HK Property Focus: Stable Residential Prices on Solid Local DemandHome price to median household income ratio

China / Hong Kong Industry Focus
HK Property Sector
Refer to important disclosures at the end of this report
DBS Group Research . Equity
14 July 2015
Hong Kong great place to make

money, not spend
HSI: 23,517
Stable residential prices on solid local demand
Central to lead the pack in the office market upturn;

the worst for retail scene is yet to be seen
Developers are attractively valued; prefer office

landlords to retail counterparts
Top picks: Cheung Kong Property, SHKP and

Hongkong Land
Market view. Local homebuyers are supporting the

residential market where prices have reached new highs.
Despite our expectations of stable prices, potential interest
rate hikes and local economic slowdown could push up the
real interest rate and exert the pressure on home prices. The
office market is exhibiting improving rental growth
momentum, especially Central, thanks to rising demand
from Mainland Chinese firms. On the back of tight vacancy
and limited new supply, Central should continue to lead the
pack. The challenging retail scene is expected to persist
given worsening inbound tourism led by the strong local
currency.
Stock recommendation. Developers are attractively valued
with new project launches as a key sector catalyst. Our top
picks are Cheung Kong Property and SHKP for their
compelling valuations and strong execution. Potential index
inclusion should further add to the formers investment
appeal. Other preferred developers include Sino Land and
New World. Among landlords, we prefer office plays Hongkong Land and Swire Properties. Yield movement will
determine the performance of the REIT sector.
ANALYST
Jeff YAU CFA, +852 2820 4912
jeff_yau@hk.dbsvickers.com
Allen CHAN +852 2971 1932
allen_chan@hk.dbsvickers.com
Recommendation and valuation

Code
Propert y Dev elopers

Cheung Kong Property 1113 HK
Hang Lung Props
101 HK
Henderson Land
12 HK
K Wah Int'l
173 HK
Kerry Props
683 HK
Lai Sun Dev
488 HK
MTR Corp
66 HK
New World Dev
17 HK
Sino Land
83 HK
SHKP
16 HK
Tai Cheung
88 HK
Wheelock & Co.
20 HK
Wing Tai Props
369 HK
Propert y Inv est ors
Great Eagle
HK Land @
Hy san Dev
Swire Props
Wharf
REIT s
Champion REIT
F ortune REIT
Prosperity REIT
Sunlight REIT
The Link REIT
@ denominated in USD
Pric e
Mk t
8- J ul
Cap
HK $ HK $bn
Rec om
57.95
20.55
49.00
3.80
27.20
0.150
34.05
8.83
11.68
115.10
6.59
37.55
4.61
224
92
162
11
39
3
199
79
71
331
4
76
6
81.10
25.05
55.25
5.47
34.00
0.263
36.20
11.74
15.14
150.00
8.65
42.35
6.05
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Buy
Buy
41 HK
HKL SP
14 HK
1972 HK
4 HK
27.65
7.70
31.90
23.35
49.20
18
18
34
137
149
30.50
9.32
38.15
30.20
53.85
Hold
Buy
Buy
Buy
Hold
2778 HK
778 HK
808 HK
435 HK
823 HK
4.03
7.48
2.67
3.71
45.10
23
14
4
6
103
4.68
9.15
3.00
4.22
49.10
Buy
Buy
Buy
Buy
Buy
Source: Thomson Reuters, DBS Vickers
www.dbsvickers.com
ed-JS & TH/ sa- AH & MH
12- m
t arget
HK $
Table of Contents
Analyst
Hong Kong Property
Jeff Yau, CFA
(852) 2820 4912
Allen Chan
(852) 2971 1932
Investment summary
Residential
Office
13
Retail
20
Property developers
26
Property Investors
39
REITs
44
Appendix: Asset breakdown
49
Appendix: NAV sensitivities
51
Stock Profiles
54
Cheung Kong Property (1113 HK)
54
Hang Lung Properties (101 HK)
56
Henderson Land (12 HK)
58
K. Wah International (173 HK)
60
Kerry Properties (683 HK)
62
Lai Sun Development (488 HK)
64
MTR Corporation (66 HK)
66
New World Development (17 HK)
68
Sino Land (83 HK)
70
Sun Hung Kai Properties (16 HK)
72
Tai Cheung (88 HK)
74
Wheelock & Co (20 HK)
76
Wing Tai Properties (369 HK)
78
Great Eagle (41 HK)
80
Hongkong Land (HKL SP)
82
Hysan Development (14 HK)
84
Swire Properties (1972 HK)
86
Wharf Holdings (4 HK)
88
Champion REIT (2778 HK)
90
Fortune REIT (778 HK)
92
Prosperity REIT (808 HK)
94
Sunlight REIT (435 HK)
96
The Link REIT (823 HK)
98
Note: Prices used as of 8 July 2015

Covered photo (from left):
Hemera (CK Property & Nan Fung);
Harbour City (Wharf Holdings);
Citibank Plaza (Champion REIT)

HK Property Sector
Investment summary
Residential
Despite tighter mortgage lending rules for mass-market
projects introduced by the Hong Kong Monetary Authority in
late Feb, residential prices remain on an uptrend to hit a new
high, supported by solid housing demand from local endusers/first-time buyers. There was a revival of primary market
activities in late Mar after a short-lived consolidation phase.
Developers close-to-market pricing strategy stimulated buying
interest. The secondary market, however, remained relatively
quiet. Barring any external shocks that may trigger forced
selling among existing home owners, residential prices should
remain stable in the coming twelve months. Any interest rate
hikes would make housing less affordable but household
income growth could partially neutralise the impact. If local
economic growth loses momentum with deflationary pressure
emerging, real interest rates would turn positive and dent
residential demand. This remains the key risk for the residential
sector in our view.
Office
Office leasing market growth, particularly in Central, has been
gaining momentum, especially from 2Q15. Supported by
growing office demand from Mainland Chinese corporates,
vacancy in Central has hit a six-year low. New financial
liberalisation measures between Hong Kong and China such as
mutual fund recognition scheme and the upcoming ShenzhenHong Kong Stock Connect should augur well for office
demand, especially in CBD, over the medium term. Coupled
with tight new supply, we are positive on Central office market.
We forecast Central office rents to lead the pack and rise 1012% in 2015. Rental growth for decentralised offices should
be modest at 5% except for strata-titled units in Kowloon East
where market competition has been increasing.
Retail
The retail scene is challenging with the worst yet to come.
Retail sales have been falling, primarily led by slowing inbound
tourism. The strong local currency is encouraging tourists to
spend overseas instead of in Hong Kong. Sales of expensive
luxury goods have been consistently falling, while sales of
medicine and cosmetic items have stopped rising. By the same
token, outbound tourism in Hong Kong is growing remarkably
which is dragging local consumption. Multiple entry
arrangements for Shenzhen residents have tightened since Apr
15, and this would reduce Mainland Chinese tourist arrivals.
Street shops near the border with retail offerings tailor-made
for grey goods traders/day trippers should be hit the most.

Overall, we project that retail sales value will decline 2-4% in
2015. Rents for high-street shops should fall 10-20% in 2015
while those for shopping centres with diversified retail offering
should rise 0-3%.
Property Developers
Property developers we cover are trading at 14-82% discounts
to our assessed current NAVs, with an average for the sector at
36%, which still compares favourably its 10-year average of
21%. Sector valuation is attractive with new project launches
as catalyst to narrow the NAV discounts. Within the sector, our
top picks are Cheung Kong Property and SHKP for their
appealing valuations, encouraging project sales performance
and solid recurrent income. Potential index inclusion could
further add to Cheung Kong Propertys investment appeal.
Other preferred developers include Sino Land and New World
Development. Among small-to-mid cap developers, Tai
Cheung is unlocking its NAV through strata-titled disposal of
Metropole Square and has the potential to be re-rated.
Property Investors
Property investors are trading at 38% discount to our
appraised current NAVs on a weighted average basis, against
its 10-year average of 27%. Within the sector, we prefer office
landlords - Hongkong Land and Swire Properties - given our
positive stance on the office market. Even after a strong share
price rally YTD, Hongkong Land should have scope for further
share price appreciation. Swire Properties remains attractively
valued. Low valuations for Hysan Development could lend
support to its share price. The challenging retail scene may
increase uncertainty on Wharfs earnings and hence we rate
the counter as a HOLD. However, parent Wheelock has been
raising its stake in Wharf which could limit further downside
risk on stock price.
REITs
REITs under our coverage are trading at prospective distribution
yields of 4.4-6.4% or 4.7% on a weighted average basis.
However, the yield of Hong Kong 10-year Exchange Fund Note
has recovered to 1.8% amid growing expectations of US Fed
rate hike, and the current yield spread currently stands at 2.9%,
in line with its historical average of 2.9%. Yield movement
should determine the near-term performance of the REIT sector.
Page 3

HK Property Sector
Difficult to meet the down-payment requirement. Since the

recovery from the global financial crisis in 2009, home prices
have been rising consistently. With the appreciation in home
prices outstripping household income growth, the ratio of
home prices to median household annual income surged to
15x, which is almost the highest seen in the past twenty
years. Based on LTV ratio of 60%, the down-payment
required to purchase a home would represent c.6 years of
household income. However, the housing affordability ratio,
which measures the percentage of monthly household
income used to service mortgage repayments remain far
below the levels seen in 1997, thanks to the favourable
interest rate environment. To sum it up, we see that
meeting the down-payment requirement, rather than the
ability to service monthly mortgage repayments, is a major
challenge for potential homebuyers.
x
20
18
16
14
12
10
8
6
4
Mar-94
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Tighter mortgage lending rules for mass market projects. In

late Feb15, the Hong Kong Monetary Authority further
tightened mortgage lending rules in response to continued
spiralling home prices and rising indebtedness of Hong
Kong households to a historical high of >64% of GDP. The
maximum loan-to-value (LTV) ratio for self-use residential
properties valued at HK$7m or below was lowered to 60%
from 60-70%. These properties are usually mass market
projects targeting mainly local end-users/first-time buyers
which were not affected by cooling measures introduced by
the government in earlier years. In addition, the maximum
debt servicing ratio (DSR) for mortgage applicants seeking
additional financing for these units which led to LTV ratio
rising to >80%, was lowered to 45% from 50% with
stressed-DSR cap lowered to 55% from 60%. The more
stringent mortgage lending rules inevitably made it more
difficult for prospective buyers to meet the down-payment
requirement.
Ratio of housing price to household income (private

household)
Source: Centaline Property Agency, Census and Statistics Department,

DBS Vickers
Housing affordability ratio

Prime base
120%
100%
HIBOR base
Jun-15
55.1%
54.1%
May-15
54.3%
53.2%
80%
60%
40%
20%
0%
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Residential
Prime base
HIBOR base
Source: Centaline Property Agency
Primary market picked up quickly. The stricter downpayment requirement should inevitably drive marginal
homebuyers out of the market. And, prospective
homebuyers had adopted a "wait and see" approach for a
short period of time after the new rule took effect. But the
market lull was short-lived. The primary market staged a
revival in late Mar when new projects such as Hemera drew
strong buying interest with close-to-market pricing. This
reflects that underlying residential demand remains solid.
Rising marriage and divorce rates lead to higher demand for
accommodation. In recent years, number of marriages in
Hong Kong has been on an uptrend, and contributed to
solid housing demand. On the other hand, divorce rates are
also rising, and may explain why small-sized units are
becoming more popular than before.
Page 4

HK Property Sector
Yearly primary market transactions volume
Number of Registered Marriage in Hong Kong

Person
70,000
35,000
60,000
30,000
50,000
25,000
40,000
20,000
30,000
15,000
20,000
10,000
10,000
5,000
1H
2H
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
No. of units
Source: CEIC
Yearly primary market transactions value

HK$m
Number of Divorce Decrees Granted in Hong Kong
1H
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Person
25,000
20,000
15,000
10,000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
5,000
2H
Source: CEIC
Parental support. Nowadays, it is increasingly common for

parents to help bridge the funding gap for down-payment
when their children purchase homes. This would in turn
support local housing demand.
Overall, transaction volume in the primary market rose 25%
to c.8,500 units in 1H15, and transaction value totalled
HK$90bn, representing 43% y-o-y growth.
Monthly primary market transactions volume

No of units
3,000
2,500
J un-15
6M 15
-15.5% m-o-m
24.5% y-o-y
11.2% y-o-y
2,000
1,500
1,000
500
0
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Page 5

HK Property Sector
Mass market projects continued to sell well in 1H15, despite
tighter mortgage lending rule squeezing some marginal
buyers out of the market. Tseung Kwan O was the focus of
the primary market, with four projects launched for sale
after the tighter mortgage lending rules for mass market
projects took effect. In early Apr, K.Wah International
launched Twin Peaks in Tseung Kwan O with >360 units (or
97% of total) sold for c.HK$2.9bn or HK$12,500psf. CK
Property tapped the strong demand with the launch of
Hemera and The Beaumount II. Market response was
overwhelming and both projects were completely sold
within a short period of time. Thereafter, Sino Land also sold
c.515 units at Corinthia by the Sea, a jv with K.Wah,
generating revenue of c.HK$5bn. Overall, c.3,400 new units
in Tseung Kwan O were sold for c.HK$26bn, with sellthrough rate of 99%.
CK Property was the best-selling developer in 1H15,
generating c.HK$21bn revenue from property sales, with
the bulk from Hemera and The Beaumount II in Tseung
Kwan O. La Lumiere in Hung Hom, launched in late Feb, has

been substantially taken up since its initial launch in late Feb.
In our view, reasonable pricing is the key to a successful
launch.
SHKPs launch of Century Link in Tung Chung in Jan was
well received, with 97% of total units sold. The launches of
Wharfs Peninsula East in Yau Tong and China Overseas
Lands My Place in To Kwa Wan were also greeted with
enthusiastic response. These two mass market projects were
fully snapped up given attractive offer prices.
Sentiment in the luxury home market also seemed to be
improving. SHKP sold eight luxurious houses at 50 Stanley
Village Road on Island South and three at Twelve Peaks on
the Peak for c.HK$2.4bn in total. Henderson Land sold 9
units at 39 Conduit Road for c.HK$1.3bn or HK$48,800psf
on average on saleable area basis. Elsewhere, Sino Land sold
five houses at Botanica Bay in Cheung Sha on Lantau Island
at an ASP of c.HK$23,000psf.
New project launches since Jan 2015

L aun c h
J an-15
J an-15
F eb-15
F eb-15
Mar-15
Apr-15
Apr-15
Apr-15
Apr-15
Apr-15
Apr-15
May -15
May -15
May -15
May -15
May -15
May -15
J un-15
J un-15
J un-15
J un-15
J ul-15
Projec t
Century Link Ph 1
The Nov a
J ones Hiv e
One Kowloon Peak Ph 1
La Lumiere
Twin Peaks
Hemera
50 Stanley V illage Road
Peninsula East
2 Cape Driv e
Botanica Bay
My Place
High Park Grand
Eden Gate
Regent Hill
AXIS
The Beaumount II
Domus
Corinthia by the sea
Ultima Ph 1
V IV A
Sky park
L o c at io n
Dev elo p er
Tung Chung
SHKP
Sai Ying Pun
COLI/URA
Tai Hang Henderson Land/Soundwill
Tsuen Wan
Cheuk Nang
Hung Hom
Cheung Kong Property
Tsueng Kwan O
K.Wah
Tseung Kwan O
Island South
SHKP
Yau Tong
Wharf
Island South
COLI
Cheung Sha
Sino Land
To Kwa Wan
COLI/URA
Prince Edward
Henderson Land
Kowloon Tong
Chinacem
Happy V alley
Priv ate dev eloper
Hung Hom
Henderson Land
Tseung Kwan O
Yuen Long
Paliburg/Regal Hotels
Tseung Kwan O
Sino Land/K.Wah
Ho Man Tin
SHKP
Ma Tau Wai
Mong Kok
New World/URA
T o t al Un it s
1,407
255
119
49
216
374
1,648
12
256
7
16
168
41
38
82
120
872
134
536
256
75
439
Un it s so ld
1,370
118
54
13
214
361
1,648
8
256
2
5
168
2
1
46
42
872
134
515
76
61
40
% sold A SP (HK $ psf )

97%
10,000
46%
19,900
45%
21,400
27%
11,800
99%
16,000
97%
12,500
100%
9,000
67%
48,050
100%
10,100
29%
68,300
31%
23,000
100%
14,500
5%
24,400
3%
36,000
56%
23,000
35%
19,000
100%
10,000
100%
11,800
96%
14,300
30%
32,000
81%
16,000
9%
18,300
Source: Companies, Local press, DBS Vickers
Thanks to the buoyant primary market, we estimate that

there c. 13,200 new units scheduled for completion in
2015-16 have been pre-sold. This represents 43% of the
total projected supply during these two years.
Secondary market however appeared less buoyant. Unlike
developers, existing homeowners are unable to provide
price incentives or top-up mortgage loans to lure
homebuyers. But they have strong holding power due to the
prevailing low interest rates. This resulted in a relatively
quiet secondary market. During Mar-Jun 15, transaction
Page 6
volume in the secondary market averaged c.3,300units per

month, well below the 20-year average of 5,400 units.

