July 9, 2012

China: Real Estate Developers

Equity Research

Vol down from last weeks high, inventory fell in the 1st week of July
July 2-July 8 transaction volume and ASP
On a wow basis, 26 out of 33 cities with data available saw vol. decrease, with a group median of -18% (vs. 38% for the week ended July 1). On a yoy basis, 30 of the 33 cities with data available saw volumes increase, with a group median of 78% (vs. +79%). Compared with the June 2012 weekly average, 34 cities with data available saw volumes flat, with a group median of 0% (vs. +49%). Cities by tiers all retreated from last weeks high, especially Tier 1 cities. This is similar across regions, especially the Yangtze River Delta region. In terms of ASP, on a wow basis, 8 out of 12 cities with data available on median level saw prices decrease by 5% (vs. +6%); on a 3-month cumulative basis, 11 of 13 cities with data available saw prices increase, with a group median of 4.2% from the prior 3-month average.
MAJOR CITIES AGGREGATE TRANSACTION VOLUME AND ASP BY TIERS
(K sqm)

Tier 1 aggregate volume (LHS) Tier 3 cities aggregate volume (LHS) Tier 2 cities aggregate ASP (RHS)

Tier 2 cities aggregate volume (LHS) Tier 1 cities aggregate ASP (RHS) Tier 3 cities aggregate ASP (RHS)

(Rmb/sqm)

6,000

22,000 20,000 18,000 16,000

5,000

4,000

14,000 12,000

3,000 10,000 2,000 8,000 6,000 1,000 4,000 2,000 0 0

Ytd performance
As of end July 8, 35 cities with data available saw average weekly vol in July 2% lower than the June average, but 56% higher than that of the 2011 average. Ytd, 15 of the 27 cities with data available on a median level saw volumes decrease, with a group median of -0.4% yoy (vs. -8% for the week ended July 1). Compared with 2010, 14 of the 23 cities with data available saw volumes increase, with a group median of 4% (vs. +1%). In terms of ASP, 18 out of the 27 cities saw prices decrease ytd, with a group median of -5% yoy (vs. -4%).

Note: (1) Tier 1 cities refer to Beijing, Shanghai, Shenzhen, Guangzhou; Tier 2 cities refer to Tianjin, Nanjing, Chengdu, Changsha, Suzhou, Qingdao, Dalian, Chongqing, Hangzhou, Sanya, and Xi'an, Tier 3 cities refer to Nanchang, Dongguan, Hefei, Kunming, Ningbo, Shantou, and Bengbu. (2) Aggregate ASP calculation for cities are either on weekly or monthly basis subject to data availability. Source: CIA, Gao Hua Securities Research estimates

SUMMARY OF OUR ACTIONABLE STOCK IDEAS

12-M TP
Potential upside/ downside 7.23 1.33 5.96 11.37 5.37 20.00 13.10 15.40 4.10 1.67 71% 53% 29% 27% 26% 26% 24% 20% 20% -12% 28% 8.54 1.53 6.37 15.56 6.82 23.94 15.83 18.55 5.25 2.10

Bull-case valuation
Variance vs. share price

Bear-case valuation
Variance vs. share price

9/Jul

Ticker

Rating LCY

Inventory levels
According to the 12-month rolling GFA sold, average inventory take-up time (for the 13 cities we track) decreased to 16.0 months compared with 16.3 months at the week ended July 1. Among 13 cities we track: (1) inventory declined in Beijing, Nanjing, Suzhou, Hangzhou, Qingdao, Guangzhou and Fuzhou; (2) inventory is stable in Changchun, Shanghai, Shenzhen and Dongguan; (3) inventory is still growing: in Ningbo and Xiamen.

Offshore listed Evergrande 3333.HK Fantasia 1777.HK Poly HK 0119.HK Greentown 3900.HK Sino Ocean 3377.HK CRL 1109.HK Agile 3383.HK Longfor 0960.HK Sunac 1918.HK SZInv 0604.HK Offshore average Onshore listed Lushang 600223.SS Zhongnan 000961.SZ BCD 600376.SS Vanke (B) 200002.SZ Vanke (A) 000002.SZ Poly 600048.SS Gemdale 600383.SS CWTC 600007.SS OCT 000069.SZ Onshore average Total average

