China Property: Plotting earnings impact for CRL/COLI under presales reform; bull vs. bear views

With more detailed pre-sale reform guidelines, we have greater visibility on developers' earnings trajectories. Assuming net gearing rises by c.10ppt, we estimate COLI (ex-COGO) and CRL could sustain FY29-30E contracted sales of c.RMB160bn and RMB130bn, respectively, 30% and 40% below FY26E. Under our base case of a 10% decline in land prices, COLI's and CRL's FY29E earnings, which should fully reflect the reform impact, would be 11% and 8% below our previous FY28E estimates. We see greater downside for the rest of the sector due to higher leverage and/or asset turns. We maintain CRL and COLI as our top picks, given manageable earnings downside and potential upside from IP multiple re-rating and earnings upgrades if home prices recover. We maintain U/P on Yuexiu and Vanke. Investor views remain divided: some onshore investors expect home prices to recover under the new framework alongside further policy support, while offshore investors worry that lower IRRs and greater pricing risk fr