HK Property Sector
Monthly secondary market transactions
No of units
14,000
12,000
J un-15
25.9% m-o-m
6M 15
19.6% y-o-y
Centa-City Leading Index (mass)

160
140
-7.4% y-o-y
120
10,000
8,000
100
6,000
80
4,000
60
Residential prices remain on upward trajectory. Home price

growth has not derailed even with the implementation of
stricter mortgage lending rules. According to Centa-City
Leading Index, residential prices rose by a further c.4% after
the HKMA tightened the mortgage lending policy.YTD,
overall home prices grew c.8%, with mass market projects
registering slightly higher growth of c.9%. During the same
period, prices for small-to-medium sized units grew c.9%,
outperforming those for large-sized units by c.4%.
Centa-City Leading Index (overall)
40
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
2,000
0
Home price growth

YTD 2015: +9%
2014: +14%
2013: +3%
2012: +24%
2011: +8%
2010: +19%
2009: +31%
2008: -16%
2007: +22%
Centa-City Leading Index (small/medium-sized units)

160
140
120
100
80
Home price growth

YTD 2015: +9%
2014: +12%
2013: +3%
2012: +24%
2011: +7%
2010: +19%
2009: +31%
2008: -16%
2007: +24%
60
145
125
105
85
Home price growth

YTD 2015: +8%
2014: +11%
2013: +3%
2012: +21%
2011: +8%
2010: +19%
2009: +30%
2008: -15%
40
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
165
Centa-City Leading Index (large-sized units)

150
45
140
130
120
110
100
90
Home price growth

YTD 2015: +5%
2014: +6%
2013: +1%
2012: +14%
2011: +5%
2010: +21%
2009: +27%
2008: -16%
2007: +27%
80
70
60
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
65
Page 7

HK Property Sector
Yuen Long projects to take centre stage. SHKP's project
launches in 2H15 are skewed towards the mass market
segment. The company has obtained pre-sale consent for
Century Link Ph 2 in Tung Chung. Other projects scheduled
for sale include Twin Regency, Grand YOHO Development
and Accapella Ph 1 in Yuen Long.
CK Property plans to launch two upmarket projects in
Kowloon - Stars by the Harbour in Hung Hom and The
Zumurud in Ho Man Tin - for pre-sale in 2H15. These two
developments consist of mostly large-sized units targeting
affluent upgraders. Besides, the company is applying for
pre-sale consent for two projects in Yuen Long, including a
house project and a large-scale development near Long Ping
Station.
New World Development has a strong project launch
pipeline in 2H15. After Skypark in Mongkok, the company
plans to sell The Parkhill in Yuen Long next followed by The
Clearwater Bay in Sai Kung towards the end of the year. We
note that The Clearwater Bay will be the largest residential
project in the area in more than a decade.
Double Cove Ph 4 in Ma On Shan will be Henderson Land's
major project for sale in 2H15. The recent encouraging
tender results for nearby sites should facilitate the launch of
this project. The company will launch its urban
Page 8
redevelopment projects in Sai Wan Ho and Tai Kok Tsui at

appropriate times.
After Corinthia by the Sea in Tseung Wan O is substantially
sold, Sino Land plans to launch The Fairmont in Mid-levels
subject to obtaining pre-sale consent. This upmarket project
contains twenty-seven large-sized units with panoramic
harbour views.
Kerry Properties planned launch of 1,100-unit Tuen Mun
project will be in the spotlight in 2H15. One of its attraction
lies with its close proximity to the renowned Harrow
International School.
Wharf will focus on selling its Mount Nicholson project on
the Peak, a 50/50 JV with unlisted Nan Fung. The 19 villas
will be offered for sale first, followed by the apartments.
The distinguished address would make this luxury
development well sought after by wealthy buyers. Parent
Wheelock & Co will launch a redevelopment project in Shau
Kei Wan, followed by a project in Tseung Kwan O.
Overall, the projects in Yuen Long are anticipated to take
centre stage in the primary market in 2H15. Property
developers are expected to maintain their close-to-market
pricing strategy to push sales, which may cap upside on
home prices. Overall, we expect c.17,000 primary units to
be sold in 2015.

HK Property Sector
Expected major project launches in 2H15 and 2016
P ro je c t / L o t n o
L o c a t io n
Ch e u n g K o n g P ro p e rt y
Stars by the Harbour
T he Z umurud
Lot 2129 in DD121
YLT L 518
SH K P
Ultima Ph 1
Century Link Ph 2
Grand YOHO Dev elopment Ph 1
A cappella Dev elopment Ph 1A
A cappella Dev elopment Ph 1B
A cappella Dev elopment Ph 1C
T w in Regency
S in o L a n d
T he F airmont
YLT L 513
N e w W o rld D e v e lo p me n t
Sk y park
T he Park hill
T he Clearw ater Bay
Des V oeux Road West project
Double Cov e Ph 4
Double Cov e Ph 5
H e n d e rs o n L a n d
Double Cov e Ph 4
Double Cov e Ph 5
33 Shing On Street
50-64 M au T au Kok Road
11-33 Li T ak Street
K e rry P ro p e rt ie s
KIL 11227
T M T L 423
W h e e lo c k
Island Residence
T K OT L 112
T K OT L 125
Ch in a O v e rs e a s L a n d & In v e s t me n t
M arina South
No. 62 Begonia Road
H o n g K o n g H o u s in g S o c ie t y
Hey a Cry stal
Hey a A qua
W h a rf
M ount Nicholson (Ph 1-3)
S w ire P ro p e rt ie s
Lot 724 & 726 in DD332
K . W a h In t e rn a t io n a l
YLT L 513
Ch in a c h e m ( u n lis t e d )
Inv erness Park
M a n h a t t a n R e a lt y ( u n lis t e d )
1 T sing Lung Road
CS I P ro p e rt ie s
Lai Ping Road 39-77
R y k a d a n Ca p it a l
T he Paseo
URA
De Nov o
H a n s io n
T he Grampian
E mp e ro r In t e rn a t io n a l
8 Kw un F at Street
K o w lo o n D e v e lo p me n t
South Coast
L o c a t io n
St ak e T o t al n o .
( % ) o f u n it s
R e ma rk
Kln
Kln
NT
NT
Hung Hom
Kow loon City
Yuen Long
Yuen Long
100
80
100
100
321
228
41
1,129
Presale consent obtained in F eb 15

Presale consent pending approv al
Kln
NT
NT
NT
NT
NT
NT
Ho M an T in
T uen M un
Yuen Long
Yuen Long
Yuen Long
Yuen Long
Yuen Long
100
100
100
100
100
100
100
256
932
1,114
499
362
166
523
On sale
Presale consent obtained in A pr 15
HK
NT
M id-Lev els
Yuen Long
100
40
27
912

J V w ith K. Wah
Kln
NT
NT
HK
NT
NT
M ongk ok
Yuen Long
Sai Kung
Western District
M a On Shan
M a On Shan
100
100
63
80
32
32
439
141
680
191
474
178
On sale
Old lease
J V w ith Henderson Land
J V w ith Henderson Land
NT
NT
HK
Kln
Kln
M a On Shan
M a On Shan
Sai Wan Ho
T o Kw a Wan
T ai Kok T sui
59
59
100
100
100
474
178
234
300
448

J V w ith New World
Old lease
Old lease
Old lease
Kln
NT
Ho M an T in
T uen M un
100
100
1,425
1,100

HK
NT
NT
Shau Kei Wan

T seung Kw an O
T seung Kw an O
100
100
100
170
800
428
Old lease
HK
Kln
A p Lei Chau
Kow loon T ong
100
100
114
10

Kln Cheung Sha Wan

Kln Cheung Sha Wan
100
100
350
275
F or sale soon
HK
T he Peak
50
67
Presale consent obtained in Nov 14
NT
Cheung Sha
100
28
Presale consent obtained in M ay 15
NT
Yuen Long
60
912
Kln
Kow loon T ong
100
134
Pre-sale consent obtained in Dec 14
NT
T uen M un
100
75
Pre-sale consent obtained in F eb 14
NT
Shatin
100
20
Presale consent obtained in J ul 14
Kln
J ordan
100
66
Kln
Kai T ak
100
484
Kln
Kow loon T ong
100
14
NT
T uen M un
100
14
HK
A berdeen
100
150
Source: Lands Department, Companies, Local press, DBS Vickers
Page 9

HK Property Sector
Residential prices vs mortgage rate

%
7
HK$psf
160
140
120
100
80
6
5
4
3
2
0
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Mortgage rate
Source: Centaline Property Agency, CEIC
Page 10
CCL (RHS)
60
40
20
0
Residential prices vs real interest rate

%
8
6
160
140
4
2
0
(2)
(4)
120
100
80
60
40
(6)
(8)
20
0
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Real interest rates more important in determining home

prices. Potential interest rate hikes will be among the key
aspects to monitor for the residential market. The market is
expecting the US Fed fund rates to rise 25-50bps by end2015 and 250 bps by 4Q17. Given that the HK dollar is
pegged to the US dollar, Hong Kong interest rates should
follow suit. Assuming the effective mortgage rate increases
to 4.5% by end-2017 from the current 2%, we estimate
that the housing affordability ratio would deteriorate to
c.69%. This suggests that home prices should fall by c.20%
in order to bring down the affordability ratio to the current
c.55%. But, if household incomes improve by 3% p.a., a
14% correction in home prices is enough to neutralise the
impact of mortgage rate normalisation on housing
affordability. Hence, concerns over interest rate hikes
should not be overplayed. Indeed, from a historical
perspective, home prices in Hong Kong are negatively
correlated with real interest rates rather than nominal
interest rates. The current inflation in Hong Kong remains
higher than the mortgage rate, and hence, the negative real
interest rate is lending support to the housing market. The
retail market in Hong Kong has been slowing down of late,
which may have some repercussions on the overall economy.
If the local economy loses growth momentum with
substantial deflationary pressure as a result, residential
prices could see downward pressure as real interest rates
will surge rapidly, thus dampening local housing demand.
Real interest rates (LHS)
CCL (RHS)
Source: Centaline Property Agency, CEIC
Stable prices. Barring external shocks that may result in

forced selling among existing home owners, residential
prices should remain broadly stable over the next 12 months.

HK Property Sector
YTD, the government has sold 12 residential and
residential/commercial sites through tender for a total of
HK$18.2bn. We estimate that these sites will provide 4,800
units when completed, with >50% coming from the Tuen
Mun area. YTD, the government sold three lots in Tuen Mun
for HK$8.77bn in total, with c.2,500 units expected to be
built on the sites.
Projects along railways form key supply. YTD, about half of
land supply for development purposes have come from MTRC
tenders. MTRC successfully tendered out Lohas Park Packages
6 & 7 and Tin Wing Stop project to Nan Fung, Wheelock &
SHKP respectively. These three developments are expected to
provide 5,150 residential units when completed in 2021-22.
MTRC will offer one to two more packages at Lohas Park and
Yuen Long Station site (it acts as an agent for the government)
for tender before end-2015.
Elsewhere, Urban Renewal Authority awarded the
development rights for its Fuk Wing Street project, which will
offer 92 units upon completion, to Emperor International. In
total, we estimate that about 10,100 units will be built on
sites sold through tender by the government, MTRC and URA
YTD. This has yet to include redevelopment of ageing
buildings. Judging from the average number of completions
and take-ups during 1996-2014, land supply has normalised.
SHKP continues to be active in the land market with the
acquisitions of three lots YTD. Beside the Tin Wing Stop
development, the company also bought two other
residential or residential/retail sites in Tai Po and Tuen Mun
respectively. These three projects will provide residential
GFA of c.2.1m sf and are planned for small-to-medium sized
units. We note that most of the sites SHKP acquired since
2014 will be used to build small-to-medium sized units,
which are more affordable to locals.
SHKPs land acquisition YTD
Dat e
Feb-15
Projec t / Lot
No
L oc at ion Usage
GF A
(sf )
Tin Wing Stop Tin Shui Wai
L and Prem
(HK $m)
R/C 982,280
1,520
Mar-15
TPTL 225
Tai Po
R 900,508
3,480
J un-15
TMTL 539
Tuen Mun
R/C 354,566
1,319
Source: Company, Lands Department
Henderson Land paid HK$3.63bn for a residential lot in

Tuen Mun in Jun 15. This translates into an accommodation
value of HK$4,621psf, 25-59% higher than two lots nearby
sold in 2012 and 2013 respectively, reflecting the rising
price of land in that location. Located close to Harrow
International School, the site is earmarked for low-density
development with total GFA of 0.79m sf. Most of the units
should enjoy seaviews.
More China-based developers joining the game. CITIC
Pacific acquired a residential lot in Ma On Shan through
government tender for HK$1.469bn in May 15, which
exceeded market expectations. This translates into an
accommodation value of HK$6,502psf, 18% higher than
the amount that China City Construction-led consortium
paid for a site nearby and also the highest ever in the area.
This reflects CITIC Pacifics aggressiveness in raising its land
bank in Hong Kong. This is CITIC Pacifics first acquisition in
Hong Kong in 17 years. Upon completion, this residential
project will provide GFA of 225,900sf. The encouraging
tender results should facilitate future launches of Henderson
Land's Double Cove Ph 4 and 5 located in the proximity.
Besides, China Vanke expanded its footprint in Hong Kong
market with the acquisition of a residential site in Tuen Mun
for HK$3.82bn in Jul 15.
Sino Land returns to expansion mode. Sino Land acquired a
site in Sai Kung for HK$609m or HK$11,804psf. This low
density project will provide GFA of 51,591sf upon
completion. This acquisition should further strengthen Sino
Lands presence in Sai Kungs housing market. Following
this purchase, Sino Land now has three projects in Sai Kung
with combined GFA of 0.47m sf. Similarly, small developers
such as Wang On Group and Chuangs Consortium have
also replenished their land bank, capitalising on the
governments increased land supply.
Housing supply is rising but not excessive. With the
government's concerted effort in expediting land supply and
developers' intention of building more small-sized units in
recent years, our analysis suggests that future housing
supply will normalise gradually in the years to come. We
estimate that new residential unit completions will average
17,000 p.a. between 2015-18. This represents a 49%
increase from the 5-year average completion of c.11,400
units in 2010-14. Hence, we believe the developers will
maintain their reasonable pricing strategy to move sales.
Nonetheless, supply is by no means excessive from a
historical perspective. Between 1996 and 2014, the number
of new unit completions and take-ups averaged 18,300.
Page 11