B* B B B B B B B B S

HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$

102% 76% 38% 73% 60% 50% 49% 45% 54% 11% 56%

4.76 0.98 3.50 7.92 3.67 14.44 9.29 10.89 2.72 1.38

13% 12% -24% -12% -14% -9% -12% -15% -20% -27% -11%

B B* B* B B B B S S

Rmb Rmb Rmb HK$ Rmb Rmb Rmb Rmb Rmb

8.23 17.70 18.00 12.98 12.12 15.00 8.00 8.50 4.74

53% 34% 31% 27% 25% 15% 15% -19% -33% 17% 23%

9.29 20.11 19.85 15.65 14.14 18.32 9.58 9.00 7.50

72% 53% 45% 54% 46% 41% 38% -15% 6% 38% 47%

5.56 12.07 11.45 9.60 8.96 11.39 5.95 7.20 4.16

3% -8% -17% -6% -7% -12% -14% -32% -41% -15% -13%

*on our Conviction List. Source: Datastream, Gao Hua Securities Research estimates

Investment view
Our Buy ideas: Evergrande (CL), BCD (CL), Zhongnan (CL), CRL, Longfor, Agile, Greentown, Poly HK, Sunac, Sino-Ocean, Fantasia, Poly (A), Gemdale, Vanke (A), Vanke (B), and Lushang. Our Sell ideas: SZInv, OCT, and CWTC. Downside risks: Policy missteps or macro hard landing. Upside risks: Unexpected government policy easing.
Yi Wang, CFA +86(21)2401-8930 yi.wang@ghsl.cn Beijing Gao Hua Securities Company Limited Jason Sun +86(10)6627-3187 jason.sun@ghsl.cn Beijing Gao Hua Securities Company Limited Vicky Li +86(21)2401-8926 vicky.li@ghsl.cn Beijing Gao Hua Securities Company Limited Jacqueline Du +86(10)6627-3147 jacqueline.du@ghsl.cn Beijing Gao Hua Securities Company Limited

For a special disclosure as to Goldman Sachs investments in IFM Investments Limited, see the statement preceding the Reg AC Certification.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by nonUS affiliates are not registered/qualified as research analysts with FINRA in the U.S.
Global Investment Research

The Goldman Sachs Group, Inc.

July 9, 2012

China: Real Estate Developers

The author would like to thank Olivia Xiao for her contribution to this report.

Exhibit 1: Ytd transaction volume decreased by a median level of 0.4% yoy among the 27 cities with data available
Weekly and ytd transaction volume comparison of 36 cities

Volume 0702-0708

Weekly Comparison wow yoy vs. 2012 Jun weekly avg

YTD (Jan 2, 2012 -July 8, 2012) comparison 2012 YTD vs 2011 vs 2010 vs 2009 vs 2008

(k sqm)
Pan-Bohai Rim & North China Beijing Tianjin Qingdao Dalian Changchun Jinan Harbin Lianyungang Yangtze River Delta Region Shanghai Nanjing Suzhou Wenzhou Hangzhou Ningbo Xuzhou Yangzhou Southern China Shenzhen Guangzhou Fuzhou Sanya Xiamen Dongguan Huizhou Haikou Shantou Central & Western China Chengdu Changsha Nanchang Guiyang Baotou Chongqing Wuhan Hefei Kunming Bengbu Xi'an Median

(%) -38% -42% -8% 7% -20% n.a. -18% -17% -30% -14% -50% 50% -31% -2% -27% -35% 6% -43% -14% -11% -33% -28% -10% 19% -28% 97% -14% -20% -54% 20% -35% 14% n.a. -2% -38% n.a.
-18% 7 26

(%) 112% -6% -9% n.a. 22% n.a. 348% 15% 26% 173% 318% 135% 224% 98% 58% 57% 5% 58% 34% 132% 78% 37% 58% 286% 59% 126% 144% 86% 132% 23% 97% 90% n.a. 201% -16% 14%
78% 30 3

(%) -13% -9% 27% 33% 7% n.a. 99% -7% -3% 1% -30% 7% -11% 42% -4% -2% -13% -19% 12% 14% 0% -15% -1% 34% 1% 45% 5% -3% -40% -1% -6% 14% n.a. 10% 1% -10%
0% 17 17

(k sqm) 4,531 3,761 2,965 730 2,361 n.a. 1,953 1,990 6,223 3,399 6,603 580 4,100 1,649 3,033 735 1,646 4,517 936 510 2,227 2,675 1,626 1,226 378 3,971 6,953 1,784 4,401 1,347 10,352 7,512 3,528 2,972 745 3,829
2,675 Up cities Down cities

