1238 HK Not rated 045 035 045 na (22) 29 305 221 263GZI Reit 405 HK (HK$) Not rated 024 026 028 na 83 77 62 65 66

Exhibit 21 Comparable valuations Closing Price PE (x) PB (x) Company Ticker (HK$) 2009 2010F 2011F 2009 2010F 2011FChina South City 1668 HK (HK$) 151 189 78 58 1 09 07Mingfa Group 846 HK 221 189 69 Franshion Property 817 HK (HK$) 276 212 183 223 16 15 15 Renhe Commercial 1387 HK 200 88 63 47 34 27 23 Powerlong 1238 HK 243 47 60 47 12 10 09 GZI Reit 405 HK (HK$) 304 126 118 107 08 07 07 Pricing date 20 Jan 2010

Given that CSCrsquos major landbank and revenue exposure is in the commercial property sector we have chosen only developers who have significant exposure in the commercial property sector for comparison From a PE perspective CSCrsquos FY10F and FY11F PEs appear reasonable relative to peers Nevertheless its forecast EPS growth in those years is the strongest among its peers More importantly its FY09 PB and FY10F PB are the lowest of its peers despite having a higher-than-average ROE This appears to reflect that the market is under-valuing the potential for CSC to add income-earnings assets which could have a significant positive impact on its shares in FY10F and FY11F in our view

Valuation methodology We have adopted a discounted cash flow (DCF) approach to value the stock We assume a discount rate of 144 for CSCrsquos Nanning Nanchang and Shenzhen projects Detail assumptions on rental selling prices sales and development progress and vacancy rate can be found in the Appendix

Risks A much slower-than-expected take-up rate of the CSC Shenzhen trade centres could result in relatively low patronage of raw materials and finished good buyers at the malls As a consequence tenants may not renew their leases We believe a gradual decrease rather than increase in occupancy rates would be significantly negative for the operations of CSC Execution capability in new markets such as Nanning and Nanchang will also be a major risk

Mega wholesale malls are a new concept in Nanchang and Nanning such that there are no quantifiable statistics to gauge actual demand for wholesale spaces in these tier-2 cities A weaker-than-expected take-up and prolonged low vacancy rates would affect CSC likely weighing on its cashflow earnings and branding

The central government has started implementing measures aimed at tightening conditions in the residential market This has hurt buyer sentiment somewhat Weakening buyer sentiment could affect sales of residential units In Nanchang and Nanning

Slower-than-expected take-up and execution capability are the major risks

Assuming a 144 discount rate for all CSC projects

PB ratio implies the stock is under-valued

Financial analysis

The beginning of stable profitability Choppy earnings in the past The company has recorded choppy earnings performance in the past with FY07 and FY09 running into losses posting net losses of HK$29mn and HK$107mn respectively The volatile earnings results were very much due to CSCrsquos lack of properties for sale mdash it has only had Shenzhen Phase I for sale over the past few years As a result revenue booking has been inconsistent However we expect CSC to witness stable profitability from FY10F onwards given that it will have a broader property portfolio mdash namely the Nanchang and Nanning projects The bulk of its revenue will be derived from property sales For FY10F we expect its sales revenue to come largely from the 119000sqm Shenzhen trade centre while for FY11F we estimate sales revenue will largely come from Nanchang and Nanning residential sales and the trade centre in Shenzhen

We also estimate that its investment property income stream will record significant growth of 50 and 52 in FY10F and FY11F respectively

Excluding revaluation gains we expect its normalised net profit to come in at RMB322mn in FY10F and RMB933mn in FY11F

Exhibit 22 Revenue and profit forecasts Year end 31 Mar (HK$mn) FY08 FY09 FY10F FY11F FY12FTotal Revenue 563 224 1891 3994 5983 Property sales 450 78 1670 3660 5208 Property rentals 77 100 134 226 637 HotelsServiced apartments 20 26 55 61 67 Construction services income an other fee 16 21 32 47 71 Reported net profit 556 754 1106 1158 2172 Normalised net profit 57 (107) 480 1158 1560

Source Company data Nomura estimates

Exhibit 23 Booked sales revenue breakdown Value (RMBmn) Volume (sqm) FY10F FY11F FY12F FY10F FY11F FY12FSales of Shenzhen Phase 1 trade centres 150 150 - 10000 10000 -Sales of Shenzhen Phase 2 trade centres 1321 1873 1296 91100 123032 81050Sales of Nanning project 0 617 1486 0 148400 256000Sale of Nanchang project 0 584 1806 0 137750 351600Total 1471 3225 4588 101100 419182 688650

Choppy earnings due to lack of properties for sale

Cashflow and debt analysis

Exhibit 24 Cashflow analysis (HK$mn) FY10F FY11F FY12FCash inflow IPO proceeds 3200 Sales of Shenzhen Phase 1 trade centres 170 170 -Sales of Shenzhen Phase 2 trade centres 1499 2126 1471Rental from Shenzhen trade centres 189 287 570Sales of Nanning residential - 701 1687Sale of Nanchang residential - 663 2051Total cash inflows 5491 3947 5778Cash outflow - - -Construction cost of Shenzhen Phase 2 (595) (1082) (1468)Shenzhen SGA (316) (284) (153)Shenzhen profit tax LAT operating tax (472) (664) (546)Nanning land cost (285) - (285)Nanning Construction cost - (541) (1417)Nanning SGA - (126) (277)Nanning profit tax LAT operating tax - (95) (309)Nanchang land cost (263) (277) (152)Nanchang Construction cost - (757) (1745)Nanchang SGA - (119) (343)Nanchang profit tax LAT operating tax - (76) (338)Others (650) 259 (405)Total cash outflows (2582) (3763) (7437)Net cash inflowoutflow 2909 183 (1659)

We estimate that CSC will have marginally positive cashflows of HK$29bn in FY10F and HK$183mn in FY11F In our opinion this should help provide strong support for the company to expand aggressively Even for FY12F we believe the company can easily tie over the deficits with its cash on hand

Internal resources and sales income sufficient for expansion in next two years in our view

Business model

Business model amp competitive edge Comprehensive services and facilities CSC is a leading developer and operator of large trading and logistics platforms in China It facilitates the wholesaling of a comprehensive set of raw materials and finished goods to buyers which cater to both the domestic and export markets Raw materials and finished goods include textileclothing leatheraccessories electronic accessories printingpaper productspackaging metalschemicalsplastics CSCrsquos platform allows companies to reach many buyers Concurrently the one-stop platform reduces tenantsrsquo operating costs through integrated supporting facilities such as warehousing transportation exhibition centres and services provided by trade associations and government services

Buyers of CSC are mostly wholesalers (70-80) who are also end-users of its trade centres The remaining 20-30 buyers are investors who buy the trade centres or rental revenue streams

We attribute the companyrsquos long-term competitive edge to

1 CSCrsquos ability to optimise trade and tenant mix on a big trading platform ie trade centres with areas of more than 2mn sqm

2 CSC can integrate five light-industry clusters together The inter-linkage of these clusters can attract manufacturers mdash eg a chairmaker needing leather metal and plastics is prepared to use CSC as a one-stop shop (rather than a wholesale market specialising in selling one raw material) CSCrsquos plan to enhance vertical integration by providing wholesaling space for finished goods will likely further extend its client base in our view

3 Strong support and mutually beneficial partnerships with local authorities We believe local authorities view CSCrsquos trade and logistics centres as anchor infrastructure that can attract investment in the region and in turn boost tax coffers In addition often local governments in cities where CSC has projects had planned to relocate existing trade centres out of the core city area given that these centres were often highly disorganised and that traffic problems often resulted from large pedestrian and vehicle flow in the precinct In return we believe local governments have given CSC preferential policy treatment and are pushing transportation and public infrastructure development in the vicinity

4 Local governments have provided support to CSC in the following ways

minus Awarding land at low costs for development

minus Awarding large plots of land (more than 1mn sqm) for development Such plots are hard to come by

minus Building additional transportation infrastructure to improve the connectivity of CSC Shenzhen to major expressways and train lines

5 CSCrsquos ability to identify plum locations It looks for places supported by good transport links which enhance the flow of goods and buyerssellers

6 The extensive industry contacts and knowledge of the five founding shareholders We think those provide CSC with an understanding of the preferences and needs of users and buyers The five owners have been able to bring in many new buyers for their development based on their reputation and links in our opinion

CSCrsquos trading platforms should thrive in our view as companies try to pare costs Its trading platforms allow industrial material providers as well as finished goods distributors to contain costs and optimise customer exposure by providing one-stop logistics platforms

CSCrsquos platform allows industrial material providers to reach many customers hellip

hellip and pare costs mdash a boon in the prevailing rising cost environment

Exhibit 25 Comprehensive service and facilities provided by the trade centres

CSCTenants

E-commerceProvides e-commerce solutions and professional information services

Quality Assurance ServicesProvides tenants in the textile industry with facilities for quality control testing research and consulting services

Security FacilitiesEnsures the safety of our tenants their customers and properties

Supermarket + EntertainmentAdds leisure and convenience to tenants their customers and the community

Hotel + RestaurantsFacilitate tenant needs for hosting potential customers

TransportationOffers convenience and enhances efficiency

ResidentialProvides accommodation to tenants with various community facilities

Advertising ServicesProvides advertising services for tenants

Exhibition CentresProvides venue for hostingsponsoring trade exhibitions further enhancing trade flow and customer traffic

CSCTenants

Provides venue for hostingsponsoring trade exhibitions further enhancing trade flow and customer traffic

CSCTenants

Macro factors favouring CSCrsquos business model

Benefiting from improved infrastructure Chinarsquos improving intercity and intracity transportation networks are potentially a boon for CSC First enhanced transportation connectivity should mean that the companyrsquos three projects have a bigger catchment area Plus enhanced transportation ties should spawn new logistics hubs Jones Lang LaSalle a property consultancy sees 20 potential logistics hot spots in China mdash 15 emerging and secondary logistics hubs apart from the five traditional logistics hubs of Beijing Shanghai Guangzhou Shenzhen and Tianjin In our opinion these new centres should also present new development opportunities for CSC as the company builds its presence beyond Guangdong