HK Property Sector
Residential land sales YTD 2015

Dat e
Projec t /L ot No
G ov ernment t ender
J an-15
STTL 587
J an-15
KCTL 518
F eb-15
TMTL 514
F eb-15
NKIL 6532
Mar-15
TPTL 225
Apr-15
Lot 1909 in DD 100
Apr-15
Lot 1181 in DD 215
May -15
STTL 605
J un-15
TMTL 539
J un-15
TMTL 500
J un-15 Lot 1872 in DD Cheung
Chau
J ul-15
TMTL 541
L oc at ion L oc at ion
Usage
GF A
(sf )
L and
Premium
(HK $m)
L and
Premium
(HK $psf )
Dev elopers
Est . no of
unit s
5,221
Wang On Group
6,700
Global Conv ention
2,997 Chuang's Consortium
20,535
Kerry Props
3,864
SHKP
9,127
CSI Properties
11,804
Sino Land
6,502
Citic Pacific
3,720
SHKP
4,621
Henderson Land
2,346
Priv ate dev eloper
400
80
250
50
1,300
6
25
220
300
1,000
15
Shatin
Kwai Chung
Tuen Mun
Kowloon Tong
Tai Po
Sheung Shui
Sai Kung
Ma On Shan
Tuen Mun
Tuen Mun
Cheung Chau
NT
NT
NT
Kln
NT
NT
NT
NT
NT
NT
NT
R
R/C
R/C
R
R
R
R
R
R/C
R
R
148,057
55,521
143,054
116,379
900,508
33,110
51,591
225,913
354,566
785,334
29,364
773
372
429
2,390
3,480
302
609
1,469
1,319
3,629
69
Tuen Mun
NT
R/C
841,737
3,822
4,541
China V anke
1,200
M T RC t ender
J an-15
Lohas Park Package 6 Tseung Kwan O
F eb-15
Tin Wing Stop
Tin Shui Wai
J un-15
Lohas Park Package 7 Tseung Kwan O
NT
NT
NT
R 1,474,200
R/C 982,280
R/C 1,235,277
3,345
1,520
3,880
2,269
1,547
3,141
Nan F ung
SHKP
Wheelock & Co.
2,400
1,500
1,250
URA T ender
Mar-15 F uk Wing Street project
Kln
R/C
Emperor International
92
Sham Shui Po
Source: Lands Department, Local press, DBS Vickers
Page 12
54,142

HK Property Sector
3.0
2.0
1.0
Jul-14
Jan-15
Jul-13
Jan-14
Jan-13
Jul-12
Jul-11
Jan-12
Jan-11
Jul-10
Jul-09
Jan-10
Jul-08
Jan-09
0.0
Source: Jones Lang LaSalle
Office vacancy rate Overall
%
May-15
8.0
Apr-15
7.0
7.1
6.2
6.0
5.0
3.7 3.9
4.0
2.5 2.6
1.2 1.1
0.0
HK East
1.0
0.6 0.6
Overall
2.0
Kowloon East
2.3 2.5
Tsimshatsui
3.0
Wanchai/
Causeway Bay
Office rental growth in 1H15

%
7.0
4.7
4.3
2.3
Overall
Kowloon
East
1.6
1.2
Tsim Sha
Tsui
8
7
6
5
4
3
2
1
0
Hong Kong
East
With Central office vacancy reaching a six-year low, office

rental growth accelerated, particularly from 2Q15.
According to Jones Lang LaSalle, Central office rents rose
7% in 1H15, which contributed to the overall office rental
growth of 4.7% during the period. But office rents in
Central are still 8-9% lower than the previous highs in mid2011, and 16% off its historical peak recorded in 3Q08.
4.0
Wanchai/
Causeway Bay
This saw office vacancy in Central tightening considerably

from 3.7% in Dec 14 to 2.3% in May 15, the lowest since
the onset of Global Financial Crisis in Nov 2008. Top grade
office buildings, One IFC and Two IFC, are virtually fully
leased. Citibank Plaza, with vacancy of c.25% in Dec 14,
successfully tapped on the growing demand in Central,
securing high-profile tenants. Besides Bloomberg, BlackRock
and Thomson Reuters also took up space at Citibank Plaza,
relocating from Cheung Kong Center and Island East
respectively. New tenants included a new set-up in Hong
Kong. With net take-up of >180,000sf over the past six
months, Citibank Plaza sees its committed occupancy level
recovering to c.95%.
May-15: 2.3%
5.0
Jan-08
Another significant factor is that multinational financial

services firms are seeking space for expansion. Bloomberg
leased an additional c.40,000sf at Citibank Plaza for
expansion purposes, in addition to its existing space at the
nearby Cheung Kong Center.
%
6.0
Central
Central office market heating up. Leasing activities in

Centrals office market has been gaining momentum,
especially after Apr 15. This was fuelled by a sustained rise
in demand from Mainland China companies, banking and
financial institutions in particular. For example, Yunfeng
Capital, founded by Jack Ma, Chairman of Alibaba Group,
has leased 12,000sf at One Exchange Square while China
Merchant Capital has taken up 15,000sf at Three Pacific
Place. According to Jones Lang LaSalle, Mainland China
financial services and trading securities firms are an
increasingly important source of leasing demand in Central,
accounting for c.40% of net take-ups there in 1H15.
Office vacancy rate Central
Central
Office
Page 13

HK Property Sector
Other sub-markets also registered gradual improvement in
vacancy rates. Vacancy at Tsim Sha Tsui was the lowest
among major office submarkets, at only 0.6% in May 15,
down from Dec 14s 1.1%. The improvement was
underpinned by leasing demand from banks. For example,
UBS leased c.23,000sf at One Peking to house their wealth
management staff. With the tight vacancy environment,
office rents in Tsim Sha Tsui grew 4.3% in 1H15, according
to Jones Lang LaSalle.
Office vacancy rate Overall

%
9.0
8.0
May-15: 3.7%
7.0
6.0
5.0
4.0
3.0
Office vacancy rate Tsim Sha Tsui
2.0
1.0
%
8.0
6.0
Jul-14
Jan-15
Jul-13
Jan-14
Jan-13
Jul-12
Jul-11
Jan-12
Jan-11
Jul-10
Jul-09
Jan-10
Jul-08
Jan-09
May-15: 0.6%
7.0
5.0
4.0
Office vacancy rate Kowloon East
3.0
2.0
%
30.0
20.0
15.0
Vacancy in Island East remained low at 1.2% in May 15,

with key office buildings virtually fully let. The planned
Taikoo Place Redevelopment Ph 2 would reduce space
availability and tighten vacancy further in the medium term.
10.0
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
0.0
Jan-09
5.0
Jul-08
Office vacancy rate Island East
May-15: 6.2%
25.0
Jan-08
Jul-14
Jan-15
Jul-13
Jan-14
Jul-12
Jan-13
Jan-12
Jul-11
Jul-10
Jan-11
Jul-09
Jan-10
Jan-09
Jul-08
Jan-08
1.0
0.0
Jan-08
0.0

%
4.5
Positive demand outlook. New financial liberalisation

measures between China and Hong Kong should provide a
boost to the Hong Kong financial market and be the key
force driving office demand growth in Central in the
foreseeable future.
May-15: 1.2%
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
Jan-15
Jul-14
Jul-13
Jan-14
Jan-13
Jul-12
Jan-12
Jul-11
Jul-10
Jan-11
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
0.0
Overall, the fall in office vacancy was modest, declining to

3.7% in May 15, from Dec 14s 4.2%. Office vacancy would
have been even tighter if not for the relatively higher
vacancy of 6.2% for Kowloon East partly due to the
completion of some new buildings such as 15 Chong Yip
Street.
Page 14
Hong Kongs Securities and Future Commission and China

Securities Regulatory Commission announced the scheme of
Mainland-Hong Kong Mutual Recognition of Funds, which is
implemented in Jul 2015. This scheme allows funds
domiciled and operating in Hong Kong to be distributed in
China and vice versa. In other words, this represents
opportunities for offshore funds to tap the enormous retail
fund market in China. In order to tap on this uncharted
market, an increasing number of fund houses are expected
to establish or expand their footprint in Hong Kong. This
should stimulate office demand, particularly in Central, over
time.
The proposed Shenzhen-Hong Kong Stock Connect is
widely anticipated to be launched in 2H15. Like Shanghai-

HK Property Sector
Hong Kong Stock Connect pilot scheme, this mutual market
access scheme should open up more business opportunities
for brokers and related financial service providers. This in
turn translates into more office space required.
Central to lead the pack. All factors considered, we are
upbeat on the outlook of Central office market, which
should stand out among the various locations. We forecast
office rents in Central will rise 10-12% p.a. in 2015. Other
decentralised submarkets, excluding Kowloon East, should
stage 5% rental growth in 2015. Strata-titled office
buildings in Kowloon East should see marginally lower rents
in 2015 given increased market competition, but rents for
those with single landlords are expected to remain stable.
As such, the rental differential between Central and
decentralised locations should widen again in the coming
year.
Grade A office rental gap between Traditional Central
and selected districts
1,250
1,000
750
500
250
0
2012
2013
2014
Source: Colliers
In 1H15, office price in Central rose 1.8%. An entire floor at

9 Queens Road Central fetched HK$480m or
HK$34,860psf, which is a new high for office property in
the city. The overall office capital values grew 1.7% in 1H15,
mainly led by Kowloon East.
1.8
1.7
1.5
1.1
1.1
Hong Kong
East
Feb-15
Feb-14
Aug-14
Aug-13
Feb-13
Feb-12
Aug-12
Quarry Bay
Kowloon East
2.6
Wanchai/
Causeway Bay
Wanchai
Tsim Sha Tsui
Aug-11
Feb-11
Feb-10
Aug-10
Feb-09
Aug-09
Feb-08
HK$psf
Office capital value growth (1H15)
Aug-08
Aug-07
HK$psf
120
110
100
90
80
70
60
50
40
30
Fit-out costs (excl I.T. and furniture)
Overall
Kowloon
East
Tsim Sha
Tsui
Fit-out cost has been rising consistently in recent years.

According to Colliers, fit-out costs (excluding I.T. and
furniture) increased from HK$400-1,000psf in 2012 to
HK$470-1,200psf in 2014. This represents 2-year CAGR of
8-10%. The high cost may discourage tenants from
relocating offices unless there are substantial rental cost
savings or productivity gains. Hence, we expect relatively
high retention rates.
Central
Source: Knight Frank, DBS Vickers
Billion Development a key player in office sales market.

Unlisted Billion Development is selling three newly built
office buildings in Kowloon East, including 10 Shing Yip
Street, 52 Tsun Yip Street and 15 Chong Yip Street, on a
strata-titled basis. The company also substantially pre-sold
its two commercial developments in Shatin (STTL 412 &
STTL 413) at an ASP of c.HK$7,000psf. These two projects
are close to each other near the Shek Mun MTR Station. Tai
Cheung also commenced the strata-titled sales of Metropole
Square in the area. This building was converted into office
use under the governments revitalisation policy for
industrial buildings. Reportedly, four floors have been sold
for >HK$400m or HK$6,000psf so far.
Page 15

HK Property Sector
One HarbourGate in the limelight. In 2H15, One
HarbourGate in Hung Hom should remain as the focus in
the investment sales market. This project contains primarily
twin office towers erected along the Hung Hom waterfront
with GFA of 0.6m sf. Superstructure works are in progress
with project completion scheduled in 2016. Wheelock
intends to sell this office development on en bloc basis.
When completed, One HarbourGate will be one of the
iconic office developments along the coastline of Victoria
Harbour, an ideal location for large corporates to showcase
their brands. We believe that this project should appeal
strongly to renowned Mainland Chinese firms.
One HarbourGate (Wheelock & Co)
Ratio of investors and owner occupiers for sales

transaction (over 8,000sf GFA)
100%
17%
26%
80%
62%
60%
40%
83%
74%
20%
38%
Double stamp duty
0%
2012
2013
Investor
2014
Owner Occupier
Source: Colliers
Kowloon East to dominate new office supply. This year, the

government continues to supply land for office development
in Kowloon East as part of its plan to energize the area into
CBD2. Two commercial lots were sold via tender in 1H15,
and will provide GFA of 1.37m sf when completed. Since Jul
2011, the government has sold seven commercial sites in
Kowloon East. Upon scheduled completion in 2015-19,
these sites will offer a combined GFA of 4.8m sf or 0.96m sf
p.a. on average.
Source: DBS Vickers
Despite the double stamp duty, a rising number of

companies are considering buying instead of renting office
premises as long-term real estate solutions as this would
allow them to consolidate their scattered business units
under the same roof to enhance efficiency. According to
Property Consultant Colliers, the proportion of sales
transactions for office premises of >8,000sf GFA that are for
owner occupation has grown substantially from 17% in
2012 to 62% in 2015 while that for investments has
dropped from 83% in 2012 to 38% in 2014.
Page 16
The Link REIT ventures into office sector. In Jan 15, a

consortium between The Link REIT and Nan Fung won the
tender for a commercial site (NKIL 6512) in Kwun Tong for
HK$5.86bn or HK$6,630psf. This acquisition came shortly
after The Link REIT obtained unitholders' approval to modify
its investment mandate to include property development,
and also marked its first foray in Hong Kong office market.
Nan Fung has development expertise and this should help
mitigate any execution risk. The consortium plans to develop
the site into an office project with some retail element, with
GFA of 883,888sf. The Link REIT has a 60% stake and Nan
Fung has 40% in this office development which will be
retained for long-term investment upon completion.