(%) 23% -22% -26% -36% n.a. n.a. n.a. n.a. -11% 61% 178% -8% 81% 8% n.a. n.a. 11% 0% -15% -34% 91% -20% 10% n.a. -40% 5% 50% 68% n.a. -13% 38% n.a. -27% -7% 0% -21%
-0.4% 12 15

(%) -9% -16% -23% -51% n.a. n.a. n.a. n.a. -4% 54% 235% n.a. 196% 6% n.a. n.a. 27% 34% n.a. -48% 84% 20% n.a. n.a. 4% -13% 2% 44% n.a. -19% 1% n.a. 54% 7% n.a. -30%
4% 14 9

(%) -43% -37% -18% -59% -38% n.a. n.a. n.a. -52% -27% 54% -48% 9% -40% n.a. n.a. -59% -29% -70% n.a. -13% -17% n.a. n.a. -17% -37% -23% -28% n.a. -27% -12% n.a. n.a. 7% n.a. -18%
-28% 3 21

(%) 10% 37% 310% -45% -5% n.a. n.a. n.a. -32% 34% 223% n.a. 160% n.a. n.a. n.a. 2% 128% 16% n.a. 301% 68% n.a. n.a. n.a. 11% 31% 134% n.a. 81% 67% n.a. n.a. n.a. n.a. 30%
36% 17 3

255 173 211 48 141 n.a. 273 90 285 194 256 42 257 128 160 32 72 195 47 14 141 114 78 84 15 219 372 91 187 67 428 433 n.a. 178 29 160
151 Up cities Down cities

Note: GFA numbers indicated in Chongqing, Hangzhou, Wuhan, Haikou, Kunming, Harbin, Ningbo, Shantou, Xuzhou, Yangzhou, Lianyungang, and Bengbu are for commodity properties; for others, the numbers refer to residential properties. Source: CIA.

Goldman Sachs Global Investment Research

July 9, 2012

China: Real Estate Developers

Exhibit 2: Ytd ASP decreased by a median level of 5% yoy among the 27 cities with data available
27 cities weekly and ytd ASP comparison

ASP 0702-0708

Weekly Comparison wow yoy vs. 2012 Jun avg

YTD (Jan 2, 2012 - July 8, 2012) comparison 2012YTD vs 2011 vs 2010 vs 2009 vs 2008

(Rmb/sqm)
Pan-Bohai Rim & North China Beijing Tianjin Qingdao Dalian Jinan Yangtze River Delta Region Shanghai Nanjing Suzhou Wenzhou Hangzhou Ningbo Southern China Shenzhen Guangzhou Fuzhou Sanya Xiamen Dongguan Huizhou Shantou Central & Western China Chengdu Changsha Nanchang Baotou Chongqing Hefei Bengbu Xi'an Median

(%) -2% -9% n.a. n.a. n.a. 0% n.a. n.a. n.a. n.a. -11% -5% 2% n.a. 7% n.a. -6% n.a. -20% n.a. n.a. n.a. -5% -6% n.a. 3% n.a.
-5%

(%) -19% 10% n.a. n.a. n.a. 28% n.a. n.a. n.a. n.a. -15% -8% 7% n.a. -10% n.a. -4% n.a. -24% n.a. n.a. n.a. -7% -10% n.a. 9% 4%
-7%

(%) -1% -7% n.a. n.a. n.a. 8% n.a. n.a. n.a. n.a. -10% -3% 0% n.a. 6% n.a. -6% n.a. -18% n.a. n.a. n.a. -5% -4% n.a. -1% 2%
-3%

(Rmb/sqm) 20,283 10,000 7,454 11,770 7,228 15,100 10,086 10,450 18,504 17,152 11,172 16,037 13,247 12,935 24,443 13,083 8,776 5,721 6,503 8,678 5,952 6,962 4,545 6,676 7,070 5,003 6,510
10,000

(%) -5% 9% -4% -6% -7% 3% -18% -2% 14% -28% -19% -15% 1% -9% 20% -7% 8% -9% 19% -5% 10% -7% -4% -6% 11% -5% 0%
-5%