In 2006 the Chinese government unveiled plans to invest US$242bn in rail by 2020 aiming to extend the rail network from 72000km to 100000km Among this new capacity Western China figures prominently Looking at roads the Chinese government is targeting to expand the expressway network to 85000km by 2020 120000km by 2030 and 175000km by 2050 from 50000km currently

Rail and road big expansion plans

Overhaul in transportation in China

Exhibit 26 China top 20 logistics hotspots

Source Jones Lang LaSalle

Exhibit 27 China rail network

Source Ministry of Railways Jones Lang LaSalle Nomura research

Exhibit 28 China future expressway network

Source Ministry of Transport Jones Lang LaSalle Nomura research

Exhibit 29 CSC Shenzhen major infrastructure projects in the vicinity

Source Jones Lang LaSalle Nomura research

Exhibit 30 Local government 11th Five-Year Plan on transportation infrastructure Guangdong Jiangxi Guangxi Railway Total railroad length to stand at 2900

kilometres and subways more than 300 kilometres

Total railroad length to reach 2832 kilometres in which complex lines top 1670 kilometres and electrified lines 1662 kilometres

Construct or upgrade 2500 km of new rail in the 11th Five-Year Plan with a total investment in excess of RM100bn Enhance capacity of coastal railway to boost throughput for coastal harbours Enhance capacity of Nanning-Kunming railway Construct Nanning-Guangzhou express railway

Road The highway network is expected to reach 140000 kilometres by 2010F with expressway accounting for 5000 kilometres highway density to reach 78 kilometres per hundred square kilometre

By 2010 the government targets to have built over 3000 kilometres of expressway with 1175km of tier-1 roads and 10600 kilometres of tier-2 roads

By 2010 highways to span 80000km including 6000km of expressways 730km of tier-1 roads and 12000km of tier-2 roads Each tertiary city to be connected by an expressway Each county to be connected by a tier-2 or higher-grade road

Waterway Harbour throughput 12bn tons Focus on construction of a marine terminal between Ganjiang and Xinjiang forming an internal marine network within Jiangxi Freshwater mileage could run up to 5716 kilometres Aim to build Jiujiang logistics centre and container pier with capacity for 800000 standard packing boxes

Aims to construct 34 new berths each with capacity gt 10000 Total throughput capability gt 900mn tons

Airline Traveller throughput to reach 90mn Expand Changbei International Airport to become mid-size pivotal port

Enhance connections between Nanning International Airport and ASEAN airports

Source Colliers Nomura research

At the project level we think CSC Shenzhen should also benefit from a series of infrastructure improvements in Shenzhen (see Exhibit below)

Exhibit 31 CSC Shenzhen infrastructure in the pipeline

Project Description Construction started Comment

Yantian International Container Port Expansion

A total of six berths will be built in the expansion project

The first four berths entered operation in 2007 two are under construction

All new berths will be able to handle vessels over 10000 TEU

Shekou Container Terminals Phase 3

Three berths with total designed capacity of 25mn TEU will be built 2010

Qianhai Bay Logistics Park (Phases I amp 2)

Total planned size 867mn sq m

Planned construction size during 11th Five-Year Plan (FYP) 38mn sq m

Volume of freight handled in 11th FYP 15mn tonnes per year

2008-2010

Sungang-Qingshuihe Logistics Park (Phases I amp 2)

Planned construction size during 11th FYP 28mn sq m

Dachan Bay Logistics Park (Phases I amp 2)

Volume of freight handled in 11th FYP 138mn tons per year

2009-2010

These projects will increase the total capacity of terminals in Shenzhen The logistics parks should also encourage more enterprises to set up their logistics base in Shenzhen CSC could benefit through the improvement of logistic infrastructure and services

Xiamen-Shenzhen Express Rail Link

From Xiamen to Longhua Station in Shenzhen 2011

Guangzhou-Shenzhen-Hong Kong Express Rail Link

From West Kowloon in Hong Kong to Shibi in Guangzhou

Intermediate stations include Futian and Longhua in Shenzhen and Humen in

Dongguan

2014-2015

Making Shenzhen more accessible to the rest of China should attract new business

Shenzhen Metro Extension

Line 1 airport extension from Shijie Zhi Chuang (世界之窗) to Shenzhen Airport

Line 2 from Chiwan (赤灣) to Xinxiu (新秀)

Line 3 from Yitian (益田) to Shuanglong (雙龍)

Line 4 from Futian Custom (福田口岸) to Qinghu (清湖)

Line 5 from Qianhaiwan (前海灣) to Huangbei (黃貝)

2009-2011

Source Shenzhen municipal government Jones Lang LaSalle Nomura research

Competitive edge

Government nurturing logistics sector There is little doubt in our view that the central government and local governments are committed to building up the logistics sector in China In November 2008 the State Council announced a package of six policies aimed at stimulating the economy including plans to support several industries including logistics

Earlier this year the State Council issued a Circular on ldquoPlans for Adjusting and Accelerating the Logistics Industry Developmentrdquo We believe the document underlines the depth of support among the authorities for long-term development of the logistics sector

Exhibit 32 Measures to accelerate growth of logistics sector Encourage the consolidation and reorganisation of the logistics industry with an emphasis on specialisation and long-term development of large-scale logistics enterprises Focusing on certain key geographic regions for the development of the logistics industry including the Pearl River Delta Supporting the construction and development of large-scale logistics infrastructure projects Supporting increased cooperation among administrative departments and provinces to create a more competitive environment for the logistics industry Sustaining the stable development and confronting existing difficulties faced by the logistics industry throughout 2009 as well as cultivating large-scale internationally competitive logistics enterprises by 2011 Strengthening the legal and regulatory framework governing the logistics industry Diversifying channels of investment for logistics infrastructure projects including encouraging the use of bank loans capital markets transactions mergers and acquisitions and the establishment of Sino-foreign joint ventures Utilising world trade organisations free-trade zones and other mechanisms for economic cooperation to promote and strengthen cooperation in the logistics industry among the China and other countries and regions including Korea Japan ASEAN nations and the Middle East Encouraging further consolidation and reorganisation of the logistics industry with an emphasis on the specialisation and long-term development of large-scale logistics enterprises

CSC sales and leasing strategy CSCrsquos sales and leasing strategy is designed to produce a long-term win-win for tenants and buyers alike Backed by low land costs and well-managed construction costs CSC aims to sell sufficient trade centres to recoup initial outlays bearing in mind the need to retain a sizable proportion of its trade centres for leasing to ensure it can collectively manage its assets Rental of the leasing portion is initially set well below the market equilibrium rental with a view to optimising leasing space This means space is quickly filled and as business activity increases rentals typically mean-revert to market average levels

Replication of CSC model Following the success of CSC Shenzhen management stated that it plans to replicate the business model to provide integrated logistics trade platforms for raw material and finished goods buyers across China Macro conditions and macro policies like increasing transport infrastructure development to improve connectivity across cities as well as steeping up government support for development of the logistics industry should provide a positive backdrop

Existing competition Existing trade centres tend to be clustered in regions and provinces where there is a large manufacturing base mdash ie Guangdong and Zhejiang While several trade centres already exist most specialise in one industry or trade Nor do they offer integrated multiple services as CSC does Existing trade centres arguably have more mature transportation infrastructure and better connectivity than CSC Yet we believe they are inferior in terms of the range of integrated logistics services offered as well as the variety of trades offered

Space is quickly filled up rapidly increasing the centrersquos activity level As business activity increases rentals typically mean-revert to market average levels

Macro tailwinds

CSCrsquos edge its range of integrated logistics services offered

Logistics sector seen by central government as critical to the economy

Exhibit 33 Existing trade centres Trade centre Province Start date Industry GFAHuaqiangbei Guangdong 1988 Electronics 280000Keqiao Textile Cities Zhejiang 1993 Textile 800000Shishi Clothing Base Fujian 1995 Textile 550000Zhongda Textile Market Guangdong 1982 Textile 500000Humen Clothing Market Guangdong 1995 Textile 450000Qianqing Light Textile Raw Material Market Zhejiang 1993 Textile 300000Zhanqian Road Clothing Wholesale Centre Guangdong 1985 Textile 260000Guangdong Hardware City Guangdong 2003 Metal 900000Yongkang Hardware City Zhejiang 1992 Metal 600000Zhongshan Hardware and Electrical Centre Guangdong 2006 Metal 200000Guangdong International Packaging amp Printing City Guangdong 2005 Printing 200000China Printing City Zhejiang 2002 Printing 200000Huadu Shiling Guangdong 1983 Leather 500000Zhejiang Haining Leather Clothing Centres Zhejiang 1993 Leather 160000

Project details

CSC project details CSC Shenzhen Phase I Located in Pinghu Longgang district CSC Shenzhen is 20km from Shenzhen city centre It has a total GFA of circa 263mn sqm Phase I has a GFA of 463600 sqm with 359500 sqm of trade centre space and 104100 sqm of supporting facilities

Exhibit 34 Shenzhen CSC location

Source Company Nomura research

Exhibit 35 CSC Shenzhen breakdown of Phase I by trade GFA (sqm) Trade centres Lease Sale Total of total Total unitsTextile amp clothing 45000 49300 94300 262 760Leather amp accessories 46100 45600 91700 255 730Electronics accessories 32300 11000 43300 121 340Paper products amp packaging 23300 24900 48200 134 400Metals chemicals amp plastic 44700 37300 82000 228 640Total 191400 168100 359500 100 2870

Source Company data Nomura research

Exhibit 36 CSC supporting facilities Facilities GFA (sqm)Business centres 22400Warehouses facilities 26500Hotel amp restaurant 35900Sales amp leasing amp administrative facilities 10000Exhibition amp conference facilities 9300Total 104100