HK Property Sector
NKIL 6512 (The Link REIT and Nan Fung)
Redevelopment of Wharf T&T Square has commenced, with

demolition work in progress. Wharf T&T Square is located in
close proximity to Wheelock's One Bay East and Mapletree
Investment's office project along the Kwun Tong waterfront.
Wharf will redevelop this building into a commercial tower
which offers office GFA of 513,000sf, with full completion
scheduled for 2019.
Wharf T&T Square Redevelopment
Source: DBS Vickers
In May 15, a consortium comprising Billion Development,

CSI Properties and Sino Land defeated twelve developers to
secure a commercial site in Kowloon Bay through
government tender for HK$3.04bn. This translated into an
accommodation value of HK$6,199psf, 7% lower than the
neighbouring site acquired by The Link REIT/Nan Fung
consortium. Upon completion, this site will provide GFA of
490,188sf for office use. Unlisted Billion Development has a
40% stake in this project, with CSI Properties and Sino Land
each holding 30%. Billion Development has good
understanding of the Kowloon East office market. The
company just completed three office developments in Kwun
Tong. Its two completed office developments, Billion Centre
and YHC Tower, are close to the newly acquired site. Sino
Land has also developed two office projects in Kowloon Bay,
namely Exchange Tower and Kowloon East 18. Despite their
strong development expertise, the joint venture
arrangement enables the developers to share investment
risks.
NKIL 6313 (Billion Development, Sino Land & CSI Props)
Source: DBS Vickers
Source: DBS Vickers
In order to maximise the development potential, New World

Development plans to redevelop the Kut Cheong Mansion
in Quarry Bay into an office building with GFA of 487,500sf.
Kut Cheong Mansion is located adjacent to AIA's Stanhope
House and just 3 minute walk from Quarry Bay MTR Station.
New World has a 90% stake in this redevelopment after
acquiring 50% interest from its parent Chow Tai Fook
Enterprise in Jan 2015. Demolition of the existing building
has commenced with project completion expected in 2018.
This, coupled with Swire Properties large-scale Taikoo Place
Redevelopment, will dominate new office supply in Island
East.
Kut Cheong Mansion Redevelopment (New World Dev)
Source: DBS Vickers
Page 17

HK Property Sector
Island East offices to benefit from infrastructure
improvements. Currently, Central-Wan Chai Bypass and
Island Eastern Corridor Link are under construction. Upon
completion in late 2017, the project provides a 4.5km long
dual three-lane trunk road with a 3.7km long tunnel,
connecting Rumsey Street Flyover at Central with Island
Eastern Corridor at North Point near City Garden. Travelling
time will be shortened to 5 minutes from >15 minutes
currently. With improved transportation infrastructure,
Island East should hold stronger appeal to office tenants in
the medium term.
Central-Wanchai Bypass & Island East Corridor Link
Source: Highway Department
Page 18

HK Property Sector
Major office supply

Pro jec t
2015
Tow er 535
A IL 354, 41 Heung Yip Road
W50
2-12 Observ atory Road
One Bay East
52-56 Tsun Yip Street
15 Chong Yip Street
2 Ng F ong Street
L o c at io n
G F A (sf )
D ev elo p ers
R emark s
Causew ay Bay
Wong Chuk Hang
Wong Chuk Hang
Tsim Sha Tsui
Kw un Tong
Kw un Tong
Kw un Tong
San Po Kong
130,000
323,958
120,000
165,000*
1,024,700
371,176
266,447
314,214
Phoenix Property Inv estors

SHKP
Henderson Land/ Lai Sun Dev elopment
Wheelock & Co
Billion Dev elopment (Unlisted)
Completely sold
A lmost sold out
Preleasing in progress
Completely sold
On sale
On sale
F or sale
Central
Central
Hung Hom
114,000
81,700
590,000
Shanghai Commercial Bank

Chinachem
Wheelock & Co
Goldin F inancial Global Centre

STTL 463
STTL 412
Kow loon Bay

Shatin
Shatin
852,501
430,395
351,980
Goldin F inancial
2017
Chinachem Central II
NKIL 6311
NKIL 6312
KTIL 174
Central
Kow loon Bay
Kow loon Bay
Kw un Tong
90,000
333,121
550,030
471,229
Chinachem
Priv ate dev eloper
Sw ire Properties
SHKP/Wong's International
Causew ay Bay
est.360,000
Hy san Dev elopment
Wan Chai
Quarry Bay
Quarry Bay
Quarry Bay
Wong Chuk Hang
Wong Chuk Hang
Wong Chuk Hang
Tsim Sha Tsui
Cheung Sha Wan
Kow loon Bay
Kw un Tong
Kw un Tong
Kw un Tong
Kw ai Chung
314,000
487,500
1,020,000
980,000
382,500
166,400
139,000
TBD
193,535
490,188
660,301
596,200
883,888
228,033
Chinachem
New World Dev elopment
Sw ire Properties
Sw ire Properties
Sw ire Properties/China Motor Bus
Priv ate dev eloper
Priv ate dev eloper
New World Dev elopment
F irst Group (Unlisted)
Billion Dev / Sino/ CSI Props
Mapletree Inv estment
Wharf
The Link REIT/ Nan F ung
Hon Kw ok Land
2016
Shanghai Commercial Bank Building
Chinachem Central I
One HarbourGate
2018 and bey ond

Sunning Plaza/ Sunning Court
redev elopment
A sian House redev elopment
Kut Cheong Mansion Redev elopment
Taikoo Place redev elopment (Ph1)
Taikoo Place redev elopment (Ph2)
8-10 Wong Chuk Hang Road
34 Wong Chuk Hang Road
A IL 309
New World Centre redev elopment
NKIL 6410
NKIL 6313
KTIL 761
Wharf T&T Square Redev elopment
NKIL 6512
KCTL 495
Partly for ow n use

A pply ing for pre-sale
consent
Largely sold
Largely sold
* Include retail portions

Source: Company, Local presses, DBS Vickers
Page 19

HK Property Sector
Monthly retail sales value growth Other consumer
durable goods
Falling retail sales. In the first five months of 2015, overall

retail sales value in Hong Kong fell 1.8% y-o-y to HK$209bn,
led by a decline in sales for expensive hard luxuries. If not
for the 19% growth in other consumer durable goods from
sales of certain smartphone and smartwatch models, retail
sales value would have fallen by a larger 3%. In addition,
some department stores had brought forward the seasonal
sales promotion period, thus mitigating the decline in retail
sales.
5M15: 19.0% y-o-y
100
50
0
May-15: -0.1% y-o-y
40
May-15: 62.3% y-o-y
150
(50)
Monthly growth of total retail sales value

Yoy, %
Yoy, %
200
5M15: -1.8% y-o-y
Jan-Feb 08
May-08
Aug-08
Nov-08
Mar-09
Jun-09
Sep-09
Dec-09
Apr-10
Jul-10
Oct-10
Jan-Feb 11
May-11
Aug-11
Nov-11
Mar-12
Jun-12
Sep-12
Dec-12
Apr-13
Jul-13
Oct-13
Jan-Feb 14
May-14
Aug-14
Nov-14
Mar-15
Retail
30
Source: CEIC
20
Slowing inbound tourism was the culprit. Jewellery, watches

& clocks and valuable gifts posted a 16.8% drop in sales
value in 5M15. The ongoing anti-corruption campaign in
China continued to weigh on demand for expensive luxury
goods. More importantly, foreign currency depreciation is
encouraging more tourists to spend overseas instead of
Hong Kong and this has taken a toll on sales of the above
items. In 1Q15, Mainland tourist arrivals to Japan more than
doubled in 5M15. On the other hand, the growth in the
number of Mainland Chinese visiting Hong Kong has been
moderating since the beginning of 2015 and even posted a
10% decline in Mar 15. As growth in Mainland Chinese
tourist arrivals slowed to 5.9% in 5M15 from 2014s 16%,
total visitor arrivals in Hong Kong grew by just 3.9% to 25m
in 5M15. Those under the Individual Visit Scheme recorded
declines of 4.8-15.7% y-o-y between Mar and May 2015.
As such, growth for 5M15 narrowed to a marginal 0.4%
against 2014s 14.1%
10
0
Jan-15
Jul-14
Jul-13
Jan-14
Jul-12
Jan-13
Jul-11
Jan-12
Jul-10
Jan-11
Jan-10
Jul-09
Jul-08
Jan-09
(20)
Jan-08
(10)
Source: CEIC
Yearly growth of total retail sales value

Yoy, %
25
Monthly retail sales value growth jewelleries/watches
20
15
Yoy, %
80
10
May-15: -15.0% y-o-y

5M15: -16.8% y-o-y
60
40
20
5M15
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
(20)
(40)
Jan-Feb 08
May-08
Aug-08
Nov-08
Mar-09
Jun-09
Sep-09
Dec-09
Apr-10
Jul-10
Oct-10
Jan-Feb 11
May-11
Aug-11
Nov-11
Mar-12
Jun-12
Sep-12
Dec-12
Apr-13
Jul-13
Oct-13
Jan-Feb 14
May-14
Aug-14
Nov-14
Mar-15
Source: CEIC
2004
2003
2002
(5)
Source: CEIC
Page 20

HK Property Sector
Visitor arrival growth - China
Growth of visitor arrivals from China to Japan
Persons
Yoy, %
May-15: 134% y-o-y

5M15: 106% y-o-y
2,500,000
May-15: 5% y-o-y
5M15: 5.9% y-o-y
60
50
2,000,000
40
1,500,000
30
20
1,000,000
10
500,000
Jul-14
Jan-15
Jan-14
Jul-13
Jul-12
Jan-13
Jul-11
Jan-12
Jan-11
Jul-10
Jul-09
Jan-10
Jul-08
Jan-09
2014
5M15
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
(20)
Jan-08
(10)
Source: Japan National Tourism Organisation

Source: CEIC
Visitor arrival growth - overall

Visitor arrival growth Individual Visit Scheme
Yoy, %
Jan-15
Jul-14
Jan-14
Jul-13
Jul-12
Jan-13
Jan-12
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jul-08
Source: CEIC
Jan-09
Jan-08
(20)
Jan-11
(10)
Jul-10
Jul-09
10
Jan-10
20
Jan-09
30
May-15: -4.8% y-o-y

5M15: 0.4% y-o-y
Jul-08
40
80
70
60
50
40
30
20
10
0
(10)
(20)
(30)
Jul-11
May-15: 3.6% y-o-y

5M15: 3.9% y-o-y
Jan-08
Yoy, %
50
Source: CEIC
Page 21

HK Property Sector
The impact of the inbound tourism slowdown was also
evidenced by the recent weaker sales of medicine and
cosmetic items, which fell by 1.9-3.3% y-o-y for three
consecutive months since Mar 2015, compared to an
uptrend prior to this.
Monthly retail sales value growth medicine and
cosmetic items
Yoy, %
4.6% growth in 2014. Total restaurant receipts also rose

3.7% in value terms in 1Q15. In particular, non-Chinese
restaurants fared better with stronger growth of 5.6%
during the same period. These trends should benefit the
suburban malls serving the daily needs of residents living in
the neighbourhood.
Monthly retail sale value growth Food, alcoholic,
drinks and tobacco
May-15: -1.9% y-o-y
35
5M15: 1.8% y-o-y
Yoy, %
30
25
25
20
20
15
15
10
10
5
0
(5)
(5)
(10)
5M15: 8.6% y-o-y
(15)
Jul-07
Oct-07
Jan-Feb 08
May-08
Aug-08
Nov-08
Mar-09
Jun-09
Sep-09
Dec-09
Apr-10
Jul-10
Oct-10
Jan-Feb 11
May-11
Aug-11
Nov-11
Mar-12
Jun-12
Sep-12
Dec-12
Apr-13
Jul-13
Oct-13
Jan-Feb 14
May-14
Aug-14
Nov-14
Mar-15
Jan-Feb 08
May-08
Aug-08
Nov-08
Mar-09
Jun-09
Sep-09
Dec-09
Apr-10
Jul-10
Oct-10
Jan-Feb 11
May-11
Aug-11
Nov-11
Mar-12
Jun-12
Sep-12
Dec-12
Apr-13
Jul-13
Oct-13
Jan-Feb 14
May-14
Aug-14
Nov-14
Mar-15
May-15: 1.9% y-o-y
Source: CEIC
Source: CEIC
HK$ against Japanese Yen

Value growth of total restaurant receipts
16.15
Yoy, %
15.95
15.75
7
6
15.55
15.35
15.15
14.95
Source: Bloomberg Finance L.P.
Strong local currency makes shopping in Hong Kong

expensive. The strong Hong Kong dollar also resulted in
robust outbound tourism in Hong Kong and rising
consumption overseas, which bodes ill for local spending on
luxury goods or discretionary items.
Consumer staples still stable. On the other hand, consumer
staples registered stable sales growth. Sales value of food,
alcoholic, drinks & tobacco, and supermarket items grew
8.6% and 1.4% respectively in 5M15, following 6.6% and
Page 22
1
0
(1)
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
14.75
Source: CEIC

HK Property Sector
Value growth of total restaurant receipts

Yoy, %
11
Number of visitors under Multiple-entry endorsements

m persons
15
35%
30%
12
9
7
5
25%
20%
15%
10%
5%
0%
0
2009*
2010
2011
2012
2013
2014
Visitors under Multiple-entry endorsements (LHS)

1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
(1)
% of visitors from China (RHS)
Source: Hong Kong Tourism Broad
Source: CEIC
56.7
58.1
59.6
2013
2014
48.5
2010
51.6
46.2
2009
37.9
2006
44.4
36.0
2005
41.3
36.4
32.8
40
30.2
50
2004
60
2008
70
2012
62.6
China day-trippers as a % of total China visitor arrivals
30
20
2011
2007
5M15
10
2003
First introduced in 2009, the multiple entry permit

arrangement allows qualified Shenzhen residents to make
unlimited visits to Hong Kong. This boosted the growth of
day-trippers since then, with the number of Mainland
tourists visiting Hong Kong under the One Visa, Multiple
Entry surging rapidly from 1.47m in 2009 to 14.85m in
2014, which represented 31.4% of total China tourist
arrivals.
With the implementation of the modified multiple entry

permit arrangement, eligible Shenzhen permanent residents
are allowed to visit Hong Kong once a week. This should
crack down the activities of grey good traders from
Shenzhen. Some same-day visitors who currently travel to
Hong Kong frequently would also be impacted by new
policy. It is estimated that the modified policy will cut the
number of Mainland tourist arrivals by 4.6m p.a..
2002
Multiple entry arrangements for Shenzhen residents

tightened. In view of rising public concerns over social
impact brought about by excessive growth in the number of
Mainland Visitors (especially in districts near the border),
the One Visa, Multiple Entry arrangement was modified
in Apr 2015. Since the government has been reviewing the
multiple entry permit arrangement for almost a year, this
news was not a surprise to the market.
Source: CEIC
As these day-trippers or grey good traders usually shop in

the districts near the border such as Sheung Shui and Yuen
Long, retail businesses there would inevitably be affected.
Street shops with retail offerings tailor-made for Mainland
day-trippers or grey good traders should be hit the most
while shopping malls with diversified retail offerings should
be less affected. Then again, Mainland shoppers may adjust
their spending per visit. Therefore, the tightened multiple
Page 23