(%) 1% 10% 13% 13% n.a. 15% -5% 12% n.a. -16% -21% -23% 13% n.a. 12% 18% 15% n.a. 28% 22% 33% 30% 19% 24% 8% n.a. 15%
13%

(%) 67% 45% -4% 46% n.a. 34% 46% 54% 48% 33% 18% 30% 56% 89% n.a. 69% 48% n.a. 48% 82% 47% 63% 45% 64% n.a. n.a. 46%
48%

(%) 56% 41% 6% 63% n.a. 70% 48% 50% n.a. 21% n.a. 24% 33% 74% n.a. 22% 34% n.a. n.a. 61% 50% 33% 67% 62% n.a. n.a. 52%
50%

21,061 9,572 n.a. n.a. n.a. 19,303 n.a. n.a. n.a. n.a. 11,099 18,312 12,436 n.a. 28,182 n.a. 7,895 n.a. 5,854 n.a. n.a. n.a. 4,372 6,522 n.a. 5,494 6,861
9,572

Up cities 4 5 4 Up cities 9 18 21 19 Down cities 8 8 9 Down cities 18 4 1 0 Note: GFA numbers indicated in Chongqing, Ningbo, Shantou, and Bengbu are for commodity properties; for others, the numbers refer to residential properties.
Source: CIA.

Goldman Sachs Global Investment Research

July 9, 2012

China: Real Estate Developers

Exhibit 3: We estimate it would take 16.0 months on average to clear the inventory in the 13 cities we follow
13 cities inventory comparison
(mn sqm)
GFA sold in 2011 Avg GFA sold during 06-10 Rolling 12 months GFA sold Inventory as of July 8 2012

30
Pan Bohai Rim

Yangtze River Delta

Pearl River Delta

25

20

15

10

Note: (1) Rolling 12 months GFA sold is calculated based on the past 12 months avg. sales velocity; (2) GFA numbers indicated in Hangzhou and Ningbo are for commodity properties; for others, the numbers refer to residential properties. Source: CIA, Gao Hua Securities Research estimates.

Exhibit 4: Offshore developers existing NAV discount

(%) 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% NAV prem/disc (left scale) Adjusted sector market cap index (right scale) Base point 2005/12/9=100

Exhibit 5: Onshore developers existing NAV discount

(%) 200%
NAV prem/disc (left scale) Adjusted sector market cap index (right scale) Base point 2006/2/17=100

The off-shore sector market cap weighted average discount to NAV is 11.4%

1,100 1,000 900 800 700 600 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700

1,600 1,400

150%

1,200 1,000

100%

800 600

50%

400 200

0%

0 -200

-50% The on-shore sector market cap weighted average discount to NAV is 12.4%

-400 -600 -800

-100%

Source: Datastream, Gao Hua Securities Research estimates.

Source: Datastream, Gao Hua Securities Research estimates.

Goldman Sachs Global Investment Research

July 9, 2012

Goldman Sachs Global Investment Research 5

Exhibit 6: China developers valuation comparison

Company

Ticker

Mkt Cap (US$ bn) 4.9 2.2 19.4 11.9 7.2 8.3 0.6 2.8 1.9 4.4 1.9 8.5 2.2 0.7 0.9 5.5 2.4 3.1 4.5 1.3

Price as of 12 mth Price target 13.10 8.24 18.54 20.00 3.87 7.23 1.33 2.46 11.37 12.33 5.11 15.40 5.96 1.72 1.67 12.18 4.19 5.37 6.68 4.10

Rating Buy Neutral Neutral Buy Neutral Buy* Buy Neutral Buy Neutral Neutral Buy Buy Neutral Sell Neutral Neutral Buy Neutral Buy

9/Jul/12

Potential upside/ downside (%) 24 11 0 26 20 71 53 4 27 16 1 20 29 30 (12) 0 31 26 8 20 20

Target price disc. to NAV -30% -20% -20% -20% -30% -30% -60% -30% -40% -40% -30% -30% -50% -50% -40% -40% -50% -50% -40% -50%

End-12 NAV scenario analysis Shr price (disc)/ prem to NAV Shr price (disc)/ prem to NAV Bear-case Shr price (disc)/ prem to NAV

FD Core P/E (x)

P/B(x)

Dividend yield (%)