CSC Shenzhen is 20km from Shenzhen city centre

CSCrsquos master agreement with Shenzhen Longgang Pinghu Logistic Base Development Centre stipulates that CSC may only sell 30 of the total GFA of the Shenzhen project (Phases I and II inclusive)

Of Phase I 188000 sqm is saleable And of this total at end-FY09 168100 sqm had been sold for a total consideration of HK$8632mn This translates into an average per unit selling price of HK$5128sqm based on our calculations

Some of the units sold were covered by a special cooperation agreement between CSC and the buyer whereby the buyer is given a discount on the purchase price In return buyers give CSC the right to lease out the units and receive the accompanying income stream for the following three years This implies that CSC is paying a price discount to buy over the three-year rental income stream of the buyerrsquos unit Of the 168100 sqm of CSC Shenzhen Phase I that has been sold 126000 sqm is subject to co-operation (sale and lease back) agreements After selling the shop unit CSC can charge rent for three years but at the same time it pays an agreed fixed rent to the shop owner For the rental units CSC has adopted a strategy of granting rent-free periods ranging from three to 15 months (depending on duration of lease) to boost initial occupancy

CSCrsquos goal is to maximise occupancy and attract quality tenants by offering preferential rentals at substantial discounts to the market in the initial years of operation Once the trade centres are nigh-on full rentals typically rise to market levels In FY06-08 management zeroed in on high occupancy

CSC Shenzhen Phase I trade centres entered operation in 2005 We think CSC Shenzhen has performed well in the past three years with total occupancy rising from 723 in 31 March 2007 to 816 in 31 March 2009 With the exception of the textile and clothing materials trade centre the trade centres have notched up consistently high occupancy rates The overall weighted average monthly effective rent ticked up by 184 to RMB232sqm in FY09 from RMB196sqm in FY07 Plus selling prices rose by 140 to RMB15045sqm in FY09 from RMB6257sqm in FY07

Of the approximately 84000 sqm of Phase 1 leases which recently expired 90 of the leases are renewed with an approximately 25 growth rate in effective rental

Exhibit 37 Shenzhen Phase I occupancy rates () FY07 FY08 FY09

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

tenantsTextile amp clothing 904 906 613 738 774 498 684 728 463Leather amp accessories 933 934 610 909 922 591 904 917 590Electronics accessories 301 301 183 613 616 309 643 646 287Paper products amp packaging 383 389 136 715 723 244 904 906 320Metals chemicals amp plastic 682 694 396 810 841 417 810 842 429Weighted average 717 723 1938 775 801 2059 792 816 2089

Exhibit 38 Shenzhen Phase I historical rental trend (RMB) FY07 FY08 FY09 Monthly

gross rent Monthly effective

rentMonthly

rentTextile amp clothing 610 210 576 281 646 285Leather amp accessories 662 204 668 346 649 330Electronics accessories 186 186 575 133 607 129Paper products amp packaging 687 170 659 133 651 132Metals chemicals amp plastic 681 174 578 181 648 186Weighted average 624 196 615 242 648 232

Master agreement lets CSC sell only 30 of total GFA

Special co-operation agreement to help boost sales while assuring good tenant mix

Once occupancy reaches close to 100 rentals will likely rise to market levels

Overall occupancy has risen from 723 in FY06 to 816 in FY09

Exhibit 39 Shenzhen Phase I GFA sold and selling prices

100000

120000

140000

FY07 FY08 FY090

16000GFA sold (LHS) ASP (RHS)(sqm) (HK$sqm)

Exhibit 40 Shenzhen Phase I occupancy

FY07 FY08 FY09

Rental occupancy Total occupancy()

Exhibit 41 Shenzhen Phase I rentals

624 615648

196242 232

FY07 FY08 FY09

Gross rental Effective rental(RMBsqmmth)

CSC Shenzhen Phase II Located next to Phase I CSC Shenzhen Phase II sports a total GFA 212mn sqm comprising 116mn sqm of trade centres and 096mn sqm of supporting facilities CSC is constructing Phase II in stages and started work on the first stage in August 2006 Thus far the residential facilities West Garden (1628 units) have been completed Of these 1191 units have been leased to tenants under the aforementioned finance lease agreement according to the company The average consideration for the lease units over the lease term is RMB4823sqm (HK$5048sqm) for total revenue of HK$4032mn The two trade centres mdash textile and leather accessories mdash were completed in June 2009 and pre-selling began in August 2008 As at November 2009 102254 sqm of the trade centre had been sold and the average selling price of the Phase II trade centres was RMB13961sqm in FY09 The rest of the area sold through to June 2009 had a selling price of some RMB14500sqm on our estimates The other three trade centres of Phase II will likely be completed by 2011 according to CSC (see Exhibit 44 Project completion schedule of CSC Phase II)

CSC Shenzhen Phase II residential facilities completed pre-sale of the two trade centres began in August 2008

Exhibit 42 GFA breakdown of trade centres (excluding car parks amp ancillary areas) Estimated

leasable (sqm) Estimated

saleable (sqm) Total of total

Textile amp clothing 175000 75800 250800 217Leatheramp accessories 203500 106400 309900 268Electronics accessories 98000 22000 120000 104Paper products amp packaging 188000 70700 258700 224Metals chemicals amp plastic 151700 65000 216700 187Total 816200 339900 1156100 100

Exhibit 43 GFA breakdown of supporting facilities GFA (sqm)Other commercial facilities 343000Residential facilities 163000Warehouses amp logistic facilities 147000Underground carparks and ancillary area 353000Total 999200

Exhibit 44 Projected completion schedule of Phase II 2008 2009 2010 2011 2012 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H Trade Centres Textile amp clothing materials Leather amp accessories Metals chemicals amp plastics Printing paper products amp packaging materials Electronics accessories Residential Warehouse 1 Warehouse 2 Office 1 Office 2 Office 3

CSC Shenzhen comparables To assess CSC Shenzhenrsquos long-term viability in terms of rental occupancy and selling prices we look at comparable wholesale property developments in Guangzhou and Shenzhen To our view these are not perfect comparables in terms of scale variety and composition of trade mix or even geographical location and catchment area In almost all cases cited these are wholesale malls specialising in one product ie tea CSC Shenzhen is much larger in size as one would expect of a development integrating five trade centres and logistics facilities

Still of the five comparables we look at for rental comparison we can see that

Based on our analysis occupancies are high with almost all having 100 occupancy rates

Based on our analysis average rental clustering in the region of RMB450-600sqmmth

While these comparables are much more centrally located than CSC we think improvements in transportation infrastructure in the vicinity of CSC Shenzhen could see CSCrsquos rental and occupancy converge toward comparable levels in the long term

Examining CSC Shenzhenrsquos long-term viability by looking at comparables mdash but these are not perfect matches

Exhibit 45 Trade centres rental comparables

Comparables Year Location IndustryGFA

(sqm) Tenant mix Average rental

(RMBsqmmth)Occupancy

()White Horse Building 1993 Guangzhou

Yue Xiu districtTextile amp clothing 60000 2000 tenants

Domestic 75 foreign 25

650-1050 100

China Fabric amp Accessories Centre 2005 Guangzhou Haizhu district

Fabrics Textile Clothing and

Materials

310000 4000 tenants Domestic 85

foreign 15

450-650 gt95

Segem Electronics Plaza 1998 Shenzhen Huaqiangbei

Electronics 45000 3500 tenants Domestic 70

foreign 30

650-1000 100

Huaqiang Plaza 2007 Shenzhen Huaqiangbei

Electronics 230980 NA 450-850 100

Baiyun World Leather Trading Centre 2003 Guangzhou Baiyun district

Leather goods 30000 1000 tenants Domestic 90

foreign 10

650-900 100

Exhibit 46 Trade centres sales comparables

Comparables Year Selling price

(RMBsqm) TradeLocation Hualong Market 2007 15000-35000 Agricultural products Shenzhen

Longgang Oriental Tea World 2004 15000-28000 Tea products

Shenzhen Longgang New Asia Electronic Commercial Building (phase II) 2007 85000-170000 Computers and Electronic

ApplianceShenzhen Huaqiangbei BaoAn Electronic City 2002 18000-30000 Electronics Appliance Shenzhen

ASEAN Logistics City Nanning CSC also has planned two further projects located strategically at transportation infrastructure nodes One is ASEAN Logistics City in Nanning Guangxi province On 29 December 2007 the company entered into a master agreement with the government of Jiangnan District Nanning City concerning the development of ASEAN Logistics City The local authority has agreed in principle to provide two parcels of land with aggregate area of approximately 17mn sqm of which 997000 sqm will be used for the development of trade centres and exhibition facilities 400000 sqm for development of integrated logistics commercial and storage facilities and another 330000 sqm for ancillary living and commercial purposes In late October 2009 the company successfully acquired 50 of the land site of ASEAN Logistics City It expects to acquire land for Phase II in 2H11

Upon completion the projectrsquos total GFA will be around 42mn sqm consisting of 18mn sqm of integrated trade centres and exhibition facilities 520000 sqm of integrated logistics and warehouse facilities integrated commercial facilities of approximately 360000 sqm residential facilities of nearly 12mn sqm and underground car parking facilities of nearly 320000 sqm The company estimated that the whole project will cost around RMB101bn to build over two phases

On 29 December 2007 the company inked a master agreement to develop ASEAN Logistics City

Upon completion the projectrsquos total GFA will be around 42mn sqm

We think long-term rental and selling prices will tally with the median levels of comparables at RMB450-600sqmmth and RMB15000-35000sqm

Exhibit 47 Location of ASEAN Logistics City

Exhibit 48 Transport infrastructure surrounding ASEAN Logistics City Infrastructure Description Airports 20 km from site Railways Connected by several railways linked to Vietnam Cambodia Malaysia and Singapore Ports Next to the ports of Xijiang Tingzi and Jinji which allow access to Guangzhou Zhuhai Macau and Hong Kong Highways Linked to major highways of Southeast Asia Connected to Guangzhou and Hong Kong