HK Property Sector
entry permit arrangement would dampen visitor arrivals but
the impact on the overall retail market is not necessarily very
drastic.
China lowers import tariffs. The Chinese government
reduced import duties in Jun 15 on some imported
merchandise that are in high demand, including cosmetic
goods, apparel, footwear and diapers. Import duties are
levied based on dutiable value at the port of entry, which
used to be much lower than retail prices, especially cosmetic
goods. Hence the immediate impact on cross border
spending from the cut in import tariffs should not be
overstated. In fact, any change in rates for value-added tax
would have a greater impact on the Hong Kong retail
market. If this happens, more Mainland Chinese would
consider purchasing these items domestically rather than in
Hong Kong and this would have negative implications on
Hong Kong retailers over the longer term.
The worst is yet to be seen. All factors considered, the retail
scene ahead should remain challenging, with the worst yet
to be seen. For the full year, we are projecting retail sales
value to decline by 2-4%, after registering a marginal 0.2%
drop in 2014.
Vacant street shops emerging. Given headwinds in the retail
market, luxury retail brands and jewellery/watch retailers
have been adjusting their store strategies. Some have
decided not to renew the lease for their retail premises in
prime locations upon expiry. This has resulted in growing
number of vacant street-front shops in traditional retail
districts such as Causeway Bay.
Vacant street store in Causeway Bay
challenging retail market outlook. Rents for street-front

shops near the border should also be under pressure with
reduced activities of grey goods traders from Shenzhen
following the tightening of multiple entry arrangements for
Shenzhen residents. But, shopping malls should fare slightly
better, especially suburban malls serving locals, which
should see 0-3% growth in rentals in 2015
New regional mall on the horizon. SHKP is scheduled to
open YOHO Mall Ph 1 in 2H15. YOHO Mall Ph 1 comprises
the refurbished Sun Yuen Long Centre and retail arcade at
YOHO Midtown, which will house around 200 retail stores
and food & beverage outlets, with a significant number of
them new to the area. Committed tenants include
international fashion brands, H&M and Zara. Total GFA is
0.6m sf. Retail portion of Grand YOHO development, under
Ph 2 of YOHO Mall, is expected to come onstream late 2016
or early 2017. When fully completed, the retail complex
provides c.1m sf retail space and is directly linked with West
Rail Yuen Long Station. It is set to become a key regional
mall in the Northwestern New Territories.
Unlocking mall value. Fortune REIT agreed to sell Nob Hill
Square in Kwai Chung to Pamfleet for HK$648m or
HK$7,060psf in Feb 15. This marked its first property
disposal since listing in 2003. The sale price represents 48%
premium to its appraised value as at Dec 14, and translates
into an exit yield of 2.9% based on net property income of
HK$19m for FY14. Hence, it made sense for Fortune REIT to
unlock the value of this retail property. Nob Hill Square is
the retail portion of Nob Hill, a 696-unit residential
development, and is just a 10-minute walk from Mei Foo
MTR Station. Completed in 2002, this three-storey retail
arcade provides GRA of 91,779sf and 43 car parking spaces.
It was virtually fully let in Dec 2014. Key tenants include a
supermarket and some F&B outlets. The transaction was
completed in Apr 2015. The buyers plan to embark on
enhancement works to improve its rental value.
Nob Hill Square
Source: DBS Vickers
According to Jones Lang LaSalle, rents for prime shopping

malls increased by a marginal 0.7% in 1H15. Rents for highstreet shops retreated 6.7% in 1H15 following a 0.6% drop
in 2H14. Looking ahead, we forecast rents for high-street
shops in retail hubs to decline 10-20% in 2015 given
Page 24
Source: Company

HK Property Sector
MTRC keeps expanding its retail property portfolio. In the
project tender of Lohas Park Package 7 in Tseung Kwan O,
MTRC decided to retain the ownership of retail portion
upon completion with contribution of the corresponding
land premium and construction cost totalling HK$4.98bn.
Located close to Lohas Park MTR Station, this retail mall will
provide GFA of 0.48m sf. Scheduled for completion in 2020,
it will be the only shopping mall at Lohas Park MTR Station
and serve the daily needs of residents there. Since 2014,
MTRC has been expanding its retail rental portfolio with the
development of three retail mall projects at Maritime Square
Extension, Tai Wai Station and Lohas Park Package 7. They
will provide combined GFA of 1.3msf upon targeted
completion from 4Q17 onwards.
Retail mall at Lohas Park
Source: DBS Vickers
Page 25

HK Property Sector
attractively valued. Continued launch of new projects for
sale should unlock its NAV, which coupled with potential
index inclusion, should serve as a near-term share price
catalyst. BUY with HK$81.1 TP.
Property developers
Share price performance
Perf o rman c e (% )
1 - mt h 2 - mt h 3 - mt h
CK Property
Hang Lung Group
Hang Lung Properties
Henderson Land
K Wah Int'l
Kerry Properties
Lai Sun Dev elopment
MTR Corp
New World Dev
Sino Land
SHKP
Tai Cheung
Wing Tai Properties
Wheelock and Co.
Sec t o r av erag e
(12.5)
(13.8)
(13.8)
(9.5)
(14.7)
(13.2)
(28.6)
(5.8)
(14.9)
(10.7)
(10.5)
(7.8)
(11.0)
n.a.
(23.7)
(17.5)
(13.2)
(18.5)
(15.7)
(26.1)
(9.3)
(17.8)
(14.6)
(12.2)
(4.2)
(11.9)
(8.6) (15.7)
(1 0 . 7 ) (1 3 . 1 )
HSI Index
HSP Index
(13.9)
(12.1)
(14.7)
(10.0)
n.a.
(15.4)
(9.7)
(3.7)
(7.0)
(2.2)
(14.3)
(11.1)
(5.1)
(9.2)
(6.4)
3.5
(4.8)
2014
n.a.
n.a.
(10.1) (11.5)
(11.2)
(5.5)
35.0
(0.7)
(10.0)
(5.4)
4.6
(3.4)
(16.2) (14.8)
8.3
7.1
(3.2)
(1.0)
18.1
(6.7)
20.3
(2.7)
8.7
3.3
5.0
(7.8)
(7.9)
1.5
(7 . 1 ) 1 4 . 1
(10.4)
(5.2)
YTD
1.3
7.2
3.7
(0 . 9 )
(0.4)
3.6
Source: Thomson Reuters
Excluding Cheung Kong Property (CK Property) which got

listed in Jun 15 by way of introduction, share prices of
property developers under our coverage have been relatively
stable YTD on a weighted average basis. The sector move
broadly in line with the Hang Sang Index (-0.4%) but
underperformed the landlords (+0.7%) slightly. These
property developers are now trading at discounts ranging
from 14% to 82% to our assessed current NAVs, or 36%
on weighted average basis. This compares favourably with
the average sector discount of 21%. Sector valuation
remains undemanding from a historical perspective. Within
the sector, we like CK Property and SHKP, mostly for their
compelling valuations, stellar project sales performance and
solid recurrent earnings. Particularly for CK Property,
potential index inclusion could add further to its investment
appeal. Project launches should remain the main sector
catalyst while a possible interest rate hike could be a sector
overhang.
CK Property's Hemera and The Beaumount II in Tseung
Kwan O, launched in Apr and May 15 respectively, are
completely sold out. This not only enhances the company's
earnings visibility but also bolsters its financial strength for
making accretive acquisitions in Hong Kong, Singapore and
the UK. CK Property derives recurring earnings of c.HK$9bn
p.a. from its rental business, hotel operations and REIT
investment. Its solid and diversified recurrent income base
points to sound earnings quality and equips the company
with greater financial flexibility in paying dividends. The
stock, trading 40% below our assessed current NAV, is
Page 26
SHKP has a strong project launch pipeline in 2H15, with

major projects up for sale including Century Link Ph 2 in
Tung Chung and Twin Regency/Grand YOHO
Development/Acappella in Yuen Long. They are positioned
as mass market projects and are expected to receive positive
market response when launched for sale. SHKP further
strengthened its development land bank with the
acquisition of three residential lots in Tai Po, Tuen Mun and
Tseung Kwan O for developing small- to medium-sized units
YTD. Rental income base is set to further widen in FY16
with the addition of two retail malls in Hong Kong and
Guangzhou into its investment property portfolio. This
points to better earnings quality. Trading at 40% discount
to our appraised current NAV, the counter looks appealing.
BUY with HK$150 TP.
Sino Lands recent launch of Corinthia by the Sea in Tseung
Kwan O met with enthusiastic response. Over 95% of total
units have been taken up for c.HK$5bn. Sino Land has been
stepping up its land bank replenishment with the acquisitions
of two sites in Sai Kung and Kowloon Bay. The Kowloon Bay
office project is a joint venture with Billion Development and
CSI Properties. The JV arrangement helps diversify investment
risks. Sino Land expanded its footprint to the hospitality sector
in Australia with the purchase of the 416-room The Westin
Sydney through an equally-owned consortium with
Singapore-based Far East Organization (which is controlled by
its ultimate major shareholder Ng Family). Despite a string of
acquisitions, Sino Land remains in a net cash position with a
substantial war chest for further acquisitions. The stock,
trading at a 49% discount to our assessed current NAV, is
attractive. BUY with HK$15.14 TP.
The recent stake disposals of three Hong Kong hotels to
Abu Dhabi Investment Authority has considerably enhanced
New World Development's financial muscle for pursuing
land acquisitions. Its project launch pipeline will be strong in
2H15. After launching Skypark in Mongkok for sale, New
World Development plans to sell The Parkhill in Yuen Long,
followed by The Clearwater Bay in Sai Kung. Should these
launches be greeted with favourable market response, this
would help improve the sentiment towards the counter. The
stock is trading 49% below our assessed current NAV.
Valuation remains inexpensive. BUY with HK$11.74 TP.
Henderson Land recently replenished its land bank by
acquiring a residential lot in Tuen Mun via public tender.
Taking advantage of improved sentiment in the luxury home
market, the company has sold nine units at 39 Conduit
Road in Mid-levels for c.HK$1.3bn. When launching singleblock urban redevelopment projects such as High Grand
Park for sale, the company focuses more on margins.
Moving onto 2H15, Henderson Land plans to offer Double

HK Property Sector
Cove Ph 4 in Ma On Shan for sale. Other single-block
residential developments in San Wan Ho, Tai Kok Tsui and
Hung Hom could also be released onto the market. The
stock is trading 34% below our estimated current NAV.
Major shareholder Lee Shau Kee has been consistently
raising his stake in the company which represents a vote of
confidence for the company and lends support to its share
price. BUY with HK$55.25 TP.
Hang Lung Properties Olympia 66 in Dalian is c.60% precommitted. Given retail market headwinds, the mall is
expected to be c.70% leased upon its targeted opening in
4Q15. Occupancy of Center 66 Office Tower has picked up to
c.60% while the newly completed office tower at Forum 66 is
c.20% let. Two shopping malls in Shanghai still see positive
rental reversion. Overall, we forecast that gross rental receipts
from China portfolio will grow 6-7% in FY15, mainly led by
additional contributions from newly built properties. Its Hong
Kong counterpart should also register 5% growth in rental
income as positive rental reversion is working its way through
the commercial portfolio. The stock is trading 45% below our
assessed current NAV. Low valuation should lend support to
its share price. BUY with HK$25.05 TP.
In 1H15, Kerry Properties focused on clearing the inventories
at One & Three Ede Road, 8 LaSalle and Dragons Range
which are now substantially sold. Application of pre-sale
consent for its Tuen Mun project which contains 1,100 units
with 0.94m sf GFA, is pending government approval.
Riverview Place in Tianjin had its soft opening in late Apr
and is now 90% committed. Pre-leasing of retail portion of
Kerry Central in Hangzhou is underway. Scheduled for
completion in 2016, this mixed-use development should
boost the company's rental earnings in the medium term.
Kerry Properties resumed its land bank replenishment in
Hong Kong with the purchase of the Beacon Hill luxury lot
in Feb 15. The stock is trading at a steep discount of 61% to
our assessed current NAV. BUY with HK$34 TP.
K.Wah International has seen encouraging market response
to its project launches. Twin Peaks and Corinthia by the Sea in
Tseung Kwan O have been substantially sold. Initial market
response to the new launch of The Palace Ph 2 in Shanghai
has been satisfactory. The company continues to sell Grand
Summit in Shanghai with steady take-up. With a total of
>HK$8bn proceeds generated from property sales in Hong
Kong, Shanghai and Huadu YTD, K.Wah International has
been restoring its balance sheet strength and has become
better positioned for land bank restocking with emphasis on
Hong Kong. The counter, trading 63% below our appraised
current NAV, is inexpensive. BUY with HK$5.47 TP.
Wheelock & Co. solidified its presence in the Tseung Kwan
O residential market, with the award of development rights
of Lohas Park Package 7 in late May. The company now has
six residential or residential/commercial projects in Tseung
Kwan O with total GFA of 4.2m sf, making it the largest
developer in the area. Launched in Apr 14, Peninsula East,
developed by its listed subsidiary Wharf, has been fully sold,

thanks to its attractive pricing. The Mount Nicholson luxury
project in Mid-levels, 50% held by Wharf, will go on sale
soon. Wheelock also plans to offer its own projects in Shau
Kei Wan and Tseung Kwan O for sale in 2H15. These,
coupled with the planned sale of One Harbour Gate on the
Hung Hom waterfront, should dictate its share price
performance. The stock trades at 26% discount to our
appraised current NAV. BUY with HK$42.35 TP.
MTRC successfully tendered out three developments at Tin
Wing Stop and Lohas Park in 1H15. When completed in
2021-22, these projects collectively provide 5,150 residential
units and should be the mainstay of development income. In
the Lohas Park Package 7 tender, MTRC retains the shopping
mall ownership to beef up its investment property portfolio.
The launch of Hemera, a joint venture with CK Property-led
consortium, was well received, with all 1,648 units being
completely sold. Profit will be recognised in 1H15. Tiara in
Shenzhen was also released onto the market for sale with
enthusiastic initial response. While recurrent income is going
from strength to strength and could bridge the gap in
development earnings during FY16-19, cost overruns on new
rail lines such as Express Rail Link due to project delays could
remain an issue. Trading 14% below our assessed current
NAV, the counter is fairly valued. HOLD with HK$36.2 TP.
Tai Cheung is selling Metropole Square, an office building in
Shatin converted from industrial use under the
governments revitalisation policy for industrial building, on
strata-titled basis, and has reportedly sold four floors for
>HK$400m or HK$6,000psf on average. Disposal of
Metropole Square should further strengthen its cash
holdings, enabling the company to maintain its generous
dividend policy and pursue value-accretive land acquisitions
in Hong Kong. In addition, this should serve to narrow its
steep discount of 65% to NAV. BUY with HK$8.65 TP.
Wing Tai Properties sees improving take-up rate at Homantin
Hillside after the recent re-launch. The company intends to
launch Upper Riverside in Shanghai for sale after project
completion in Sep 15. With low gearing and diversified
funding sources, Wing Tai Properties is well positioned to
pursue acquisitions for future growth. In addition to
participating in public tenders in Hong Kong, the company is
also exploring investment opportunities in London's
commercial market. The stock is trading at a steep discount of
69% to our assessed current NAV. BUY with HK$6.05 TP.
Profit from the luxury project, 339 Tai Hang Road, will
dominate Lai Sun Development's near-term development
income. Its Tseung Kwan O waterfront project is expected
to go on sale in 2016 and should benefit from encouraging
sales performance of the nearby developments. The recently
completed commercial project on Observatory Road in Tsim
Sha Tsui should further enhance its recurring income base,
leading to better earnings quality. The stock is trading 82%
below our appraised current NAV. BUY with HK$0.263 TP.
Page 27

