REI growth remains stable at 7.9% y-y    YTD REI growth has remained stable at +7.9% y-y (vs. 7.9% in 7M17) and YTDresidential REI at +10.1% y-y (vs. 10.0% in 7M17). We believe this is mainlydriven by: 1) higher land sales value which grew 50.6% y-y in August vs. 41.1%in 7M17(although land area purchased rose only 3.6% y-y in August, vs.11.1% in 7M17), but 2) slower new starts at 5.3% y-y in August (vs. +8.0% in7M17). Given the higher land sales value, low inventory but tighter credit, wecontinue to expect 5% new starts and high-single-digit REI growth for 2017F.    Property sales growth moderates further; large developers continue to outpace    Property sales growth remained moderate in August with sales volume up4.3% y-y (vs. 2.0% in July) and sales value up 6.4% y-y (vs. 4.8% in July). YTDsales volume has risen 12.7% and sales value has increased 17.2%, implyingmore contribution from lower-tier markets. With tight credit / strict HPR toremain and higher base, we expect YTD sales volume growth to soften furtherto single digit post 3Q (vs. 12.7% in 8M17), and may show single-month y-ysales volume decline in 4Q. However, large developers may continue tooutperform (+55% y-y in 8M17for our covered developers) amid boostedmarket consolidation (34.7% market share for top-20developers in 1H17, vs.25.2% in 2016).    Softened land sales amid higher land prices; new starts stays low    Although YTD land area sold softened to +10.1% y-y by August (vs. +11.1% in7M17), YTD land sales value expanded +42.7% y-y (vs. +41.1% in 7M17),implying higher land prices. We expect land sales to remain strong in 2H17F,considering low inventory level (11.1months of inventory in ~40T3citiesbased on our estimates) and a higher land supply target by the government.New starts growth stayed low at +5.3% y-y in August (YTD at 7.6% vs. 8.0% in7M17and our full-year estimate of 5%).    Recommendations and risks    We expect sales volume to moderate further in 4Q17due to strict policytightening and high base. Unlike in 1H17, we expect more divergence amongdevelopers’ sales growth due to different strategies and execution. We suggestinvestors accumulate developers with strong execution record, includingVanke, Country Garden, Longfor, KWG and CIFI. We value stocks using NAVfor existing projects. Key risks are further credit/policy tightening.

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