Base-case

Bull-case

12E 7.1 8.6 9.5 14.4 7.7 4.9 5.7 13.5 3.3 6.7 6.7 10.0 8.1 5.6 9.2 7.3 13.6 8.8 7.3 3.7 8.1

13E 6.1 7.6 10.4 11.0 7.1 5.2 4.8 13.0 3.0 6.8 7.5 9.2 6.9 5.8 9.8 7.6 13.4 8.4 5.6 3.3 7.6

12E 1.3 2.4 1.8 1.4 1.4 1.3 0.6 1.1 0.8 1.1 0.8 2.0 0.6 0.3 0.4 1.0 0.5 0.7 1.1 0.8 1.1

13E 1.1 1.9 1.6 1.3 1.2 1.1 0.5 1.0 0.7 1.0 0.8 1.7 0.6 0.3 0.4 0.9 0.5 0.7 0.9 0.7 0.94

12E 2.8 0.6 1.6 1.4 2.6 5.1 3.1 1.1 3.1 3.8 3.0 1.4 2.5 3.6 4.3 3.4 1.3 3.4 6.0 2.7 2.8

13E 3.3 0.7 1.4 1.8 2.8 4.8 3.6 1.2 3.4 3.7 2.7 1.5 2.9 3.5 4.1 3.3 1.3 3.6 7.8 3.0 3.0

H-share listed Agile COGO COLI CRL CG Evergrande Fantasia Franshion Greentown China R&F KWG Longfor Poly HK Powerlong Shenzhen Investment Shimao Shui On Land Sino Ocean SOHO China Sunac Offshore average A/B-share listed Beijing Capital Development Beijing Urban Construction China Merchants Property (A) China Vanke (A) China Vanke (B) China World Trade Center Financial Street Gemdale Corp. Hangzhou Binjiang Huafa Jiangsu Zhongnan Lushang Property Overseas Chinese Town Poly Real Estate Risesun Real Estate Shanghai Shimao Onshore average Singapore listed 600376.SS 600266.SS 000024.SZ 000002.SZ 200002.SZ 600007.SS 000402.SZ 600383.SS 002244.SZ 600325.SS 000961.SZ 600223.SS 000069.SZ 600048.SS 002146.SZ 600823.SS 3.3 2.0 7.1 16.9 1.7 1.7 3.2 4.9 2.0 1.1 2.4 0.9 8.2 14.7 3.5 1.9 Buy* Neutral Neutral Buy Buy Sell Neutral Buy Neutral Neutral Buy* Buy Sell Buy Neutral Neutral 13.7 (Rmb) 14.4 (Rmb) 25.9 (Rmb) 9.7 (Rmb) 10.2 (HK$) 10.5 (Rmb) 6.6 (Rmb) 7.0 (Rmb) 9.3 (Rmb) 8.6 (Rmb) 13.2 (Rmb) 5.4 (Rmb) 7.1 (Rmb) 13.0 (Rmb) 11.7 (Rmb) 10.4 (Rmb) 18.00 15.01 24.20 12.12 12.98 8.50 7.80 8.00 9.42 10.26 17.70 8.23 4.74 15.00 10.75 13.74 31 4 (7) 25 27 (19) 19 15 1 20 34 53 (33) 15 (8) 32 13 -30% -40% -40% -30% -40% -40% -40% -40% -40% -50% -30% -30% -50% -30% -30% -40% 25.7 25.0 40.3 17.3 21.6 14.2 13.0 13.3 15.7 20.5 25.3 11.8 9.5 21.4 15.4 22.9 (47) (43) (36) (44) (53) (26) (49) (48) (41) (58) (48) (54) (25) (39) (24) (55) (43) 28.4 28.0 43.5 20.2 26.1 15.0 14.7 16.0 19.5 25.0 28.7 13.3 15.0 26.2 17.8 26.9 (52) (49) (40) (52) (61) (30) (55) (56) (52) (66) (54) (59) (53) (50) (34) (61) (52) 16.4 19.0 33.0 12.8 16.0 12.0 10.7 9.9 10.6 13.9 17.2 7.9 8.3 16.3 10.8 16.1 (16) (24) (21) (25) (36) (12) (39) (30) (12) (39) (24) (32) (15) (20) 8 (35) (23) 9.3 10.3 14.3 7.6 6.6 37.6 13.1 8.8 10.6 8.4 12.0 12.5 16.1 10.8 11.1 11.1 10.8 7.8 10.0 15.9 7.3 6.3 32.7 12.7 8.1 10.2 8.1 9.1 9.4 16.3 8.4 10.1 9.1 9.9 1.5 1.8 1.9 1.6 1.4 2.3 1.0 1.3 2.1 1.0 2.3 3.1 2.8 2.2 2.8 1.1 1.9 1.3 1.6 1.7 1.4 1.2 2.2 0.9 1.1 1.8 0.9 1.8 2.3 2.5 1.8 2.3 1.0 1.6 2.2 1.5 0.7 2.0 2.3 0.8 0.1 1.2 0.9 2.4 0.0 0.0 1.6 1.8 1.3 0.0 1.2 2.6 1.5 0.6 2.0 2.3 0.9 0.1 1.2 1.0 2.5 0.0 0.0 1.5 2.4 1.4 0.0 1.3 3383.HK 0081.HK 0688.HK 1109.HK 2007.HK 3333.HK 1777.HK 0817.HK 3900.HK 2777.HK 1813.HK 0960.HK 0119.HK 1238.HK 0604.HK 0813.HK 0272.HK 3377.HK 0410.HK 1918.HK 10.6 (HK$) 7.5 (HK$) 18.5 (HK$) 15.9 (HK$) 3.2 (HK$) 4.2 (HK$) 0.9 (HK$) 2.4 (HK$) 9.0 (HK$) 10.6 (HK$) 5.0 (HK$) 12.8 (HK$) 4.63 (HK$) 1.3 (HK$) 1.9 (HK$) 12.1 (HK$) 3.2 (HK$) 4.3 (HK$) 6.2 (HK$) 3.4 (HK$) 18.7 10.3 23.2 25.0 5.5 10.3 3.3 3.5 18.9 20.6 7.3 22.0 11.9 3.4 2.8 20.3 8.4 10.7 11.1 8.2 (43) (28) (20) (36) (42) (59) (74) (33) (53) (48) (31) (42) (61) (62) (32) (40) (62) (60) (44) (58) (47) 22.6 12.3 27.6 29.9 7.2 12.2 3.8 3.9 25.9 23.3 8.5 26.5 12.7 3.8 3.5 24.7 9.0 13.6 11.3 10.5 (53) (39) (33) (47) (56) (65) (77) (39) (65) (54) (41) (52) (64) (65) (46) (51) (65) (69) (45) (67) (55) 13.3 7.5 16.1 18.1 4.5 6.8 2.4 2.7 13.2 13.6 4.8 15.6 7.0 2.2 2.3 12.4 4.7 7.3 8.9 5.4 (20) (1) 15 (12) (29) (38) (64) (11) (32) (22) 5 (18) (34) (40) (18) (2) (32) (42) (30) (37) (23)