HK Property Sector
Discount to NAV property developers sector average

%
30
20
+2SD: 6%
10
0
+1SD: -7%
(10)
Average: -21%
(20)
(30)
-1SD: -34%
(40)
-2SD: -48%
Jan/15
Jan/14
Jan/13
Jan/12
Jan/11
Jan/10
Jan/09
Jan/08
Jan/07
Jan/06
(60)
Jan/05
(50)
Peers valuation
Co mp an y
Hang Lung Props
Henderson Land
K Wah Int'l
Kerry Props
Lai Sun Dev
MTR Corp
New World Dev
Sino Land
SHKP
Tai Cheung
Wheelock & Co.
Wing Tai Properties
Co d e
1113
101
12
173
683
488
66
17
83
16
88
20
369
HK
HK
HK
HK
HK
HK
HK
HK
HK
HK
HK
HK
HK
Page 28
Mkt
F YE
Cap
HK $bn
Dec
Dec
Dec
Dec
Dec
J ul
Dec
J un
J un
J un
Mar
Dec
Dec
224
92
162
11
39
3
199
79
71
331
4
76
6
L ast
Pric e
HK $
57.95
20.55
49.00
3.80
27.20
0.150
34.05
8.83
11.68
115.10
6.59
37.55
4.61
12-m
PE
PE
t arg et R ec o m F Y 1 5 F Y 1 6
HK $
x
x
81.10
25.05
55.25
5.47
34.00
0.263
36.20
11.74
15.14
150.00
8.65
42.35
6.05
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Buy
Buy
13.4
15.9
17.2
15.8
12.7
13.2
19.8
11.7
14.3
17.2
7.3
7.9
15.6
12.3
14.9
16.3
7.5
11.1
14.3
22.5
10.5
13.3
13.3
11.7
6.8
19.6
J un-16
NA V
HK $
101.4
38.6
78.9
10.9
75.6
0.88
41.3
19.6
23.3
199.9
19.2
56.5
15.1
D isc . t o
J u n - 1 6 Y ield Y ield
NA V F Y 15 F Y 16
%
%
%
(43)
(47)
(38)
(65)
(64)
(83)
(18)
(55)
(50)
(42)
(66)
(34)
(70)
3.0
3.7
2.2
3.9
2.9
1.7
3.1
4.8
4.3
2.9
4.6
3.2
2.9
3.3
3.7
2.2
3.9
3.1
1.7
3.1
4.8
4.3
2.9
4.6
3.2
2.9

HK Property Sector
CK Property Discount to NAV
HK$
69
+2SD: -25%
+1SD: -29%
Average: -33%
-1SD: -37%
63
-35%
61
-37%
59
-40%
57
-2SD: -41%
03-Jul-15
26-Jun-15
19-Jun-15
12-Jun-15
05-Jun-15
55
Hang Lung Properties Discount to NAV band

HK$
60
+2SD: 23%
50
+1SD: 5%
Average: -14%
-30%
-52%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
-9%
30
10
-2SD: -50%
Jan-06
13%
20
-1SD: -32%
Jan-05
35%
40
Henderson Land Discount to NAV
Henderson Land Discount to NAV band
HK$
120
100
+2SD: 6%
+1SD: -10%
Average: -25%
60
-23%
40
-43%
-63%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
80
-2SD: -57%
Jan-06
18%
-2%
20
-1SD: -41%
Jan-05
%
30
20
10
0
(10)
(20)
(30)
(40)
(50)
(60)
(70)
-32%
65
Hang Lung Properties Discount to NAV

%
40
30
20
10
0
(10)
(20)
(30)
(40)
(50)
(60)
-30%
67
5-Jun-15
7-Jun-15
9-Jun-15
11-Jun-15
13-Jun-15
15-Jun-15
17-Jun-15
19-Jun-15
21-Jun-15
23-Jun-15
25-Jun-15
27-Jun-15
29-Jun-15
1-Jul-15
3-Jul-15
5-Jul-15
7-Jul-15
%
(25)
(27)
(29)
(31)
(33)
(35)
(37)
(39)
(41)
(43)
CK Property Discount to NAV band
Page 29

HK Property Sector
K Wah Intl Discount to NAV
K Wah Intl Discount to NAV band
HK$
(35)
(40)
(45)
(50)
(55)
(60)
(65)
(70)
(75)
(80)
(85)
8.0
+2SD: -47%
7.0
-45%
6.0
+1SD: -54%
-54%
5.0
Average: -61%
-1SD: -67%
4.0
-63%
-2SD: -74%
3.0
-72%
-81%
Kerry Properties Discount to NAV
%
40
Kerry Properties Discount to NAV band
HK$
MTR Corp. Discount to NAV
HK$
5
0
(5)
(10)
(15)
(20)
(25)
(30)
(35)
42
40
38
36
34
32
30
28
26
24
22
Average: -15%
-1SD: -21%
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
-2SD: -26%
Page 30
Jan-15
Jan-14
Jan-13
2%
-5%
-13%
-20%
-27%
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
+1SD: -9%
Jan-12
MTR Corp. Discount to NAV band
%
+2SD: -3%
Jan-11
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
-2SD: -81%
-77%
Jan-10
(80)
-50%
Jan-09
-1SD: -57%
(60)
-24%
Jan-08
Average: -33%
(40)
3%
Jan-07
(20)
30%
Jan-06
+1SD: -9%
100
90
80
70
60
50
40
30
20
10
0
Jan-05
+2SD: 16%
20
(100)
1.0
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
2.0

HK Property Sector
New World Development Discount to NAV
New World Development Discount to NAV band
HK$
%
0
(10)
(20)
(30)
(40)
(50)
(60)
(70)
(80)
(90)
35
+2SD: -16%
30
+1SD: -32%
25
Average: -47%
-1SD: -62%
15
-61%
-81%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Sino Land Discount to NAV band
HK$
%
60
30
40
Average: -26%
(20)
-1SD: -47%
-73%
SHKP Discount to NAV
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
-45%
10
5
-2SD: -67%
(60)
-17%
15
Jan-05
(40)
12%
20
+1SD: -5%
40%
25
+2SD: 15%
20
SHKP Discount to NAV band
HK$
270
+2SD: 18%
-1SD: -37%
-12%
120
-34%
70
-55%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
20
Jan-09
Jan-08
-2SD: -56%
Jan-07
9%
170
Average: -19%
Jan-06
30%
220
+1SD: 0%
Jan-05
%
40
30
20
10
0
(10)
(20)
(30)
(40)
(50)
(60)
-2%
-22%
-42%
10
-2SD: -78%
Sino Land Discount to NAV
(80)
20
Page 31

HK Property Sector
Tai Cheung Discount to NAV
Tai Cheung Discount to NAV band
HK$
%
(20)
14
(30)
12
+2SD: -44%
(40)
(60)
-1SD: -69%
-2SD: -77%
(70)
(80)
-61%
-72%
-83%
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Wheelock & Co. Discount to NAV
Wheelock & Co. Discount to NAV band
%
20
HK$
%
(40)
Jan-15
Jan-14
Jan-13
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Wing Tai Properties Discount to NAV
Jan-12
-2SD: -55%
(60)
Jan-11
(50)
-47%
Jan-10
-1SD: -43%
(40)
Jan-09
Average: -30%
(30)
1%
-15%
-31%
Jan-08
+1SD: -18%
(20)
Jan-07
(10)
17%
Jan-06
+2SD: -6%
90
80
70
60
50
40
30
20
10
0
Jan-05
10
Wing Tai Properties Discount to NAV band
HK$
8.0
(45)
7.0
+2SD: -54%
(55)
+1SD: -58%
(60)
Average: -63%
-1SD: -67%
-2SD: -71%
(65)
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
(70)
Page 32
-51%
-56%
6.0
-61%
5.0
-65%
4.0
-70%
3.0
2.0
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
(50)
(75)
8
4
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
(90)
-49%
10
+1SD: -53%
Average: -61%
(50)
-38%

HK Property Sector
Price to book chart
Henderson Land
x
3.0
x
1.4
2.5
1.2
1.0
2.0
Average: 1.31x
1.5
0.8
0.6
1.0
Average: 0.62x
K Wah International
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
0.0
Jan-06
0.2
0.0
Jan-05
0.5
Jan-06
0.4
Kerry Properties
x
2.5
x
3.0
2.0
2.5
2.0
1.5
MTR Corporation
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
0.0
Jan-07
0.5
Average: 0.58x
Jan-06
Average: 1.33x
Jan-05
1.5
Jan-06
Jan-10
x
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2.0
Jan-05
Jan-09
New World Development
x
2.5
1.0
Jan-08
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
0.0
Jan-08
0.0
Jan-07
0.5
Jan-06
0.5
Jan-05
Average: 1.01x
1.0
Jan-07
Average: 0.76x
1.0
Jan-06
1.5
Source: Thomson Reuters, Company
Page 33

HK Property Sector
Price to book chart (continued)
Sino Land
Sun Hung Kai Properties

x
2.5
2.3
2.1
1.9
1.7
1.5
1.3
1.1
0.9
0.7
0.5
Tai Cheung
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
0.0
Average: 1.09x
Jan-10
0.5
Jan-09
Average: 1x
1.0
Jan-08
1.5
Jan-07
2.0
Jan-06
2.5
Jan-05
x
3.0
Wing Tai Properties
x
1.4
x
0.45
1.2
0.40
1.0
0.35
0.8
Average: 0.33x
0.30
Average: 0.71x
Wheelock & Co.

x
1.2
1.0
0.8
0.6
Average: 0.62x
0.4
0.2
Page 34
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
0.0
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
0.15
Jan-07
0.0
Jan-06
0.20
Jan-05
0.2
Jul-11
0.25
0.4
Jan-11
0.6

HK Property Sector
Policy chart
Hang Seng Property Index
Centa-City Leading Index

150
40,000
30,000
25,000
(4) (5)
(2)
(1)
20,000
(3) (6)
(8)
(17)&(18)
(10)&(11)
(9)
130
(20)
120
(21)
(19)
110
100
90
80
70
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
15,000
(7)
(13)
(12)
140
(14) (16)
(19)
(12)
(17)&(18)
(10)&(11)
(13)(15)
(7)
(8)
(6)
(9)
(3) (5)
(1)(2)
(4)
(21)
(20)
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
35,000
(14)
(15)
(16)
H S Pro p ert y In d ex Perf o rman c e ( % )

1 - d ay 1 - w k 2 - w k 1 - mt h 3 - mt h
(1) 23-F eb-10
Raise stamp duty rate for properties v alued at more than HK$20m from 3.75% to
4.25%
Put up sev eral urban residential sites in the application list for sale in the next tw o
y ears if they are not triggered for sale
Liase w ith MTRC and URA to increase the supply of small to medium sized units
Explore means to rev italise the Home Ow nership Scheme secondary market
(2) 19-A pr-10 Introduced new guidelines for sale of flats
Initiated the auction of tw o luxury sites in Ho Man Tin and The Peak
(3) 13-A ug-10 Low er the max. LTV ratio for residential properties v alued at > HK$12m at 60%
Low er the max. LTV ratio for non ow ner-occupied residential properties to 60%
Standardise the max. debt serv icing ratio of mortgage applicants to 50% from 5060%
Prohibition of confirmor transaction for first-hand uncompleted flats
(4) 13-Oct-10 Introduce a new subsidised housing scheme (My Home Purchase Plan) to assist the
sandw ich class to purchase flats
Remov e real estate from qualified inv estment asset classes for inv estment
(5) 19-Nov -10 Introduce a special stamp duty , ranging from 5 to 15% of property v alues, on
top of the current stamp duty , on residential properties resold w ithin 2 y ears after
purchase
A ny deferred pay ment of current stamp duty no longer allow ed
Low er the max.LTV ratio for self-use residential properties v alued at > HK$12m
to 50% from 60%
Low er the max.LTV ratio for self-use residential properties v alued at HK$8-12m
to 60% from 70%
Cap the LTV ratio for non-ow ner occupied residential properties, properties held
by company and industrial and commercial properties at 50%
(6) 23-F eb-11 Proactiv ely increase land supply in F Y11/12
Housing land av ailable could prov ide 30,000-40,000 priv ate residential units
(7) 10-J un-11 The max. LTV ratio for residential properties v alued at HK$10-12m is low ered to
50% from 60%.
The max. LTV ratio for residential properties v alued at HK$7-10m is 60% with the
max. loan amount capped at HK$5m.
The max. LTV ratio for residential properties v alued at <HK$7m remains at 70%,
but the max. loan amount is capped at HK$4.2m
The applicabe max. LTV ratio w ill be lowered by at least 10 ppts regardless of
property ty pes or v alues if the principal income of mortgage loan applicants is not
deriv ed from Hong Kong
The max. LTV ratio for properties under the net w orth-based mortgage will be
lowered from 50% to 40%
0.5
4.1
7.9
5.5
(6.2)
0.1
(1.6)
(5.4)
(10.4)
(3.5)
(2.6)
(2.3)
(3.0)
3.1
1.2
0.1
(1.8)
1.8
(0.0)
(2.5)
(4.9)
(2.5)
(5.6)
(7.1)
(0.6)
3.4
6.1
2.3
1.5
(0.3)
(2.6)
(0.7)
4.4
(8.5)
16.7
Source: Thomson Reuters, Centaline Property Agency, DBS Vickers
Page 35

HK Property Sector
Policy chart (continued)

150
40,000
30,000
25,000
(4) (5)
(7)
(2)
(1)
(3) (6)
20,000
(17)&(18)
(10)&(11)
(9)
130
(20)
120
(21)
(19)
110
100
90
80
70
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
15,000
(8)
(13)
(12)
140
(14) (16)
(19)
(12)
(17)&(18)
(10)&(11)
(13)(15)
(7)
(8)
(6)
(9)
(3) (5)
(1)(2)
(4)
(21)
(20)
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
35,000
(14)
(15)
(16)

1 - d ay 1 - w k 2 - w k 1 - mt h 3 - mt h
(8) 12-Oct-11
3.0
(0.1)
2.9
2.4
2.9
(9)
1.0
0.5
8.3
12.9
19.0
3.5
7.8
9.5
12.8
19.4
1.7
7.5
6.2
7.6
15.8
(0.5)
(1.2)
1.0
(1.3)
8.7
(3.7)
0.1
(1.5)
2.8
15.4
(10)
(11)
(12)
(13)
Introduced the modified Home Ow nership Scheme

Modified the My Home Purchase Plan
30-A ug-12 Relaunch 830 unsold HOS units
Offers c.1,000 units under the rev ised "My Home Purchase Plan" in Tsing Yi for
pre-sale in 2013
Expedites the approv als for pre-sale consent
Redev elop Chai Wan F actory Estate into 180 PRH units and the URA w ill roll out
tw o pilot schemes on tw o industrial building redev elopments
Initiates the sales of 6 sites in application list and tender Tsuen Wan TW 6
dev elopment in 4Q12
06-Sep-12 Unv eiled the "Hong Kong Property for Hong Kong Residents" policy . Tw o
projects (c.1,100 units) to be built on Kai Tak New Dev elopment A rea can only
be sold to Hong Kong residents
08-Sep-12 Gov ernment planned to allow ow ners to conv ert their industrial buildings into
small-sized residential units w ithout pay ing land premium. There w ere an
estimated of 700 eligible industrial buildings.
14-Sep-12 Tightened mortgage lending rule for second home buy ers
The max. debt serv ice ratio (DSR) is low ered from 50% to 40% in base case
scenario and the maximum DSR is low ered from 60% to 50%.
LTV ratio for buy ers w ith income deriv ed mainly outside Hong Kong is low ered
10 ppts to 30-50%
The max. LTV ratio for mortgage loans assessed based on net w orth of applicants
is low ered to 30% regardless of proeprty v alues.
The max. loan tenure for all properties is limited to 30 y ears
26-Oct-12 Introduced Buy er's Stamp Duty (BSD), equiv alent to 15% of property v alues on
top of current stamp duty , for all-non Hong Kong permanent residents and
corporate homebuy ers
Modified the Special Stamp Duty (SSD) on residential properties w ith restriction
period extended from 2 y ears to 3 y ears and applicable tax rate increased to 1020% of property v alues from 5-15%
Page 36

