China's property developers had their share-price estimates lowered by as much as 32 percent by Goldman Sachs Group Inc, which cited increased uncertainty over government tightening measures.

Goldman Sachs' new target prices reflect a discount of as much as 40 percent to the companies' asset values, compared with a maximum 30 percent previously, analysts led by Yi Wang wrote in a report yesterday.

Still, a recent slump means that the shares are only 8 percent higher on average than the estimated "bear-case" net asset values for end-2010, they said. Real estate stocks on the MSCI China Index have declined an average 7.9 percent over the past six months, compared with a gain of 0.8 percent for the broader gauge, according to data tracked by Bloomberg.

China's property prices surged the most in 21 months in January, prompting policymakers to tighten home lending and order banks to set aside larger reserves to slow credit growth.

"Although we believe the purpose of this tightening is to slow, rather than reverse, China's economic recovery, we believe it could affect the pace of developers selling properties or realizing their land bank value in the near term and could therefore weigh on share price performance," the analysts wrote.

Goldman Sachs downgraded Greentown China Holdings Ltd and Shenzhen Investment Ltd to "sell" from "neutral". They also upgraded Singapore-listed Yanlord Land Group Ltd to "buy" from "neutral" and raised their rating for Franshion Properties China Ltd to "neutral" from "sell".

'Significant potential'

"We like stocks that screen as having significant potential upside to our base-case valuations as well as limited downside to our bear-case net asset value (NAV)," the analysts wrote. "We view our bear-case NAV as attractive entry levels."

Chinese property stocks, trading at the cheapest level among Asian peers, may be "worth another look", Credit Suisse Group AG said last week.

Shares of the nation's real estate companies have underperformed the MSCI China by almost 30 percent since last July and are trading at a 7 percent discount relative to the region based on a model that values companies' net assets and return on equity, which may signal that risks of tightening are already factored into prices, Credit Suisse said.