Morgan Stanley to maintain the Fang rating target price to 16.5 U.S. dollars

Beijing time July 30 Evening News, Morgan Stanley issued an investment report today to maintain SouFun stock (Nyse:sfun) "Overweight" rating, the target share price from 24.18 U.S. dollars to 16.50 U.S. dollars.

The following is a summary of the contents of the report:

SouFun is likely to downgrade its 2014 fiscal year revenue forecasts, largely dragged down by recent listings and the pressures of e-commerce services. At the same time, we believe that SouFun will benefit from the offline transfer of the Chinese real estate market. To this end, we continue to "overweight" ratings for its shares.

Change: Reduce the target stock price from 24.18 US dollars to 16.50 dollars; The projected earnings per share of fiscal year 2014 would be lowered from USD 0.80 to $0.65, and the projected earnings per share of fiscal year 2015 would be reduced from 0.99 to 0.81 US dollars; The projected earnings per share for the fiscal year 2016 would be lowered from 1.17 to $0.95.

Cut the target share price: We expect the SouFun 2015 to 2017 fiscal year to be diluted earnings per share will reach about 20%. SouFun's share price has fallen about 25% per cent since the start of the year, while Nasdaq has fallen by about 7%. SouFun's share price slide reflects fears of a slump in the housing market and a drop in the price of listings services. In the short term, market visibility is still low, but we think this is reflected in SouFun's current share price. The 16.50 dollar new share price means that the SouFun is expected to be about 20 times times earnings in the 2015 fiscal year.

Lower performance expectations: the impact of lower prices for listings and e-commerce demand, we will soufun 2014 to 2016 fiscal year revenue forecast cut by 9% to 10%. Affected by the increase in the number of investments and staff in the mobile sector, we will reduce the projected earnings per share of the SouFun fiscal year 2014 to 2016 to 18% to 19%.

Housing Publishing services under pressure: At the request of the agency, at the same time to protect market share, retain customers, SouFun will be the price of the PC-side listing Service prices down 40%, while providing free mobile services. In the 2013 fiscal year, the release service for SouFun contributed 25% of the revenue. This time, we will soufun 2014 fiscal year listing Service revenue forecast cut 20%.

E-commerce business downturn: SouFun 2013 e-commerce revenue growth of 84%, accounting for the company's total revenue of 30%. This year, we will soufun E-commerce revenue forecast by 15%, meaning that the year-on-year increase will be only about 10%. The lower take Rate (from 0.8% to 0.9% to 0.7%) was largely due to low trading volumes, and to lower-level urban sprawl and market competition.

Valuation: We continue to maintain the "overweight" rating of soufun stocks, bringing the target share price from USD 24.18 to $16.50. (Li Ming)