HK Property Sector

150
40,000
30,000
25,000
(4) (5)
(7)
(2)
(1)
(3) (6)
20,000
(17)&(18)
(10)&(11)
(9)
140
130
(20)
120
(21)
(19)
110
100
90
80
70
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
15,000
(8)
(13)
(12)
(14)
(15)
(16)
(14) (16)
(19)
(12)
(17)&(18)
(10)&(11)
(13)(15)
(7)
(8)
(6)
(9)
(3) (5)
(1)(2)
(4)
(21)
(20)
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
35,000

1 - d ay 1 - w k 2 - w k 1 - mt h 3 - mt h
(14) 16-J an-13
(15) 22-F eb-13
(16) 29-A pr-13

(17) 27-J un-13
(18) 04-J ul-13
36 designated GIC sites and other Gov ernment sites (27 ha) w ill be conv erted for
housing dev elopment to prov ide 11,900 flats
13 sites in Green Belt areas (57 ha) are considered suitable for rezoning into
residential use
16 pieces of industrial land (30 ha) are considered suitable for rezoning for
residential dev elopment
Gov ernment w ill expedite adminstrativ e approv al procedures for 55 residential
projects (45,000 units) for w hich planning applications are approv ed
Take forw ard the planning of Kam Tin South West Rail Kam Sheung Road Station
and Pat Heung Station Maintenance Depot (8,700 units)
Gov ernment expedite the dev elopment of four projects including the former
Diamond Hill Squatter A rea, former Cha Kw o Ling Kaolin Mine, former Lamma
Quarry and A nderson Road Quarry .
Double stamp duties on A LL properties of >HK$2m increases to as much as 8.5%
of purchase prices. F or transaction v alued at HK$2m or below , the stamp duty
w ill increase from HK$100 to 1.5% of trasaction v alue.
In stress-testing mortgage applicants?repay ment ability , banks are required to
assume a mortgage rate increase of 300bps instead of the existing 200bps for all
ty pes of property
The max. LTV ratio for mortgage loans for all commercial and industrial properties
shall be low ered by 10% from the existing applicable lev els.
The max. LTV ratio for mortgage loans for all standalone car park space shall be
set at 40% w ith max. tenor of 15 y ears
Only mortgage loans of properties v alued at HK$4m or below ?(dow n from
HK$6m currently ) is eligible for the maximum Mortgage Insurance Programme
cov er of 90% of LTV ?
Stamp duties w ill be charged on signing S&P agreements for non-residential
properties instead of upon the execution of a conv ey ance
The Residential Properties (F irst-hand Sales) Ordinance comes into effectiv e.
Gov ernment extends the pre-sale period of priv ate residential flats to 30 months
from 20 months before project completion.
Gov ernment rev ised the plot ratios from 3.5 to 6 for Kw u Tung A rea and from 2
to 6 for F anling North. This should increase number of residential flats to 60,700
from 47,300.
The proportion of public housing in the new dev elopment areas w ill rise to 60%
(47% of the land).
F or priv ate housing, "Hong Kong people for Hong Kong property " measure w ill
be adopted as far as possible.
1.0
0.3
1.1
(2.6)
(9.2)
(0.3)
1.1
(0.2)
(6.6)
2.9
(0.1)
2.1
1.4
(0.5)
0.0
4.5
(3.5)
5.9
(8.3)
10.6
2.2
5.0
3.6
8.6
10.6
Page 37

HK Property Sector

150
40,000
25,000
20,000
15,000
(7)
(2)
(1)
(3) (6)
(8)
(13)
(12)
(17)&(18)
(10)&(11)
(9)
140
130
(20)
120
(21)
(19)
110
100
90
80
70
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
30,000
(4) (5)
(14)
(15)
(16)
(14) (16)
(19)
(12)
(17)&(18)
(10)&(11)
(13)(15)
(7)
(8)
(6)
(9)
(3) (5)
(1)(2)
(4)
(21)
(20)
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
35,000

1 - d ay 1 - w k 2 - w k 1 - mt h 3 - mt h
(19) 13-May -14 Gov ernment proposed to extend the w aiv er period for homebuy ers to obtain
refund for Double Stamp Duty . Local homebuy ers w ho sell their existing flats
w ithin six months after the execution of a conv ey ance on sale of new flats,
instead of signing the prov isional sales & purchase agreement could qualify for the
refund
(20) 31-Oct-14 The gov ernment announced to offer fiv e new Home Ow nership Scheme projects
for pre-sale w ith applications to commence in late 2014 and balloting in Mar
2015.
(21) 27-F eb-15 Maximum LTV ratio for self-use residential properties v alued at <HK$7m is
low ered to 60% from 60-70%
Max debt-serv icing ratio (DSR) for borrow ers w ho buy a second residential
property for self-use w ill be low ered to 40% from 50%, and the stressed-DSR
cap w ill be low ered to 50% from 60%.
Max DSR of mortgage loans for all non-self use properties, including residential
properties, commercial and industrial properties and car park spaces, w ill be
low ered to 40% from 50%, and the stressed-DSR cap w ill be low ered to 50%
from 60%
Page 38
1.8
1.2
2.4
4.8
13.9
0.0
(2.7)
(0.9)
0.3
4.8
0.0
(1.8)
(4.6)
0.3
9.8

HK Property Sector
Property Investors
Perf o rman c e ( % )
1 - mt h
2 - mt h
3 - mt h
2014
YTD
(3.7)
(8.3)
(6.9)
(7.0)
(6.5)
(3.5)
(4.3)
(11.5)
(13.7)
(13.2)
(0.7)
0.8
(8.2)
(5.1)
(12.5)
(4.9)
14.6
3.7
16.8
(5.6)
9.5
13.9
(7.9)
2.0
(12.1)
Sec t o r av erag e
(7.1)
(10.2)
( 5 .7 )
6.6
0.7
HSI Index
HSP Index
(13.9)
(12.1)
(14.7)
(10.0)
(10.4)
(5.2)
1.3
7.2
(0.4)
3.6
Great Eagle
HK Land
Hy san Dev elopment
Swire Properties
Wharf Holdings
Property investors delivered divergent share price

performances YTD, with office landlords outperforming
retail counterparts remarkably. Hongkong Land gained 14%
amid rising office market in Central. This made it the best
performing landlord. On the other hand, Wharf lost 12%
during the same period mainly led by lackluster retail market
as a result of slowing inbound tourism. On a weighted
average basis, property investors rose marginally by 0.7%
YTD, outperforming the Hang Seng Index (-0.4%), property
developers (-0.9%) as well as the REITs (-3.2%)
Property investors are now trading at 38% discount to our
current NAV estimate on a weighted average basis. This
compares with its 10-year average of 27%. From a historical
viewpoint, the sector valuation is undemanding. Hongkong
Land and Swire Properties are trading at 28-39% discounts
to their respective current NAV estimates, which is
inexpensive based on historical trends. Given our
expectations that office rentals will appreciate, there is room
for further share price upside for these two office landlords.
We believe that the retail market has yet to see a bottom.
This may increase Wharfs earnings uncertainty and hence
our HOLD call.
Hongkong Land should benefit from the improving office
market in Central where rental growth momentum has
been accelerating since 2Q15 and new supply will be tight
for the years to come. Recently, the company made its first
foray into Shanghai by joining hands with China-based CIFI
Holdings to develop a mixed-use project in Pudong. Overall,
China is gradually becoming an increasing source of
earnings for Hongkong Land. The stock is trading at a 28%
discount to our appraised current NAV. We see room for
further share price upside in view of the office market
upcycle in Central and proposed inclusion into MSCI Hong
Kong Index. BUY with US$9.32 TP. .
Swire Properties' office occupancy remains firm but

reversion growth has been moderating as a result of rising
expiring rents. Pacific Place Office even registered mildly
negative rental reversion. Falling tenant sales at Pacific Place
Mall may limit the company's future pricing power while
Cityplaza Mall is reaping the benefits of asset enhancement
initiatives. To replenish its land bank, Swire Properties has
joined hands with China Motor Bus to redevelop the latter's
former bus depot in Chai Wan into a residential/commercial
project. The stock is trading at a 39% discount to our
assessed current NAV. Valuation is enticing. BUY with
HK$30.2 TP.
Wharf has been seeing signs of improvement in property
sales in China since 2Q15, especially in first-tier cities,
following the relaxation of mortgage lending rule and
interest rate cut. With increasing rental footage and rising
contributions from Chengdu IFS, Wharfs rental earnings
from China should grow. However, retail tenant sales at
Harbour City and Times Square have been declining amid a
challenging retail market outlook led by slowing inbound
tourism. This should be a drag on retail income growth in
Hong Kong. The stock is trading at a 43% discount to our
estimated current NAV. Earnings visibility could possibly be
lower than before given the challenging retail scene. We
rate the counter HOLD with HK$53.85 TP. However, parent
Wheelock has been raising its stake in Wharf which could
limit further downside risk on stock price.
Hysan Developments office portfolio should continue to see
modest rental reversion with high occupancy. Key office
tenant Manulife Financial may adjust its space requirements
at Lee Gardens One but the company should have no
difficulty in filling up any vacated space given tight vacancy
in Causeway Bay. Excluding an anchor tenant at Hysan Place,
overall tenant sales within its retail portfolio fell 5% in
4M15 given market headwinds. Capitalising on its strong
balance sheet, the company is exploring acquisition
opportunities in Hong Kong and overseas. The stock is
inexpensive, trading at 49% discount to our assessed
current NAV. BUY with HK$38.15 TP.
Following the spin-off of three Hong Kong hotels to
Langham Hospitality Investments in May 13, Great Eagle has
been on a buying spree. In 1H15, the company bought a
prime site for hotel development and, through its U.S. Fund,
a residential/ commercial site, both of which are in San
Francisco. Even after factoring the payment for the HUB
hotel in 2015, Great Eagle should remain financially healthy
for acquisition opportunities. Overseas hotel operations are
generally picking up. With EBITDA turnaround at The
Langham, Chicago and first full-period contribution from
The Langham, Xintiandi, Shanghai, we estimate FY15 hotel
EBITDA to grow >20%. With 62% discount to our
estimated current NAV, the stocks valuation is not
expensive but we do not see near-term re-rating catalyst.
HOLD with HK$30.5 TP.
Page 39

HK Property Sector
Peers valuation
Co mp an y
Great Eagle
HK Land @
Hy san Dev
Swire Props
Wharf
Co d e
41 HK
HKL SP
14 HK
1972 HK
4 HK
Mkt
F YE
Cap
HK $ b n
Dec
Dec
Dec
Dec
Dec
@ denominated in USD
Page 40
18
18
34
137
149
L ast
Pric e
HK $
27.65
7.70
31.90
23.35
49.20
12- m
PE
PE
t arg et R ec o m F Y 1 5 F Y 1 6
HK $
x
x
30.50
9.32
38.15
30.20
53.85
Hold
Buy
Buy
Buy
Hold
11.0
20.2
15.4
18.8
12.5
11.2
19.8
15.2
18.4
11.3
NA V
HK $
Disc . t o
J un- 16
NA V
%
74.4
11.6
63.6
40.3
89.8
(63)
(34)
(50)
(42)
(45)
J un- 16
Y ield Y ield
F Y 15 F Y 16
%
%
2.7
2.5
3.9
2.8
4.0
2.7
2.5
4.1
2.8
4.1

HK Property Sector
Great Eagle Discount to NAV
HK$
0
(10)
(20)
(30)
(40)
(50)
(60)
(70)
(80)
(90)
60
+2SD: -31%
+1SD: -42%
50
-25%
40
-39%
-2SD: -76%
-82%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Hongkong Land Discount to NAV
Jan-05
10
0
Jan-07
-67%
20
-1SD: -64%
Jan-06
-53%
30
Average: -53%
%
20
Jan-15
Great Eagle Discount to NAV band
Jan-05
Jan-14
Jan/15
Jan/14
Jan/13
Jan/12
Jan/11
Jan/10
Jan/09
Jan/08
Jan/07
Jan/06
Jan/05
(70)
Jan-13
-2SD: -49%
(60)
Property investors
become relatively
expensive
Jan-12
-1SD: -37%
(50)
Jan-08
(40)
Jan-11
Average: -27%
Jan-07
(30)
Jan-10
(20)
Jan-07
+1SD: -15%
Jan-06
(10)
+2SD: -3%
Jan-06
30
25
20
15
10
5
0
(5)
(10)
(15)
(20)
Jan-09
Property developers
become relatively
expensive
Jan-05
Difference in the NAV discounts for property developers

and investors
Jan-08
Discount to NAV property investors sector average
Hongkong Land Discount to NAV band
HK$
+2SD: 13%
10
14
11%
12
+1SD: -4%
-7%
(10)
10
(20)
-25%
-44%
-62%
Average: -20%
-1SD: -36%
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
(70)
-2SD: -53%
Jan-08
(60)
Jan-07
(50)
Jan-06
(40)
Jan-05
(30)
Page 41

HK Property Sector
Hysan Discount to NAV
Hysan Discount to NAV band
HK$
63
+2SD: -15%
(10)
+1SD: -26%
(20)
(30)
Average: -36%
(40)
-1SD: -46%
-2SD: -56%
+2SD: -16%
+1SD: -23%
(20)
(25)
Average: -30%
-1SD: -37%
(40)
-2SD: -44%
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
(45)
Wharf Discount to NAV
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
HK$
35
33
31
29
27
25
23
21
19
17
15
-13%
-21%
-28%
-36%
-43%
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
(5)
(15)
Jan-07
Swire Properties Discount to NAV band
%
(10)
Jan-06
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Swire Properties Discount to NAV
(35)
-69%
13
3
(30)
-54%
23
(70)
Wharf Discount to NAV band
HK$
Page 42
Jan-15
-66%
Jan-14
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-06
Jan-05
(60)
Jan-07
-2SD: -51%
Jan-13
(50)
-50%
Jan-12
-1SD: -39%
Jan-11
(40)
-33%
Jan-10
Average: -27%
Jan-09
(30)
-17%
Jan-08
+1SD: -16%
(20)
Jan-07
(10)
-1%
Jan-06
100
90
80
70
60
50
40
30
20
10
0
+2SD: -4%
Jan-05
(70)
-40%
Jan-05
(60)
(50)
-25%
43
33
(50)
(80)
-10%
53

HK Property Sector
Price to Book chart
Great Eagle
Hongkong Land
x
1.2
x
1.4
1.0
1.2
1.0
0.8
0.8
0.6
0.6
Average: 0.52x
Hysan Development
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-05
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
0.0
Jan-07
0.2
0.0
Jan-06
0.2
Jan-05
Average: 0.81x
0.4
Jan-06
0.4
Swire Properties
x
1.2
x
1.0
1.0
0.9
0.8
0.8
Average: 0.7x
0.7
Jan-15
Jan-15
Jul-14
Jan-15
Jan-15
Jan-14
Jan-14
Jan-14
Jul-13
Jan-13
Jan-13
Average: 0.71x
Jan-13
Jan-12
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
0.5
Jan-07
0.0
Jan-06
0.6
Jan-05
0.2
Jul-12
0.4
Jan-12
0.6
Wharf
x
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Average: 0.83x
Page 43

HK Property Sector
REITs
Hong Kong risk-free rate (yield of 10-year exchange

fund note)

