雅居乐集团(03383) 　　What's new 　　Agile released January~October sales numbers. We expect FY16sales to climb over Rmb50bn. 　　Comments 　　We question the sustainability of its high sell-through(~70%). Contracted sales of the company are estimated to be~Rmb55bn out of saleable resources ~Rmb78bn and ~50%may come from Guangdong province. Over the first ten monthsof the year, nearly 40% of sales was contributed by Zhongshan(Rmb10bn), Guangzhou (Rmb4.8bn) and Foshan (Rmb3.1bn),hugely boosted by the plans for a Shenzhen�CZhongshan Bridge.The over-reliance on a single region will bring volatility to thecompany’s performance. 　　FY16e: single digit growth in both top & bottom line. As2H16 deliveries will concentrate on products pre-sold in 1H16(CICCe), GPM booked in the second half could exceed 25% to liftthe whole-year number to a range of 23~25%. 　　Challenges foreseen in the fine-tuning of land reserves: 　　We expect the aggressive land replenishments (YTDattributable land costs ~Rmb20bn vs. original plan atRmb10bn) will pull net gearing back to the level of 2015through the year end (83.7% vs. 69.3% by end-1H16, PCS asdebts), to easily erase the improvement in 1H16. 　　High land cost per GFA (newly acquired), especially inhot cities, puts pressure on margins. We think thecompany will move the launch of these projects into late FY18for better potential profitability. 　　Valuation and recommendation 　　Earnings forecast unchanged. Maintain HOLD and TP HK$4.04,implied 4% downside. The company now trades at 5.7x 2016eP/E; the TP is at 5.4x 2016e P/E and 70% disc. to 2016e NAV. 　　Risks 　　Guangdong market continues to beat our expectation.