Exhibit 49 Breakdown of GFA of ASEAN Logistics City Square metresTotal GFA 4200000 Integrated trade centres and exhibition facilities 1800000 Integrated logistics and warehouse facilities 520000 Integrated commercial facilities 360000 Integrated residential facilities 1200000 Underground car parking facilities 320000

Exhibit 50 ASEAN Logistics City ndash planned industry mix Medical amp pharmaceutical equipment Electrical machinery amp equipment Automobile amp transport equipment Plastics amp chemicals Textile amp clothing Leather amp products

Completion and presale schedule Pursuant to the master agreement the first land parcel with an area of 840000 sqm would be transferred to the company in calendar 4Q09 and the second with an area of 890000 sqm in 2H11F Phase I has been successfully transferred to the company on 19 October 2009

ASEAN Logistics City is scheduled to be completed in two phases According to the company construction work on Phases I and II will commence in 1H10F and 1H12F respectively CSC estimates the construction period at two to three years We thus pencil in Phase I completion for 2H11F and Phase II for 2H13F We expect CSC to launch various phases and stages of the project for pre-selling six months prior to completion Accordingly Phases I and II are likely to be launched in 1H11F and 1H13F on our reading

Exhibit 52 Completion schedule of ASEAN Logistics City 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13Phase I Phase II

Exhibit 53 Comparables of ASEAN Logistics City

Name of project Location Completion GFA

Capital values (RMBsqm)rentals (RMBsqmmth)

Occupancy ratio

Specialised integrated Sectors

Guangxi Building Material Market

35 University East Road Nanning

1996 30000 15~40 gt90 S Building and Decoration Material

Nanning Heping Shopping Mall

Renming Road Nanning (CBD)

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

I Food and beverage home appliances apparels and footwear garment wholesale department store

Nanning building and decoration material market

88 Mingxiu East Road Nanning

1996 Around 46000 (commercial) around 25000 (warehouse)

Average 30~40 (commercial) 10~15 (warehouse)

gt90 S Building and Decoration Material

ShengshiLiangbang Plaza

Sanhua Street Wholesale Business district Nanning

2009 134000 (whole building) 40000 (commercial)

CV 45000sqm (1F) 15500~21500 (other floors)

90 (1F) 70(2F) 100(3F) 90(basement)

I Grocery commodities wholesale (Underground 1F) middle-high end garments and bags (1F) garment wholesale (2~3F) bedding garment etc (4F)

All the land should have been transferred by late 2H11F

Phases I and II are expected to be launched in 1H10 and 1H12

China South City Nanchang China South City Nanchang will be located in the Honggutan New District of Nanchang City Jiangxi province According to the master and supplementary agreements between the company and local authority CSC group will build an integrated logistics centre on a site area of nearly 20mn sqm over three phases We have assumed that Phases I II and III will have a site area of 774500 sqm 758 400 sqm and 457400 sqm respectively

With a total GFA of 39mn sqm the project will consist of integrated trade centres with a GFA of approximately 11mn sqm integrated logistics and warehouse facilities covering a GFA of approximately 500000 sqm integrated commercial facilities with a GFA of approximately 300000 sqm integrated residential facilities covering a GFA of approximately 1600000 sqm and underground car parking facilities covering a GFA of approximately 400000 sqm The company will obtain the land in three phases starting with the first in 4Q09F followed by Phase II in 2H10F and Phase III in 2H11F

Exhibit 54 China South City Nanchang GFA breakdown (sqm)Total GFA 3900000Integrated trade canters 1100000Integrated logistics and warehouse facilities 500000Integrated commercial facilities 300000Integrated residential facilities 1600000Car parking facilities 400000

Exhibit 55 China South City Nanchang planned industry mix Plastics Textile amp clothing Chemicals Leather amp products

Exhibit 56 China South City Nanchang

Source Nanchang City government Nomura research

China South City Nanchang located in Nanchang

Exhibit 57 Location of China South City Nanchang

Completion and presale schedule Construction of Phases I II and III will commence in 1H10F 1H11F and 1H12F respectively according to the companyrsquos plan We estimate that each phase of construction will take approximately two to three years The whole project is planned to be completed in 1H14F Assuming a construction phase of two years the three phases will be completed in 2H11F 2H12F and 1H14F respectively

CSC estimates the total development cost at around RMB93bn including land grant costs construction costs and capitalised finance costs over the three phases The company stated it has made no payment for the project yet

Exhibit 58 China South City Nanchang completion schedule 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14Phase I Phase II Phase III

Plan for China South City Nanchang

Total development cost for China South City Nanchang slated to be RMB93bn

Exhibit 59 China South City Nanchang comparables

Name of project Location Completion GFACapital values (RMBsqm) Rental

(RMBsqmmonth) Occupancy rate Sectors

Lianxi Grand Market

Part of Hongcheng Commercial Area Hong Cheng Road Nanchang

2000 - 80~100 High Grocery commodities garment machinery and metal products

Wuhua Grand Market (Zone II)

- - 90~200 High Hotel utilities wholesale

Wanma Garment Plaza

2003 80~120 High Brand garment wholesale and retail

Nanchang Electricity Appliances Market

- 125~170 High Home appliances wholesale and retail

Xiangjiang Furniture Market

Qiangshan South Road Nanchang

1999 (phase one) 2004

(phase two)

40000 45~70 (phase one) 75 (phase II) 100 Furniture

Jiangxi Decoration and Building Material Market

Near Intersection of Jinggagnshan Road Yanjian Road and Jianshe Road Nanchang

60000 100~260 gt95 Building and decoration materials

Poyanghu Building Material Market

Simamiao Nanchang Jiangxi

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

- Building and decoration materials

Nanchang Grocery Commodities Market

Shengmidaqiao Nanchang 2009 (Phase I)

1000000 (Three

Phases)

CV 3688 - Metal products Garment

Note Lianxi Grand Market Wuhua Grand Market (Zone II) Wanma Garment Plaza and Nanchang Electricity Appliances Market are specialised markets developed in the vicinity of Hongcheng Grand Market forming a cluster of trade centres Hongcheng Grand Market is one of the most successful wholesale and retail markets in Nanchang Currently the daily pedestrian flow of the market is around 60000-70000 and daily traffic flows is around 5000 cars

The market is undergoing a large-scale renovation and extension Upon completion of the revamp the market will boost a shopping area of 20000 square metres wholesale and retail area of 280000 square metres and business area of 120000 square metres Our view after renovation there will be around 10000 tenants including 1000 foreign-funded companies

Where could we be wrong

Risks to our view Much slower-than-expected take-up of the CSC Shenzhen trade centres could result in relatively low patronage of raw materials and finished good buyers at the malls As a consequence tenants may not renew their leases We believe a gradual decrease rather than increase in occupancy rates would be significantly negative for the operations of CSC Execution capability in new markets such as Nanning and Nanchang will also be a major risk

Mega wholesale malls are a new concept in Nanchang and Nanning such that there are no quantifiable statistics to gauge actual demand for wholesale spaces in these tier-2 cities Weaker-than-expected take-up and prolonged low vacancy rates would affect CSC likely weighing on its cashflow earnings and branding

Appendix 1

Company background The CSC business concept was initially developed by Mr Cheng Chung Hing and Mr Leung Moon Lam The concept was then discussed among the founding shareholders over a period of time before the group was established in 2002 On 18 December 2002 the company established China South International Industrial Materials City (Shenzhen) Co Ltd (China South International) in China The grouprsquos businesses are mainly conducted through China South International and its subsidiaries jointly controlled entities and associates

The companyrsquos first project was China South City Shenzhen In December 2002 the company entered into a master agreement with the Shenzhen Longgang Pinghu Logistics Base development service centre to be granted a piece of land with an aggregate area of 15mn sqm for the development of China South City Shenzhen Construction of Phase I commenced in October 2003 and was completed in September 2005 Leasing and sales of CSC began in December 2004

Encouraged by a positive response to Phase I of China South City Shenzhen the company is developing Phase II and spreading its wings beyond Guangdong The goal to tap potentially surging demand for integrated large-scale trade centres against the backdrop of Chinarsquos burgeoning economy The company has two other projects at the planning stage China South City Nanchang in Nanchang (GFA 38mn sqm) and ASEAN Logistics City in Nanning (GFA 42mn sqm) Also in June 2009 it signed a non-legally binding MOU to develop a trade centre project in Xirsquoan

In February 2007 the company entered into a master agreement with the Nanchang City Hongguta New District Administrative Committee to develop a large integrated trade centre project mdash China South City Nanchang In December 2009 the company acquired land use rights for one-third of the project

In October 2007 CSC entered into a planned investment with Nanning City Jiangnan District Government for the development of CSCrsquos third-largest integrated trade centre In October 2009 the company acquired land use rights for one-half of the project

Exhibit 60 CSC development timeline Erro r Objects cannot b e creat ed fro m editing field cod es

2003 2004 2005 2006 2007 20082002 2009 2010

CSC Shenzhen Phase I

CSC ShenzhenPhase II

Nanchang Nanning amp Xirsquoan

ProjectsRecent

Developments

May 2002

China South City

Holdings Limited founded

Oct 2003

Construction of Phase I

commenced

Dec 2004

Completion of 5 trade centers with

GFA of approx360000 sqmLeasing and

sales commence

Feb 2008

Completion of 1628 units of

West Garden

Aug 2006

Commenced construction of

Phase II development ndash

West Garden the residential units

Dec 2007

Commenced construction of Phase II textile

and leather trade centers

1H 2010Expect to

commence construction of

Phase I of Nanchang and

Nanningprojects

Dec 2007

Signing of Nanningproject master

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Expect to attain land for

Phase I of Nanchang

and Nanningprojects

July 2007

US$125 mm Convertible

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

~GFA 340000 sqm Phase II textile trade

center completed

2H 2009

~GFA 385000 sqm Phase II leather trade

center completed

Jun 2009

Entered into a non-legally

binding MOU to develop trade

center project in Xirsquoan

Jul 2009

Repurchased US$945 mm Notes

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Acquired first batch of land for Nanning