China: Real Estate Developers

Yanlord Perennial China Retail Trust US listed E-House IFM Investment Simple average of above

YNLG.SI PCRT.SI EJ CTC

2.2 0.4 0.4 0.02

Neutral Neutral Neutral Neutral

1.3 (S$) 0.5 (S$) 5.6 (US$) 1.2 (US$)

1.53 0.59 7.68 1.53

16 22 37 30 20

-40% -30% n.a. n.a.

2.5 0.8 NA NA

(48) (43) NA NA (45)

3.1 0.9 NA NA

(58) (46) NA NA (53)

1.5 0.5 NA NA

(12) (3) NA NA (22)

12.6 143.2 9.5 n.m. 13.5

14.3 46.4 7.3 n.m. 10.3

0.8 0.6 0.8 0.3 1.4

0.8 0.5 0.8 0.5 1.2

0.9 8.0 0.5 0.0 2.1

0.8 7.2 1.0 0.0 2.2

Note: 1) *Indicates the stock is on our regional Conviction List. 2) Our 12-month target prices are based on end-2012E NAV for developers, 2013E P/B multiple for IFM and 2012E P/E multiple for E-House. 3) Base-case: We assume price down 15-20% from end-2011 level in 2012E followed by 15% appreciation in 2H13. Bull-case: We expect physical market only see a mild price decline (10%) in 1H12 and then recover by about 20% before end-2013E. Bear-case: We assume property price will decline to last trough level (late 2008/early 2009), or about 40% below the current level.

Source: Datastream, company data, Gao Hua Securities Research estimates.

Other disclosure
Goldman Sachs owns 20% of the common stock of IFM Investments Ltd. Goldman Sachs does not hold any of the seats on the Companys board of directors. Goldman Sachs may have other business relationships with the Company.

