An established property developer in Chongqing. We recently paid a visit to Ying Li International Real Estate in Chongqing, PRC and visited several of its investment properties and ongoing development projects. Ying Li is a Chongqing-based property developer that primary engages in commercial property development. The company is also one of the major landlords in the Jiefangbei area (prime CBD of Chongqing), holding ~30% of the commercial space in the area.

Potential catalysts from IFC and San Ya Wan projects. Construction work for the International Financial Centre (IFC) is progressing well. The retail portion of IFC is expected to be completed in 2H10 and the office tower will be completed in 2011. Upon completion, this project will have 108,388 sqm of office space and 36,920 sqm of retail space. Given the shortage of Grade A office space in Chongqing, we expect strong demand for the office space in IFC and Ying Li plans to retain the office portion of this development for investment purposes. For the San Ya Wan project, it is strategically located within the special economic zone and the development plan for the remaining land of this site (GFA of ~129,116 sqm) could be enhanced when the government releases the development plan for the area near the end of the year.

Opportunities for new projects. The Jiefangbei area is going through an urban renewal process and we understand that there are at least 7 sites in the Jiefangbei area that have been planned for commercial redevelopment. With Ying Li's good track record in urban renewal and strong working relationship with the Chongqing government, we believe that Ying Li could be one of the key players in this urban renewal process.

More funds may be needed. Ying Li has strengthened its capital base through a private placement of 107.1m shares at S$0.28, raising gross proceeds of S$30m. Proceeds will be used for the development of IFC, repayment of loans and working capital. With 4 projects already in the pipeline, we think that more fund raising exercises may be required for Ying Li to take on new projects.

Better outlook for FY10. Financial performance is likely to remain weak in FY09 but we expect Ying Li to turn in better results in FY10 and FY11, upon the completion of the retail and office portions of the IFC respectively. Ying Li's NAV is also expected to be boosted upon the revaluation of IFC when completed. This project is currently valued at RMB 6,290 psm. In comparison, the completed office space at New York New York is currently valued at RMB 12,892 psm. We do not have a rating on Ying Li.