Project

Nov 2009

Entered into project

agreement for Xirsquoan Project

Dec 2009

Acquired first batch of land for Nanchang

Project

Nanchang Nanning amp Xirsquoan Projects

CSC Shenzhen Phase II

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

Tracing its history from 2002

Shenzhen stalwart expanding into Nanchang and Nanning

Local authorities see logistics platforms as a way to boost the local economy and government revenue

Exhibit 61 Board of directors Name Age Position CHENG Chung Hing 48 Co-Chairman and Executive Director LEUNG Moon Lam 53 Executive Director XU Yang 70 Executive Director MA Kai Cheung 67 Co-Chairman and Non-Executive Director SUN Kai Lit Cliff 55 Non-Executive Director MA Wai Mo 65 Non-Executive Director SHI Wan Peng 72 Independent Non-Executive Director LEUNG Kwan Yuen Andrew 58 Independent Non-Executive Director LI Wai Keung 52 Independent Non-Executive Director

Source Company data

What is the market pricing in A simulation

Exhibit 62 What the market is pricing in CSC Shenzhen Phase I mdash trade centre assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FTextile amp clothing Occupancy () 684 800 900 900 900 900 900 900 900 900GFA (sqm) 81979 63573 45000 45000 45000 45000 45000 45000 45000 45000Effective rental (RMBsqmmth) 285 299 314 330 363 399 439 483 531 584Rental growth () 5 5 5 10 10 10 10 10 10Leather amp accessories Occupancy () 904 950 950 950 950 950 950 950 950 950GFA (sqm) 80370 63410 46100 46100 46100 46100 46100 46100 46100 46100Effective rental (RMBsqmmth) 33 347 364 382 420 462 508 559 615 677Rental growth () 5 5 5 10 10 10 10 10 10Metals amp chemicals Occupancy () 810 900 900 900 900 900 900 900 900 900GFA (sqm) 72664 58662 44700 44700 44700 44700 44700 44700 44700 44700Effective rental (RMBsqmmth) 186 195 205 215 237 261 287 315 347 381Rental growth () 5 5 5 10 10 10 10 10 10Printing amp papers products Occupancy () 914 950 950 950 950 950 950 950 950 950GFA (sqm) 41997 32646 23000 23000 23000 23000 23000 23000 23000 23000Effective rental (RMBsqmmth) 132 139 146 153 168 185 203 224 246 271Rental growth () 5 5 5 10 10 10 10 10 10Electronics amp accessories Occupancy () 643 700 850 850 850 850 850 850 850 850GFA (sqm) 40629 36609 32300 32300 32300 32300 32300 32300 32300 32300Effective rental (RMBsqmmth) 129 135 142 149 164 181 199 219 241 265Rental growth () 5 5 5 10 10 10 10 10 10

Note GFA numbers for FY09F are Nomurarsquos estimates of the leaseable GFAs of trade centres which differ from the total GFAs of trade centres as some parts of the trade centres have been sold

Exhibit 63 What the market is pricing in CSC Shenzhen Phase I mdash facilities assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FBusiness centre Occupancy () 75 80 80 80 80 80 80 80 80 80GFA (sqm) 22400 22400 22400 22400 22400 22400 22400 22400 22400 22400Effective rental (RMBsqmmth) 444 555 693 763 839 923 1015 1117 1228 1351Rental growth () 25 25 25 10 10 10 10 10 10 10Warehouseslogistics facilities Occupancy () 95 95 95 GFA (sqm) 26500 17667 8833 Effective rental (RMBsqmmth) 100 110 121 Rental growth () 25 10 10 Hotels Occupancy () 70 70 70 70 70 70 70 70 70 70GFA (sqm) 35900 35900 35900 35900 35900 35900 35900 35900 35900 35900Average room rates (RMBnight) 460 483 507 533 559 587 616 647 680 714Rental growth () 15 5 5 5 5 5 5 5 5 5Exhibition centre Occupancy () 70 70 70 70 GFA (sqm) 9300 9300 9300 9300 Effective rental (RMBsqmmth) 1 11 121 1331 Rental growth () 10 10 10

Exhibit 64 What the market is pricing in CSC Shenzhen Phase II mdash assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FTextile amp clothing Occupancy () 12 40 75 85 90 90 90 90 90GFA (sqm) 231850 231850 175000 175000 175000 175000 175000 175000 175000Effective rental (RMBsqmmth) 33 347 364 382 401 421 463 510 561Rental growth () 5 5 5 5 5 5 10 10 10Leather amp accessories Occupancy () 12 40 75 85 90 90 90 90 90GFA (sqm) 283300 283300 203500 203500 203500 203500 203500 203500 203500Effective rental (RMBsqmmth) 33 347 364 382 401 421 463 510 561Rental growth () 5 5 5 5 5 5 10 10 10Metals amp chemicals Occupancy () 30 50 85 90 90 90 90GFA (sqm) 200450 200450 200450 151700 151700 151700 151700Effective rental (RMBsqmmth) 700 700 700 770 847 932 1025Rental growth () 5 5 5 5 10 10 10Printing amp papers products Occupancy () 30 50 85 90 90 90 90GFA (sqm) 241025 241025 241025 188000 188000 188000 188000Effective rental (RMBsqmmth) 60 60 60 63 693 762 839Rental growth () 5 5 5 5 10 10 10Electronics amp accessories Occupancy () 30 50 85 90 90 90 90GFA (sqm) 114500 114500 114500 98000 98000 98000 98000Effective rental (RMBsqmmth) 60 60 60 63 693 762 839Rental growth () 5 5 5 5 10 10 10Residential shopping plaza Occupancy () 30 75 80 80 85 85 90 90 90GFA (sqm) 15000 15000 15000 15000 15000 15000 15000 15000 15000Effective rental (RMBsqmmth) 55 578 606 637 669 702 772 849 934Rental growth () 5 5 5 5 5 5 10 10 10Warehouse 1 Occupancy () 40 50 80 90 90 90 90 90 90GFA (sqm) 43200 43200 43200 43200 43200 43200 43200 43200 43200Effective rental (RMBsqmmth) 20 20 20 40 40 40 40 40 40Rental growth () 100 Warehouse 2 Occupancy () 50 70 90 90 90 90 90GFA (sqm) 103100 103100 103100 103100 103100 103100 103100Effective rental (RMBsqmmth) 20 40 40 40 40 40 40Rental growth () High rise office 1 Occupancy () 50 70 80 85 85 85 85 85GFA (sqm) 53100 53100 53100 53100 53100 53100 53100 53100Effective rental (RMBsqmmth) 50 50 50 550 550 605 605 666Rental growth () 10 10 10High rise office 2 Occupancy () 50 70 80 85 85 85 85GFA (sqm) 78600 78600 78600 78600 78600 78600 78600Effective rental (RMBsqmmth) 50 50 500 550 550 605 605Rental growth () 10 10High rise office 3 Occupancy () 50 70 80 85 85 85GFA (sqm) 127600 127600 127600 127600 127600 127600Effective rental (RMBsqmmth) 50 50 500 550 550 605Rental growth () 10 10

Exhibit 65 What the market is pricing in CSC Shenzhen Phase II mdash selling price assumptions FY10F FY11F FY12F FY13FSelling price (trade centres) 14500 15225 15986 17585Growth () 5 5 10

Our assumptions in deriving our NAV PT of HK$264share

Exhibit 66 CSC Shenzhen Phase I trade centre assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FTextile amp clothing Occupancy () 684 800 900 950 950 950 950 950 950 950GFA (sqm) 81979 63573 45000 45000 45000 45000 45000 45000 45000 45000Effective rental (RMBsqmmth) 285 299 314 377 452 543 652 782 1016 1321Rental growth () 5 5 20 20 20 20 20 30 30Leather amp accessories Occupancy () 904 950 950 950 950 950 950 950 950 950GFA (sqm) 80370 63410 46100 46100 46100 46100 46100 46100 46100 46100Effective rental (RMBsqmmth) 33 396 475 570 684 821 985 1182 1537 1998Rental growth () 20 20 20 20 20 20 20 30 30Metals amp chemicals Occupancy () 810 900 900 950 950 950 950 950 950 950GFA (sqm) 72664 58662 44700 44700 44700 44700 44700 44700 44700 44700Effective rental (RMBsqmmth) 186 195 205 246 295 354 425 510 663 862Rental growth () 5 5 20 20 20 20 20 30 30Printing amp papers products Occupancy () 914 950 950 950 950 950 950 950 950 950GFA (sqm) 41997 32646 23000 23000 23000 23000 23000 23000 23000 23000Effective rental (RMBsqmmth) 132 158 190 228 274 328 394 473 615 799Rental growth () 20 20 20 20 20 20 20 30 30Electronics amp accessories Occupancy () 643 700 850 900 950 950 950 950 950 950GFA (sqm) 40629 36609 32300 32300 32300 32300 32300 32300 32300 32300Effective rental (RMBsqmmth) 129 135 142 149 179 215 258 310 403 523Rental growth () 5 5 5 20 20 20 20 30 30

Exhibit 67 CSC Shenzhen Phase I facilities assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FBusiness Centre Occupancy () 75 80 85 90 90 90 90 90 90 90GFA (sqm) 22400 22400 22400 22400 22400 22400 22400 22400 22400 22400Effective rental (RMBsqmmth) 533 586 644 709 780 858 943 1038 1141 1256Rental growth () 10 10 10 10 10 10 10 10 10Warehouseslogistics facilities Occupancy () 95 95 95

GFA (sqm) 26500 17667 8833

Effective rental (RMBsqmmth) 100 110 121

Rental growth () 25 10 10 Hotels Occupancy () 70 70 70 70 70 70 70 70 70 70GFA (sqm) 35900 35900 35900 35900 35900 35900 35900 35900 35900 35900Average room rates (RMBnight) 460 506 557 612 673 673 673 673 673 673Rental growth () 15 10 10 10 10 Exhibition centre Occupancy () 70 70 70 70 GFA (sqm) 9300 9300 9300 9300 Effective rental (RMBsqmmth) 1 11 121 1331 Rental growth () 10 10 10