July 9, 2012

China: Real Estate Developers

Disclosure Appendix

Reg AC
I, Yi Wang, CFA, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage universe. The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends.

Quantum
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.

GS SUSTAIN
GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list includes leaders our analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers. Leaders are identified based on quantifiable analysis of three aspects of corporate performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the environmental, social and governance issues facing their industry).

Disclosures
Coverage group(s) of stocks by primary analyst(s)
Yi Wang, CFA: China Property. China Property: Agile Property Holdings, Beijing Capital Development Co., Beijing Urban Construction Investment Development, China Merchants Property (A), China Overseas Grand Oceans Group, China Overseas Land, China Resources Land, China Vanke (A), China Vanke (B), China World Trade Center, Country Garden Holdings Company, E-House (China) Holdings Limited, Evergrande Real Estate Group, Fantasia Holding Group Co., Financial Street Holding Co, Franshion Properties (China), Gemdale Corp, Greentown China Holdings, Guangzhou R&F Properties, Hangzhou Binjiang Real Estate Group Co, Huafa Industrial, IFM Investments, Jiangsu Zhongnan Construction Group Co, KWG Property Holding, Longfor Properties Co., Lushang Property, Perennial China Retail Trust, Poly (Hong Kong) Investments, Poly Real Estate Group, Powerlong Real Estate Holdings, Risesun Real Estate Development Co, SOHO China, Shanghai Shimao Co., Shenzhen Investment, Shenzhen Overseas Chinese Town Holding, Shimao Property, Shui On Land, Sino-Ocean Land Holdings, Sunac China Holdings, Yanlord Land.

Company-specific regulatory disclosures

The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of Goldman Sachs and referred to in this research. Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Evergrande Real Estate Group (HK$4.22) Goldman Sachs had an investment banking services client relationship during the past 12 months with: Evergrande Real Estate Group (HK$4.22) Goldman Sachs makes a market in the securities or derivatives thereof: Evergrande Real Estate Group (HK$4.22) Goldman Sachs Global Investment Research 7

July 9, 2012

China: Real Estate Developers

Goldman Sachs holds a position greater than U.S. $15 million (or equivalent) in the debt or debt instruments of: Evergrande Real Estate Group (HK$4.22) There are no company-specific disclosures for: Beijing Capital Development Co. (Rmb13.73) and Jiangsu Zhongnan Construction Group Co (Rmb13.18)

Distribution of ratings/investment banking relationships

Goldman Sachs Investment Research global coverage universe
Rating Distribution Investment Banking Relationships

Buy

Hold

Sell

Buy

Hold

Sell

Global 31% 54% 15% 48% 41% 36% As of April 1, 2012, Goldman Sachs Global Investment Research had investment ratings on 3,507 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.

Price target and rating history chart(s)

Evergrande Real Es tate Group (3333.HK) 10.00 8.00 6.00 4.00 2.00 3.39 0.00 Stock Price 6.55 5.93 8.2 4.26 4.15 3.47 4 Stock Price Currency : Hong Kong Dollar 80 7.23 7.44 75 70 65 60 55 50 45 40 Index Price Stock Price 5 Index Price Dec 12 B M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M 2009 2010 2011 2012 2,000 10 2,500 15 Be ijing Capital De velopm ent Co. (600376.SS) 25 18.46 20 11.36 16.53,500 16.32 3,000 Stock Price Currency : Chinese Renminbi 4,000 Goldman Sachs rating and stock price target history 5.08 6.53 8.08 8.6 6.29 Goldman Sachs rating and stock price target history

Feb 28 B M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M 2009 2010 2011 2012

Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2012. Rating Covered by Yi Wang, CFA, Price target Price target at removal MSCI China as of Feb 28, 2010 Not covered by current analyst

Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2012. Rating Covered by Jason Sun, Price target Price target at removal Shanghai - Shenzhen 300 as of Dec 12, 2010 Not covered by current analyst

The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.

The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.

Jiangs u Zhongnan Construction Group Co (000961.SZ) 20 10.73 15 10 5 0 Stock Price

Stock Price Currency : Chinese Renminbi 4,000 12.5 8.34 3,000 2,500 2,000 Index Price 14.68 3,500

Goldman Sachs rating and stock price target history

Dec 12 N M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M 2009 2010 2011 2012

Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2012. Rating Covered by Jason Sun, Mar 7, 2012 to B f rom N as of Dec 12, 2010 Price target Price target at removal Shanghai - Shenzhen 300 Not covered by current analyst

The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.

