Non-comparable weekly data with Mid-Autumn collides with National Day。    Holiday sales data has resulted in share price retreat despite expected salesdecline, which we attribute to: 1) 8holidays (incl Mid-Autumn Festival) in Oct2017vs. 7in 2013-16(Fig.1); 2) full-week holiday falling in reporting week vs.4-6days in 2013-16; 3) high base in 2016but weak sales YTD in T1/2cities; 4)pre-holiday govt restriction on pre-sale permits resulting in much fewer newlaunches; and 5) online registration delay amid price cap. Though we expect arelatively weak Q4physical market on high base and policy tightening, we sawa post-holiday recovery in daily transactions, and expect major developers tocontinue to outperform if more permits are granted in late October.。    Weekly sales during golden week decline but should recover post-holiday。    Soufun data showed that weekly sales (2-8October) for the 25cities trackedfell by 64%/67% W-W/Y-Y to 1.5m sqm. Four-week sales were also down by2% from the previous four weeks, and down by 35% Y-Y (vs. YTD sales volumedecline of 23% Y-Y). While the sales decline during the long holidays isexpected, the magnitude is big due to the reasons we listed above. However,according to WIND data, post-holiday sales (11cities) have come back to thepre-holiday level; therefore, we believe that overall sales should recover overthe next few weeks (please refer to our analysis in Fig.3).。    Major developers’ sales remained decent at 19% Y-Y growth in September。    The sales performance of major developers remained decent in September.According to the latest data announced by the 25major developers, Y-Y salesin September were up 19% (YTD of 46%) even at a high base, with many ofthem maintaining strong momentum in September. This reinforces industryconsolidation (Fig.4).。    Sector performance to diverge; buy quality names on share price dip。    Due to the high base last September, NBS may report weak real estatestatistics on 19October. In addition, investors are worried that the governmentmay announce further tightening policies next week during the 19th NationalCongress, and as a result, developers’ share prices have been weak after theholiday. We suggest investors to buy quality names amid share pricecorrection, including Vanke, Country Garden, KWG, Future Land and CIFI,which have either a solid track record and strong execution, or abundantsaleable resources to support the growth for next few years. In addition, theyare trading at undemanding valuations, in our view. We value stocks usingNAV for existing projects. Key risk is changes in credit/policy.。

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