Exhibit 68 CSC Shenzhen Phase II assumptions FY09F FY10F FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18FTextile amp clothing Occupancy () 12 40 75 85 90 95 95 95 95GFA (sqm) 231850 231850 175000 175000 175000 175000 175000 175000 175000Effective rental (RMBsqmmth) 33 347 381 419 461 553 664 863 1122Rental growth () 5 5 10 10 10 20 20 30 30Leather amp accessories Occupancy () 12 40 75 85 95 95 95 95 95GFA (sqm) 283300 283300 203500 203500 203500 203500 203500 203500 203500Effective rental (RMBsqmmth) 33 347 381 419 503 604 724 942 1224Rental growth () 5 5 10 10 20 20 20 30 30Metals amp chemicals Occupancy () 30 50 85 95 95 95 95GFA (sqm) 200450 200450 200450 151700 151700 151700 151700Effective rental (RMBsqmmth) 70 70 70 84 1092 1420 1845Rental growth () 5 5 10 20 20 30 30Printing amp papers products Occupancy () 30 50 85 95 95 95 95GFA (sqm) 241025 241025 241025 188000 188000 188000 188000Effective rental (RMBsqmmth) 60 60 60 72 864 1123 14602Rental growth () 5 5 10 20 20 30 30Electronics amp accessories Occupancy () 30 50 85 95 95 95 95GFA (sqm) 114500 114500 114500 98000 98000 98000 98000Effective rental (RMBsqmmth) 60 60 60 72 864 1123 1460Rental growth () 5 5 10 20 20 30 30Residential shopping plaza Occupancy () 30 75 80 80 85 85 95 95 95GFA (sqm) 15000 15000 15000 15000 15000 15000 15000 15000 15000Effective rental (RMBsqmmth) 55 55 55 660 792 950 1140 1483 1927Rental growth () 5 10 20 20 20 20 20 30 30Warehouse 1 Occupancy () 40 50 80 90 95 95 95 95 95GFA (sqm) 43200 43200 43200 43200 43200 43200 43200 43200 43200Effective rental (RMBsqmmth) 20 20 20 40 40 40 40 40 40Rental growth () 100 Warehouse 2 Occupancy () 50 70 90 95 95 95 95GFA (sqm) 103100 103100 103100 103100 103100 103100 103100Effective rental (RMBsqmmth) 20 40 40 40 40 40 40Rental growth () High rise office 1 Occupancy () 50 70 80 85 85 85 85 85GFA (sqm) 53100 53100 53100 53100 53100 53100 53100 53100Effective rental (RMBsqmmth) 70 70 70 770 770 847 847 932Rental growth () 10 10 10High rise office 2 Occupancy () 50 70 80 85 85 85 85GFA (sqm) 78600 78600 78600 78600 78600 78600 78600Effective rental (RMBsqmmth) 70 70 70 770 770 847 847Rental growth () 10 10High rise office 3 Occupancy () 50 70 80 85 85 85GFA (sqm) 127600 127600 127600 127600 127600 127600Effective rental (RMBsqmmth) 70 70 70 770 770 847Rental growth () 10 10

Exhibit 69 CSC Shenzhen Phase II selling price assumptions FY10F FY11F FY12F FY13FSelling price (trade centres) 14500 15225 15986 17585Growth () 5 5 10

Exhibit 70 CSC Shenzhen Phase II sales volume assumptions Total saleable area (sqm) FY10F FY11F FY12F FY13F

Textile amp clothing 75800 45480 26252 0 0Leather amp accessories 106400 63840 42560 0 0metals amp chemicals 65000 0 32500 32500 0Printing amp paper products 70700 0 14140 35350 21210electronics accessories 22000 0 0 13200 8800Total 109320 115452 81050 30010

Exhibit 71 China South City Nanchang mdash Phase I lease assumptions FY11F FY12F FY13F FY14F FY15F FY16F FY17F FY18F

Trade Centres Occupancy () 0 30 50 80 95 95 95 95GFA (sqm) 286600 286600 286600 286600 286600 286600 286600 286600Effective rental (RMBsqmmth) 25 25 25 325 325 423 423 549Rental growth () 30 30 30Office Properties Occupancy () 0 30 50 80 95 95 95 95GFA (sqm) 64683 64683 64683 64683 64683 64683 64683 64683Effective rental (RMBsqmmth) 25 25 25 325 325 423 423 549Rental growth () 30 30 30Warehouse Occupancy () 0 30 50 70 80 95 95 95GFA (sqm) 204000 204000 204000 204000 204000 204000 204000 204000Effective rental (RMBsqmmth) 10 10 10 120 120 144 144 173Rental growth () 0 0 20 0 20 0 20Hotel Occupancy () 30 50 70 70 70 70 70GFA (sqm) 64683 64683 64683 64683 64683 64683 64683 64683Average Room rate (RMBday) 80 80 80 920 920 1058 1058 1217Rental growth () 0 0 15 0 15 0 0Carpark Occupancy () 30 50 80 95 95 95 95GFA (sqm) 77400 77400 77400 77400 77400 77400 77400 77400Effective rental (RMBsqmmth) 55 55 55 72 72 93 93Rental growth () 0 0 11 30 10 30

Exhibit 72 China South City Nanchang sales assumptions Total GFA Percentage Price achieved (RMBsqm) (sqm) for sales () FY11F FY12F FY13F FY14FTrade Centres 1100000 40 6000 6000 6600 7260Integrated residential properties 1600000 100 5300 5830 6413 7054Integrated commercial properties 300000 0 0 0 0 0Warehouse 427000 0 0 0 0 0Carpark 385000 40 2000 2200 2420 2662

Exhibit 73 ASEAN Logistics City mdash Phase I lease assumptions FY12F FY13F FY14F FY15F FY16F FY17F FY18FTrade centres Occupancy () 15 30 50 80 95 95 95GFA (sqm) 540000 540000 540000 540000 540000 540000 540000Effective rental (RMBsqmmth) 20 20 20 260 260 338 338Rental growth () 30 30Office properties Occupancy () 15 30 50 80 85 85 85GFA (sqm) 130000 130000 130000 130000 130000 130000 130000Effective rental (RMBsqmmth) 25 25 325 325 423 423 549Rental growth () 30 30Warehouse Occupancy () 15 30 50 80 95 95 95GFA (sqm) 260000 260000 260000 260000 260000 260000 260000Effective rental (RMBsqmmth) 10 10 120 120 144 144 173Rental growth () 20 20Hotel Occupancy () 15 30 50 70 70 70 70GFA (sqm) 50000 50000 50000 50000 50000 50000 50000Average Room rate (RMBday) 80 80 92 92 1058 1058 1217Rental growth () 0 0 15 0 15 0 0Carpark Occupancy () 15 30 50 80 95 95 95GFA (sqm) 93000 93000 93000 93000 93000 93000 93000Effective rental (RMBsqmmth) 375 375 49 49 63 63 82Rental growth () 0 0 30 0 30 0 30

Exhibit 74 ASEAN Logistics City sales assumptions Total GFA Percentage Price achieved (RMBsqm) (sqm) for sales () FY10F FY11F FY12F FY13FTrade Centres 1800000 40 6000 6600 6840 7524Integrated residential properties 1200000 100 5200 5200 5460 5733 Integrated commercial properties 360000 0 - - - -Warehouse 520000 0 - - - -

Financial statements

Jump in sales due to increase in property sales

Income statement (HK$mn)Year-end 31 Mar FY08 FY09 FY10F FY11F FY12FInvestment properties 77 100 134 226 637Property development 450 78 1670 3660 5208Hotelsserviced apartments 20 26 55 61 67Other Revenue 16 21 32 47 71Revenue 563 224 1891 3994 5983EBIT contributionsInvestment properties 56 31 94 158 446Property development 224 51 1308 2477 3335Hotelsserviced apartments (6) (11) (5) 6 18Other income 4 (0) 6 9 14Management expenses (175) (212) (378) (799) (1197)EBITDA 132 (104) 1070 1904 2629Depreciation and amortisation (30) (37) (45) (52) (12)EBIT 102 (141) 1025 1852 2617Net interest expense (1) (4) (20) 56 60Associates amp JCEs 0 1 - - - Other income 23 16 81 446 (319)Earnings before tax 125 (129) 1086 2353 2358Income tax (69) 22 (606) (1195) (798)Net profit after tax 56 (107) 480 1158 1560Minority interests 1 0 - - - Other itemsPreferred dividendsNormalised NPAT 57 (107) 480 1158 1560Extraordinary items 499 861 627 - 612Reported NPAT 556 754 1106 1158 2172Dividends - - - - - Transfer to reserves 556 754 1106 1158 2172

Valuation and ratio analysisFD normalised PE (x) 1583 na 189 78 58 FD normalised PE at price target (x) 2772 na 330 137 102 Reported PE (x) 163 120 82 78 42 Dividend yield () - - - - - Pricecashflow (x) 293 1261 173 48 41 Pricebook (x) 25 20 10 09 07 EVEBITDA (x) 740 na 79 43 38 EVEBIT (x) 956 na 82 45 38 EBIT margin () 182 (629) 542 464 437 Effective tax rate () 550 na 558 508 339 Dividend payout () - - - - - ROA (pretax ) 20 (19) 103 156 170

Growth ()Revenue 3136 (601) 7425 1113 498 EBITDA na (1785) na 780 381 EBIT na (2380) na 807 413 Normalised EPS na (2861) na 1413 346 Normalised FDEPS na (2861) na 1413 346

Per shareReported EPS (HK$) 009 013 018 019 036Norm EPS (HK$) 001 (002) 008 019 026Fully diluted norm EPS (HK$) 001 (002) 008 019 026Book value per share (HK$) 060 074 146 165 202DPS (HK$) - - - - - Source Nomura estimates

