Company Profile

Chongqing Wanli New Energy Co., Ltd. manufactures and markets a variety of lead‐ acid storagebatteries. The Company's products include industrial batteries, auto batteries, and other seriesof batteries.

Investment Highlights

SouFun Holdings Limited, the leading real estate Internet portal in China, announced that it wasgoing to become the controlling shareholder of Chongqing Wanli New Energy Co., Ltd., a companylisted on the Shanghai Stock Exchange (stock code: 600847), and the sale of Wanli's assets.

Under the Share Subscription Agreement, the Company has agreed to subscribe for new sharesof Wanli at a price of RMB23.87 per share, equal to 90% of the average trading price of Wanli'sshares in the 20 trading days immediately before the public announcement of the resolutions ofWanli's board of directors approving the transactions contemplated by the Restructuring. Inexchange of the Subscription Shares, the Company has agreed to transfer through the FangSubsidiaries to Wanli the entire equity interests in five wholly‐owned subsidiaries of the FangSubsidiaries that operate as the Company's service platforms for online media business, Internetfinancial services, and big data business. The Subscription Shares will be calculated based on afinal valuation of the Fang Assets by an independent asset appraisal company. The currentpreliminary valuation of the Fang Assets is RMB16.18 billion.

Wanli has also entered into an asset sale agreement with Shenzhen Nan Fang Tong ZhengInvestment Co., Ltd., the controlling shareholder of Wanli, and Mr. Xicheng Liu, pursuant to whichWanli has agreed to sell all of its existing non‐cash assets and liabilities to the Asset Sale Buyerand maintain at least RMB0.7 billion cash in Wanli.

Following the consummation of the foregoing transactions, the Fang Subsidiaries will collectivelyhold approximately 70.01% of the share capital of Wanli, taking into account the ConcurrentShare Placement. The Company will consolidate Wanli's operating results as Wanli will become amajority‐owned indirect subsidiary of the Company. The Subscription Shares will be subject to a36‐month lock‐up.

SouFun Holdings Limited made USD 880 million in revenue in 2015, up 25.7% YoY. E‐commercialbusiness, ads and marketing business, property business, value‐added business and onlinefinancial business account for 54%, 28%, 12%, 3% and 2% of the total respectively. With theimprovement of fundamentals in real estate market, ads and marketing business will probablyplay more important roles in contributing profits.

CNY 3 billion raised through the operation is going to be invested in upgrade of internal platformand system (CNY 180 million), establishment of property data base (CNY 1.7 billion), overseasmarket expansion (CNY 507 million), mobile terminal promotion program (CNY 170 million) andR&D (CNY 425 million). Abundant property information storage is expected to form theCompany’s core competency in the future.

Investment Recommendations: The Company promised to made CNY 800 million net profit in2016, implying 40x16e PE (Shenzhen Worldunion Properties Consultancy 27x16e PE, EverydayNetwork 38x16e PE). We made EPS forecast for the Company at CNY 0.8 in 2016, CNY 1.1 in 2017and CNY 1.4 in 2018, implying 40x/31x/24x PE. We give OUTPERFORM rating for the first time.

Potential Risks: restructuring generated worse‐than‐expected results, weaker‐than‐expecteddemand for properties.