Regulatory disclosures Disclosures required by United States laws and regulations

See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/comanaged public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes a market in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities. The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts may not be associated persons of Goldman, Sachs & Co. and therefore may not be subject to NASD Rule 2711/NYSE Rules 472 restrictions on communications with subject company, public appearances and trading securities held by the analysts.
Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachs website at http://www.gs.com/research/hedge.html.

Additional disclosures required under the laws and regulations of jurisdictions other than the United States
The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: Goldman Sachs Australia Pty Ltd and its affiliates are not authorised deposit-taking institutions (as that term is defined in Goldman Sachs Global Investment Research 8

July 9, 2012

China: Real Estate Developers

the Banking Act 1959 (Cth)) in Australia and do not provide banking services, nor carry on a banking business, in Australia. This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act, unless otherwise agreed by Goldman Sachs. Brazil: Disclosure information in relation to CVM Instruction 483 is available at http://www.gs.com/worldwide/brazil/area/gir/index.html. Where applicable, the Brazil-registered analyst primarily responsible for the content of this research report, as defined in Article 16 of CVM Instruction 483, is the first author named at the beginning of this report, unless indicated otherwise at the end of the text. Canada: Goldman, Sachs & Co. has approved of, and agreed to take responsibility for, this research in Canada if and to the extent it relates to equity securities of Canadian issuers. Analysts may conduct site visits but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private Limited; Japan: See below. Korea: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. New Zealand: Goldman Sachs New Zealand Limited and its affiliates are neither "registered banks" nor "deposit takers" (as defined in the Reserve Bank of New Zealand Act 1989) in New Zealand. This research, and any access to it, is intended for "wholesale clients" (as defined in the Financial Advisers Act 2008) unless otherwise agreed by Goldman Sachs. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Singapore: Further information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference only and must not be reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the Financial Services Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request.
European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/126/EC is available at http://www.gs.com/disclosures/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with Investment Research. Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer under the Financial Instrument and Exchange Law, registered with the Kanto

Financial Bureau (Registration No. 69), and is a member of Japan Securities Dealers Association (JSDA) and Financial Futures Association of Japan (FFAJ). Sales and purchase of equities are subject to commission pre-determined with clients plus consumption tax. See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company.

Ratings, coverage groups and views and related definitions

Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a stock's return potential relative to its coverage group as described below. Any stock not assigned as a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return. Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership. Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman

Sachs Research has suspended the investment rating and price target for this stock, because there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

Global product; distributing entities

The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897); in Brazil by Goldman Sachs do Brasil Corretora de Ttulos e Valores Mobilirios S.A.; in Canada by Goldman, Sachs & Co. regarding Canadian equities and by Goldman, Sachs & Co. (all other research); in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection with its distribution in the United Kingdom and European Union.
European Union: Goldman Sachs International, authorized and regulated by the Financial Services Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman Sachs AG, regulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht, may also distribute research in Germany.

Goldman Sachs Global Investment Research

July 9, 2012

China: Real Estate Developers

General disclosures
This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst's judgment. Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division. Goldman, Sachs & Co., the United States broker dealer, is a member of SIPC (http://www.sipc.org). Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. The analysts named in this report may have from time to time discussed with our clients, including Goldman Sachs salespersons and traders, or may discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed in this report, which impact may be directionally counter to the analysts' published price target expectations for such stocks. Any such trading strategies are distinct from and do not affect the analysts' fundamental equity rating for such stocks, which rating reflects a stock's return potential relative to its coverage group as described herein. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at http://www.theocc.com/about/publications/character-risks.jsp. Transaction costs may be significant in option strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation will be supplied upon request. In producing research reports, members of the Global Investment Research Division of Goldman Sachs Australia may attend site visits and other meetings hosted by the issuers the subject of its research reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Goldman Sachs Australia considers it is appropriate and reasonable in the specific circumstances relating to the site visit or meeting. All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all research content is redistributed to our clients or available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our research by third party aggregators. For all research available on a particular stock, please contact your sales representative or go to http://360.gs.com. Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY 10282. 2012 Goldman Sachs. 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 Goldman Sachs Group, Inc.

Goldman Sachs Global Investment Research

10