Low gearing should provide flexibility in aggressive expansion

Cashflow (HK$mn)Year-end 31 Mar FY08 FY09 FY10F FY11F FY12FEBITDA 132 (104) 1070 1904 2629Change in working capital 96 (30) (23) 736 696Other operating cashflow 81 205 (525) (750) (1117)Cashflow from operations 309 72 522 1891 2208Capital expenditure 33 (1) 156 (24) (13)Free cashflow 342 71 678 1867 2195Reduction in investments (600) (1105) (949) (1739) (3915)Net acquisitions 6 - - - - Reduction in other LT assets 1 3 - - - Addition in other LT liabilities 36 4 - - - Adjustments (1) 11 5 63 67Cashflow after investing acts (216) (1016) (265) 191 (1652)Cash dividends - - - - - Equity issue - - 3200 - - Debt issue 264 172 - - - Convertible debt issue 927 - Others (38) (139) (25) (7) (7)Cashflow from financial acts 1153 33 3175 (7) (7)Net cashflow 937 (983) 2909 183 (1659)Beginning cash 292 1229 246 3155 3339Ending cash 1229 246 3155 3339 1679Ending net debt 739 2276 (633) (816) 843Source Nomura estimates

Balance sheet (HK$mn)As at 31 Mar FY08 FY09 FY10F FY11F FY12FCash amp equivalents 1229 246 3155 3339 1679Properties held for sale 219 584 584 584 584Accounts receivable 11 26 95 200 299Other current assets 73 68 189 399 598Total current assets 1531 923 4023 4522 3160Investment properties 4523 6544 8214 8214 9847Other fixed assets (net) 1133 1747 1659 3370 6469Associates 10 5 5 5 5Other LT assets 109 103 103 103 103Total assets 7306 9321 14004 16214 19584Short-term debt 423 708 708 708 708Accounts payable 466 778 945 1997 2992Other current liabilities 46 80 80 80 80Total current liabilities 935 1566 1733 2785 3779Long-term debt 1545 1815 1815 1815 1815Convertible debtOther LT liabilities 1183 1445 1654 1654 1858Total liabilities 3664 4825 5202 6253 7452Minority interest 34 34 34 34 34Preferred stockShareholders Equity 3609 4462 8768 9927 12099Other equity and reservesTotal shareholders equity 3609 4462 8768 9927 12099Total equity amp liabilities 7306 9321 14004 16214 19584

LeverageInterest cover 1136 (356) 505 na naGross debtproperty assets () 269 271 180 156 129 Net debtEBITDA (x) 559 na net cash net cash 032 Net debtequity () 205 510 net cash net cash 70

Dupont decompositionNet margin () 988 3360 585 290 363 Asset utilisation (x) 01 00 02 03 03 ROA () 95 91 95 77 121 Leverage (AssetsEquity x) 19 20 18 16 16 ROE () 180 185 166 123 197 Source Nomura estimates

ANALYST CERTIFICATIONS Each of the research analysts referenced on page 1 hereof with regard to the section of this research report for which he or she is responsible certifies that all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers discussed herein In addition each of the research analysts referenced on page 1 hereof hereby certifies that no part of his or her compensation was is or will be directly or indirectly related to the specific recommendations or views that he or she has expressed in this research report nor is it tied to any specific investment banking transactions performed by Nomura Securities International Inc Nomura International plc or by any other Nomura Group company or affiliates thereof

ISSUER SPECIFIC REGULATORY DISCLOSURES

Issuer Ticker Price

(as at last close) Closing price date Rating Disclosures

China South City Holdings Limited 1668 HK 140 HKD 19 Jan 2010 No Rating 38474855

Disclosures required in the US

47 ManagerCo-Manager in the past 12 months Nomura Securities International Inc and or its affiliates in the global Nomura group have managed or co-managed a public offering of the subject companys securities in the past 12 months

48 IB related compensation in the past 12 months Nomura Securities International Inc and or its affiliates in the global Nomura group have received compensation for investment banking services from the subject company in the past 12 months

Disclosures required in the European Union

3 Lead managerco-lead manager of securitiesrelated derivatives offering Nomura International plc or an affiliate in the global Nomura group has been lead manager or co-lead manager over the previous 12 months of a publicly disclosed offer of the issuers securities or related derivatives

8 Investment banking services Nomura International plc or an affiliate in the global Nomura group is party to an agreement with the issuer relating to the provision of investment banking services which has been in effect over the past 12 months or has given rise during the same period to a payment or to the promise of payment

Disclosures required in Hong Kong

55 Nomura financial interestbusiness relationships disclosures Nomura International (Hong Kong) Limited has received compensation or mandate for investment banking services within the preceding 12 months from the issuer

Previous Ratings Issuer Previous rating Date of change

China South City Holdings Limited No Rating Online availability of research and additional conflict-of-interest disclosures Nomura Japanese Equity Research is available electronically for clients in the US on NOMURACOM REUTERS BLOOMBERG and THOMSON ONE ANALYTICS For clients in Europe Japan and elsewhere in Asia it is available on NOMURACOM REUTERS and BLOOMBERG

Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page httpwwwnomuracomresearch or requested from Nomura Securities International Inc on 1-877-865-5752 If you have any difficulties with the website please email researchchannelsupportnomuracouk for technical assistance

The analysts responsible for preparing this report have received compensation based upon various factors including the firms total revenues a portion of which is generated by Investment Banking activities

Distribution of Ratings Nomura Global Equity Research has 1724 companies under coverage 41 have been assigned a Buy rating which for purposes of mandatory disclosures are classified as a Buy rating 42 of companies with this rating are investment banking clients of the Nomura Group 40 have been assigned a Neutral rating which for purposes of mandatory disclosures is classified as a Hold rating 50 of companies with this rating are investment banking clients of the Nomura Group 19 have been assigned a Reduce rating which for purposes of mandatory disclosures are classified as a Sell rating 8 of companies with this rating are investment banking clients of the Nomura Group As at 30 September 2009 The Nomura Group as defined in the Disclaimer section at the end of this report

Explanation of Nomuras equity research rating system in Europe Middle East and Africa US and Latin America for ratings published from 27 October 2008 The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock Analysts may also indicate absolute upside to price target defined as (fair value - current price)current price subject to limited management discretion In most cases the fair value will equal the analysts assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis etc

Stocks

bull A rating of 1 or Buy indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months bull A rating of 2 or Neutral indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months bull A rating of 3 or Reduce indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months bull A rating of RS-Rating Suspended rdquo indicates that the rating and target price have been suspended temporarily to comply with applicable regulations andor firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company Benchmarks are as follows United StatesEurope Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page httpwwwnomuracomresearch) Global Emerging Markets (ex-Asia) MSCI Emerging Markets ex-Asia unless otherwise stated in the valuation methodology

Sectors

A Bullish stance indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months A Neutral stance indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months A Bearish stance indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months Benchmarks are as follows United States SampP 500 Europe Dow Jones STOXXreg 600 Global Emerging Markets (ex-Asia) MSCI Emerging Markets ex-Asia

Explanation of Nomurarsquos equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009 Stocks

Stock recommendations are based on absolute valuation upside (downside) which is defined as (Price Target ndash Current Price) Current Price subject to limited management discretion In most cases the Price Target will equal the analystrsquos 12-month intrinsic valuation of the stock based on an appropriate valuation methodology such as discounted cash flow multiple analysis etc bull A Buy recommendation indicates that potential upside is 15 or more bull A Neutral recommendation indicates that potential upside is less than 15 or downside is less than 5 bull A Reduce recommendation indicates that potential downside is 5 or more bull A rating of RS or Rating Suspended indicates that the rating and target price have been suspended temporarily to comply with applicable regulations andor firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company bull Stocks labelled as Not rated or shown as No rating are not in Nomuras regular research coverage Sectors

A Bullish rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation A Neutral rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation A Bearish rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation

Explanation of Nomuras equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe Middle East and Africa US and Latin America published prior to 27 October 2008) Stocks

bull A rating of 1 or Strong buy indicates that the analyst expects the stock to outperform the Benchmark by 15 or more over the next six months bull A rating of 2 or Buy indicates that the analyst expects the stock to outperform the Benchmark by 5 or more but less than 15 over the next six months bull A rating of 3 or Neutral indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5 over the next six months bull A rating of 4 or Reduce indicates that the analyst expects the stock to underperform the Benchmark by 5 or more but less than 15 over the next six months bull A rating of 5 or Sell indicates that the analyst expects the stock to underperform the Benchmark by 15 or more over the next six months bull Stocks labeled Not rated or shown as No rating are not in Nomuras regular research coverage Nomura might not publish additional research reports concerning this company and it undertakes no obligation to update the analysis estimates projections conclusions or other information contained herein Sectors

A Bullish stance indicates that the analyst expects the sector to outperform the Benchmark during the next six months A Neutral stance indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months A Bearish stance indicates that the analyst expects the sector to underperform the Benchmark during the next six months Benchmarks are as follows Japan TOPIX United States SampP 500 MSCI World Technology Hardware amp Equipment Europe by sector mdash HardwareSemiconductors FTSE W Europe IT Hardware Telecoms FTSE W Europe Business Services Business Services FTSE W Europe Auto amp Components FTSE W Europe Auto amp Parts Communications equipment FTSE W Europe IT Hardware Ecology Focus Bloomberg World Energy Alternate Sources Global Emerging Markets MSCI Emerging Markets ex-Asia Explanation of Nomuras equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008 Stocks

Stock recommendations are based on absolute valuation upside (downside) which is defined as (Fair Value - Current Price)Current Price subject to limited management discretion In most cases the Fair Value will equal the analysts assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc However if the analyst doesnt think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts then the fair value may differ from the intrinsic fair value In most cases therefore our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value Recommendations are set with a 6-12 month horizon unless specified otherwise Accordingly within this horizon price volatility may cause the actual upside or downside based on the prevailing market price to differ from the upside or downside implied by the recommendation bull A Strong buy recommendation indicates that upside is more than 20 bull A Buy recommendation indicates that upside is between 10 and 20 bull A Neutral recommendation indicates that upside or downside is less than 10 bull A Reduce recommendation indicates that downside is between 10 and 20 bull A Sell recommendation indicates that downside is more than 20 Sectors

A Bullish rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation A Neutral rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation A Bearish rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation Price targets Price targets if discussed reflect in part the analysts estimates for the companys earnings The achievement of any price target may be impeded by general market and macroeconomic trends and by other risks related to the company or the market and may not occur if the companys earnings differ from estimates

DISCLAIMERS This publication contains material that has been prepared by the Nomura entity identified on the banner at the top or the bottom of page 1 herein and if applicable with the contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or elsewhere identified in the publication Affiliates and subsidiaries of Nomura Holdings Inc (collectively the Nomura Group) include Nomura Securities Co Ltd (NSC) Tokyo Japan Nomura International plc United Kingdom Nomura Securities International Inc (NSI) New York NY Nomura International (Hong Kong) Ltd Hong Kong Nomura Singapore Ltd Singapore Nomura Australia Ltd Australia PT Nomura Indonesia Indonesia Nomura Securities Malaysia Sdn Bhd Malaysia Nomura International (Hong Kong) Ltd Taipei Branch Taiwan Nomura International (Hong Kong) Ltd Seoul Branch Korea Nomura Financial Advisory and Securities (India) Private Limited Mumbai India (Registered Address Ceejay House Level 11 Plot F Shivsagar Estate Dr Annie Besant Road Worli Mumbai- 400 018 India SEBI Registration No- BSE INB011299030 NSE INB231299034 INF231299034 INE 231299034)

This material is (i) for your private information and we are not soliciting any action based upon it (ii) not to be construed as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such offer or solicitation would be illegal and (iii) based upon information that we consider reliable but we do not represent that it is accurate or complete and it should not be relied upon as such

Opinions expressed are current opinions as of the original publication date appearing on this material only and the information including the opinions contained herein are subject to change without notice If and as applicable NSIs investment banking relationships investment banking and non-investment banking compensation and securities ownership (identified in this report as Disclosures Required in the United States) if any are specified in disclaimers and related disclosures in this report In addition other members of the Nomura Group may from time to time perform investment banking or other services (including acting as advisor manager or lender) for or solicit investment banking or other business from companies mentioned herein Further the Nomura Group andor its officers directors and employees including persons without limitation involved in the preparation or issuance of this material may to the extent permitted by applicable law andor regulation have long or short positions in and buy or sell the securities (including ownership by NSI referenced above) or derivatives (including options) thereof of companies mentioned herein or related securities or derivatives In addition the Nomura Group excluding NSI may act as a market maker and principal willing to buy and sell certain of the securities of companies mentioned herein Further the Nomura Group may buy and sell certain of the securities of companies mentioned herein as agent for its clients

Investors should consider this report as only a single factor in making their investment decision and as such the report should not be viewed as identifying or suggesting all risks direct or indirect that may be associated with any investment decision

NSC and other non-US members of the Nomura Group (ie excluding NSI) their officers directors and employees may to the extent it relates to non-US issuers and is permitted by applicable law have acted upon or used this material prior to or immediately following its publication

Foreign currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment In addition investors in securities such as ADRs the values of which are influenced by foreign currencies effectively assume currency risk

The securities described herein may not have been registered under the US Securities Act of 1933 and in such case may not be offered or sold in the United States or to US persons unless they have been registered under such Act or except in compliance with an exemption from the registration requirements of such Act Unless governing law permits otherwise you must contact a Nomura entity in your home jurisdiction if you want to use our services in effecting a transaction in the securities mentioned in this material

This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc (NIPlc) which is authorised and regulated by the UK Financial Services Authority (FSA) and is a member of the London Stock Exchange It does not constitute a personal recommendation as defined by the FSA or take into account the particular investment objectives financial situations or needs of individual investors It is intended only for investors who are eligible counterparties or professional clients as defined by the FSA and may not therefore be redistributed to retail clients as defined by the FSA This publication may be distributed in Germany via Nomura Bank (Deutschland) GmbH which is authorised and regulated in Germany by the Federal Financial Supervisory Authority (BaFin) This publication has been approved by Nomura International (Hong Kong) Ltd (NIHK) which is regulated by the Hong Kong Securities and Futures Commission for distribution in Hong Kong by NIHK Neither NIPlc nor NIHK hold an Australian financial services licence as both are exempt from the requirement to hold this license in respect of the financial services either provides This publication has also been approved for distribution in Malaysia by Nomura Securities Malaysia Sdn Bhd In Singapore this publication has been distributed by Nomura Singapore Limited (ldquoNSLrdquo) NSL accepts legal responsibility for the content of this publication where it concerns securities futures and foreign exchange issued by its foreign affiliate in respect of recipients who are not accredited expert or institutional investors as defined by the Securities and Futures Act (Chapter 289) Recipients of this publication may contact NSL in respect of matters arising from or in connection with this publication NSI accepts responsibility for the contents of this material when distributed in the United States

No part of this material may be (i) copied photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report Further information on any of the securities mentioned herein may be obtained upon request If this publication has been distributed by electronic transmission such as e-mail then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted corrupted lost destroyed arrive late or incomplete or contain viruses The sender therefore does not accept liability for any errors or omissions in the contents of this publication which may arise as a result of electronic transmission If verification is required please request a hard-copy version

Additional information available upon request NIPlc and other Nomura Group entities manage conflicts identified through the following their Chinese Wall confidentiality and independence policies maintenance of a Stop List and a Watch List personal account dealing rules policies and procedures for managing conflicts of interest arising from the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation

Disclosure information is available at the Nomura Disclosure web page httpwwwnomuracomresearch

Nomura International (Hong Kong) Limited Tel +852 2536 1111 30F Two International Finance Centre 8 Finance Street Central Hong Kong Fax +852 2536 1820

CHHK88e

Caring for the environment to receive only the electronic versions of our research please contact your sales representative

Bottom fishing

Contents

Executive summary

Valuations at absolute floor price

The beginning of stable profitability

Business model amp competitive edge

Government nurturing logistics sector

CSC project details

Risks to our view

Company background

Contents

Executive summary 3 An under-valued stock 3 We believe it should be valued at HK$264 3 Peer comparison mdash PB ratio attractive 4

Valuations at absolute floor price 5 Market questions CSCrsquos business model execution capability 5 At the current price what is the market factoring in 5 What are the upside catalysts 6 What does our valuation include 6 Valuation of CSC Shenzhen Phase I and II alone will be HK$183share 7 NAV breakdown by property type 10 Peer comparison mdash PB ratio attractive 12 Valuation methodology 12 Risks 12

The beginning of stable profitability 13 Choppy earnings in the past 13 Cashflow and debt analysis 14

Business model amp competitive edge 15 Comprehensive services and facilities 15 Macro factors favouring CSCrsquos business model 16

Government nurturing logistics sector 20 CSC sales and leasing strategy 20 Replication of CSC model 20 Existing competition 20

CSC project details 22 CSC Shenzhen Phase I 22 CSC Shenzhen Phase II 24 CSC Shenzhen comparables 25 ASEAN Logistics City Nanning 26 China South City Nanchang 29

Risks to our view 32

Company background 33 What is the market pricing in A simulation 35 Our assumptions in deriving our NAV PT of HK$264share 37

Financial statements 42

Competitive edge

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Competitive edge

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Competitive edge

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Competitive edge

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Upside potential

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Residential15

Commercial85

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Financial analysis

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Business model

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

CSCTenants

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

2008-2010

2009-2010

Dongguan

2014-2015

2009-2011

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Competitive edge

Macro tailwinds

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Project details

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Rental occupancy

Total occupancy

rate Number

of tenants

Rental occupancy

Total occupancy

rateNumber

of tenants

Rental occupancy

Total occupancy

rateNumber of

rentMonthly

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

100000

120000

140000

FY07 FY08 FY090

FY07 FY08 FY09

624 615648

196242 232

FY07 FY08 FY09

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

650-1050 100

Materials

foreign 15

450-650 gt95

foreign 30

650-1000 100

Electronics 230980 NA 450-850 100

foreign 10

650-900 100

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Occupancy ratio

- 26603 300~500 (1F) 150~250 (2F) 30~120 (3F-5F)

100 (1F) gt90 (2F~5F)

90 (1F) 70(2F) 100(3F) 90(basement)

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Lianxi Grand Market

Wanma Garment Plaza

1999 (phase one) 2004

(phase two)

2006 (Phase I)

54300 RV 25-55 CV 12000~16000

1000000 (Three

Phases)

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Appendix 1

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

2003 2004 2005 2006 2007 20082002 2009 2010

ProjectsRecent

Developments

May 2002

China South City

Oct 2003

commenced

Dec 2004

sales commence

Feb 2008

West Garden

Aug 2006

Dec 2007

1H 2010Expect to

Nanningprojects

Dec 2007

agreement

Feb 2007

Signing of Nanchang

project master

agreement

4Q 2009

Phase I of Nanchang

and Nanningprojects

July 2007

Bond Issuance

Jul 2003

Acquired land from

Pinghugovernment

1H 2009

center completed

2H 2009

center completed

Jun 2009

Jul 2009

due in 2012

Sep 2009

Listed in the HKEx

Stock code 1668

Oct 2009

Project

Nov 2009

Dec 2009

Project

Recent Developments

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Source Company data

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

GFA (sqm) 26500 17667 8833

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Issuer Ticker Price

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Stocks

Sectors

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

CHHK88e

Bottom fishing

Contents

Executive summary

CSC project details

Risks to our view

Company background

Documents

China South City Holdings1668 HK - corpasia.net€¦ · Nomura 1 22 January 2010 Any authors named on this report are research analysts unless otherwise indicated. See the important