%
Perf o rman c e (% )
3.5
1.808%
Jul-15
Jan-15
(0.4)
3.6
US 10-year treasury bond yield
Amid growing expectations of interest rate hikes, the five

REITs under our coverage fell 3.2% on a weighted average
basis YTD, led by The Link REIT. The performance of these
REITs lagged behind the Hang Seng Index (-0.4%), property
developers (-0.9%) and property investors (+0.7%) as well.
The Link REIT fell 7% during the same period, which we
believe was partly due to the increased investment risk
profile following the acquisitions of office site in Kowloon
East and EC Mall in Beijing. On the other hand, Champion
REIT fared better than other REITs YTD as Citibank Plaza is
on the road to a recovery in occupancy underpinned by
rising office leasing demand in Central.
4.0
The REITs we cover are trading at prospective distribution

yields of 4.4-6.4%. Bond yields have reversed their
downtrend since Mar 15. The yield of the Hong Kong 10year Exchange Fund Note edged up to 1.81% currently. The
sector yield spread now stands at 2.9% on a weighted
average basis, in line with its historical average. Excluding
Central office property, most of the rental properties held by
the REITs under our coverage recorded positive but
moderating rental reversions. Against this backdrop, DPU
growth remains positive in FY15 except for Champion REIT
which suffers from higher average vacancy and lower
average rents following the departure of BoAML in 2H14.
Nonetheless, softer reversionary growth and potentially
higher interest expenses should moderate DPU growth for
the entire sector in FY16. Elsewhere, Fortune REIT and
Sunlight REIT divested their non-core rental assets at
attractive exit yields. This gives the two REITs greater
financial flexibility in making accretive acquisitions in future.
3.5
3.0
2.5
2.0
1.5
2.192%
1.0
0.5
Source: Bloomberg Finance L.P.
Jul-15
Jan-15
Jan-11
0.0
Jul-14
* DBSV coverage only
Page 44
Jul-14
0.0
Jan-14
0.5
Jan-14
1.3
7.2
1.0
Jul-13
(10.4)
(5.2)
1.5
Jul-13
(14.7)
(10.0)
2.0
Jan-13
(13.9)
(12.1)
2.5
Jan-13
HSI Index
HSP Index
3.0
Jul-12
7.8
5.0
(7.7) 26.7
(0.9)
(9.8)
(10.4)
n.a.
(12.8)
(9.7)
(5.6)
(9.3)
(6.3) 16.8
(6.8)
(8.1)
(12.2) 15.5
(3.1) 16.7
(8.2) 29.1
(11.9)
2.9
( 5 . 5 ) 2 4 .9
Jan-12
(3.4)
(6.3)
(4.0)
(9.9)
(10.3)
(1.6)
(6.6)
(12.1)
(10.5)
(4.6)
(4.2)
(9.7)
(4.4)
Jul-11
(8.0)
(5.0)
(3.4)
(9.9)
(7.4)
(3.2)
(5.0)
(9.7)
(8.0)
(4.6)
0.2
(9.9)
( 1 .9 )
Jul-12
11.9
(4.6)
(3.2)
(17.1)
(6.5)
(7.9)
1.1
(0.5)
(11.7)
6.0
(7.1)
0.8
(3 . 2 )
Champion REIT
F ortune REIT
Hui Xian REIT
J inmao Inv estments
Langham Hospitality
New Century REIT
Prosperity REIT
Regal REIT
Spring REIT
Sunlight REIT
The Link REIT
Yuexiu REIT
Sec t o r av erag e*
Jan-12
YTD
Jul-11
2014
Jan-11
1 - mt h 2 - mt h 3 - mt h

HK Property Sector
favourably with its average of 2%. Despite its increased risk
profile led by new ventures, we maintain BUY at this stage
with HK$49.1 TP.
Sector yield spread

%
10
8.9%
8
6
4
+1SD: 4.5%
Average: 2.9%
-1SD: 1.4%
0
-0.7%
Jan-06
Aug-06
Mar-07
Oct-07
May-08
Dec-08
Jul-09
Feb-10
Sep-10
Apr-11
Nov-11
Jun-12
Jan-13
Aug-13
Mar-14
Oct-14
May-15
(2)
Rental reversion remained healthy at 18% in 1Q15. This,

coupled with contributions from newly acquired Laguna
Plaza, should underpin Fortune REIT's near term rental
income growth. Fortune REIT has also unlocked the hidden
value of Nob Hill Square via a disposal at an exit yield of
2.9%. Balance sheet has thus improved, which paves the
way for accretive acquisitions in future. This bodes well for
Fortune REIT's long-term growth. With c.60% of rental
income derived from tenants in non-discretionary retail
sectors with relatively stable demand, Fortune REIT should
be sheltered from the retail slump led by a slowdown in
inbound tourism. Fortune REIT offers distribution yields of
6.1-6.2% for FY15-16. BUY with HK$9.15 TP.
Steady tenant sales growth should help sustain The Link
REITs reversionary growth in the years ahead. Ongoing
asset enhancement initiatives should unlock the hidden
value of its portfolio, and continue to support the REITs
near-term earnings. Despite the acquisition of an office lot
in Kwun Tong in Jan 15, The Link REITs gearing remains
low at 12% in Mar 15 due to an uplift in property
valuations. This implies plenty of room for The Link REIT to
gear up for new acquisitions in Hong Kong & China to
expand and diversify its long-term earnings. The Link REIT
offers distribution yields of 4.4-4.7% for FY16-17. These
translate into yield spreads of 2.6-2.9% which compares
Prosperity REITs current portfolio occupancy remains high at

98-99%. We expect rental increment to be favourable at
c.20% given that c.39% of leases are due for renewal this
year. This should underpin steady rental revenue growth
over the next couple of years. In light of the expiry of
HK$1.416bn worth of interest rate swaps in Jun 15,
Prosperity REIT has entered into a new interest rate swap
arrangement to fix the interest rate. With c.55% of its debts
hedged into fixed rates, Prosperity REITs interest rate risk is
well managed. Prosperity REIT offers distribution yields of
6.4% for FY15-16. Given its steady growth prospects,
Prosperity REIT is a BUY with HK$3.00 TP.
Sunlight REIT disposed three non-core properties
for.c.HK$920m in total. Exit yield is attractively low at 2.1%.
In addition to unit repurchase and raising its dividend
payout, we believe that the capital will be re-deployed for
new acquisitions. Occupancy of Sunlight Tower stays high at
c.99% with positive rental reversion to continue. Healthy
rental reversion for Sheung Shui Centre Shopping Arcade
and Metro City Ph1 property should be sustainable,
supporting revenue growth. Sunlight REIT offers distribution
yields of 5.7-5.9% for FY15-16. Given its defensive earnings
profile and healthy reversionary growth, Sunlight REIT is a
BUY with HK$4.22 TP.
Champion REIT has rebuilt the occupancy at Citibank Plaza.
Following the recruitment of several financial service tenants
such as Bloomberg, committed occupancy at Citibank Plaza
has recovered markedly to c.95% leading to income
recovery for Champion REIT in FY16. New financial
liberalisation measures between Hong Kong and China such
as mutual fund recognition scheme bodes well for office
demand in Central over the longer term which would be
positive for Citibank Plaza. Tenant sales growth from
Langham Place Mall remains encouraging. We also expect a
modest increase in rentals upon the renewal of tenancies at
Langham Place Office Tower. Champion REIT is trading at
distribution yield of 4.5% for FY15 and 5.2% for FY16. BUY
with HK$4.68 TP. Potential interest rate hike could be a
drag in earnings as Champion REIT does not hedge the
interest cost for any of its bank borrowings.
Page 45

HK Property Sector
Peers valuation
R EIT
Co d e
Champion REIT*
Mkt
Cap
HK $m
L ast
Pric e
HK $
12-m
Y ield
T arg et R ec o m F Y 1 4 A
HK $
%
Y ield
F Y 15F
%
Y ield
F Y 16F
%
Pric e/ G earin g
BV
R at io
(x)
%
2778 HK
Dec
23,208
4.03
4.68
Buy
5.1
4.5
5.2
0.50
23.1
778 HK
Dec
14,083
7.48
9.15
Buy
5.6
6.1
6.2
0.63
31.8
87001 HK
Dec
18,049
3.37
n.a.
NR
7.7
8.1
8.4
0.63
9.2
F ortune REIT*
Hui Xian REIT@^
F YE
J inmao Inv estments*
6139 HK
Dec
9,700
4.85
6.20
Buy
9.9
9.3
9.6
0.91
66.0
Langham Hospitality ^
1270 HK
Dec
6,383
3.14
n.a.
NR
9.5
9.1
9.1
0.59
38.4
New Century REIT^
1275 HK
Dec
2,846
3.04
n.a.
NR
10.7
n.a.
n.a.
0.86
31.0
28.6
Prosperity REIT*
808 HK
Dec
3,813
2.67
3.00
Buy
6.1
6.4
6.4
0.57
Regal REIT^
1881 HK
Dec
6,645
2.04
n.a.
NR
7.9
9.2
9.5
0.43
33.9
Spring REIT^
1426 HK
Dec
3,601
3.23
n.a.
NR
8.7
8.9
9.0
0.53
33.5
Sunlight REIT*
435 HK
J un
6,079
3.71
4.22
Buy
5.4
5.7
5.9
0.50
23.3
The Link REIT*
823 HK
Mar 103,431
45.10
49.10
Buy
3.7
4.1
4.4
0.88
11.9
Yuexiu REIT^
405 HK
Dec
3.92
n.a.
NR
7.1
7.9
8.1
0.66
32.0
@ denominated in RMB
^ DPU based on consensus
Source: Thomson Reuters, *DBS Vickers
Page 46
11,036
0.0
Fortune REIT Price to book NAV
x
1.4
%
25
1.2
20
1.0
0.8
15
0.6
0.4
0.2
0
The Link REIT Price to book NAV
x
1.9
1.7
1.5
1.3
1.1
0.9
0.7
0.5
Aug/03
Jan/04
Jun/04
Nov/04
Apr/05
Sep/05
Feb/06
Jul/06
Dec/06
May/07
Oct/07
Mar/08
Aug/08
Jan/09
Jun/09
Nov/09
Apr/10
Sep/10
Feb/11
Jul/11
Dec/11
May/12
Oct/12
Mar/13
Aug/13
Jan/14
Jun/14
Nov/14
Apr/15
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
May/06
Sep/06
Jan/07
May/07
Sep/07
Jan/08
May/08
Sep/08
Jan/09
May/09
Sep/09
Jan/10
May/10
Sep/10
Jan/11
May/11
Sep/11
Jan/12
May/12
Sep/12
Jan/13
May/13
Sep/13
Jan/14
May/14
Sep/14
Jan/15
May/15
x
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
Aug/03
Jan/04
Jun/04
Nov/04
Apr/05
Sep/05
Feb/06
Jul/06
Dec/06
May/07
Oct/07
Mar/08
Aug/08
Jan/09
Jun/09
Nov/09
Apr/10
Sep/10
Feb/11
Jul/11
Dec/11
May/12
Oct/12
Mar/13
Aug/13
Jan/14
Jun/14
Nov/14
Apr/15
Champion REIT Price to book NAV
%
8
7
6
5
4
3
2
1
0
Nov/05
Mar/06
Jul/06
Nov/06
Mar/07
Jul/07
Nov/07
Mar/08
Jul/08
Nov/08
Mar/09
Jul/09
Nov/09
Mar/10
Jul/10
Nov/10
Mar/11
Jul/11
Nov/11
Mar/12
Jul/12
Nov/12
Mar/13
Jul/13
Nov/13
Mar/14
Jul/14
Nov/14
Mar/15
Nov/05
Mar/06
Jul/06
Nov/06
Mar/07
Jul/07
Nov/07
Mar/08
Jul/08
Nov/08
Mar/09
Jul/09
Nov/09
Mar/10
Jul/10
Nov/10
Mar/11
Jul/11
Nov/11
Mar/12
Jul/12
Nov/12
Mar/13
Jul/13
Nov/13
Mar/14
Jul/14
Nov/14
Mar/15

HK Property Sector
Champion REIT Yield vs Govt bond
%
30
25
20
15
10
5
Dividend Yield
Dividend Yield
Dividend Yield
HK 10-yr ex fund notes
Fortune REIT Yield vs Govt bond
10
HK 10-yr exfund notes
The Link REIT Yield vs Govt bond
HK 10-yr exc fund notes
Page 47
x
%
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
30
x
1.20
1.00
0.80
0.60
0.40
0.20
Page 48
%
20
18
16
14
12
10
8
6
4
2
0
0.00
Sunlight REIT Price to book NAV

Jan-06
Jun-06
Nov-06
Apr-07
Sep-07
Feb-08
Jul-08
Dec-08
May-09
Oct-09
Mar-10
Aug-10
Jan-11
Jun-11
Nov-11
Apr-12
Sep-12
Feb-13
Jul-13
Dec-13
May-14
Oct-14
Mar-15
Dec/05
Jun/06
Dec/06
Jun/07
Dec/07
Jun/08
Dec/08
Jun/09
Dec/09
Jun/10
Dec/10
Jun/11
Dec/11
Jun/12
Dec/12
Jun/13
Dec/13
Jun/14
Dec/14
Jun/15
Prosperity REIT Price to book NAV
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec/06
Jun/07
Dec/07
Jun/08
Dec/08
Jun/09
Dec/09
Jun/10
Dec/10
Jun/11
Dec/11
Jun/12
Dec/12
Jun/13
Dec/13
Jun/14
Dec/14
Jun/15

HK Property Sector
Prosperity REIT Yield vs Govt bond
Dividend Yield
Dividend Yield
Sunlight REIT Yield vs Govt bond
25
20
15
10

HK Property Sector
Appendix: Asset breakdown

Property developers
G A V B reak d o w n ( % )
HK
Residential
Office
Retail
Hotel
Industrial
Others
F armland
China
Ov erseas
Listed subsidiaries. associates
& inv estments
Other assets
T o t al
G A V B reak d o w n ( % )
HK
Residential
Office
Retail
Hotel
Industrial
Others
F armland
China
Ov erseas
Listed subsidiaries. associates
& inv estments
Other assets
T o t al
Ch eu n g
K ong
Pro p ert y
62
17
15
9
16
3
1
0
31
3
H an g L u n g
Pro p s
H en d erso n
L an d
K . W ah
K erry Pro p s
L ai Su n
M T RC
50
12
13
22
0
0
2
0
50
0
55
11
12
18
4
1
6
4
16
0
32
28
1
4
0
0
0
0
55
0
41
29
5
5
0
0
1
0
50
2
87
11
36
30
7
0
3
0
0
12
41
11
6
21
0
0
3
0
2
0
28
12
1
100
0
100
0
100
0
100
1
100
0
100
57
100
N ew W o rld
D ev
Sin o L an d
SH K P
T ai Ch eu n g
W h eelo c k &
Co .
W in g T ai
Pro p s
71
22
6
25
14
0
1
3
13
0
84
22
20
34
2
3
1
0
7
8
75
25
18
23
5
1
2
1
20
2
97
36
26
5
29
0
0
0
0
2
25
15
7
3
0
0
0
0
0
7
89
18
59
0
6
7
0
0
5
3
15
68
0
100
0
100
1
100
0
100
0
100
0
100
* For New World Development, its stake in New World China Land is classified under "China" instead of "listed subsidiaries, associates and
investments
* For Wheelock & Co, its stake in Wheelock Properties (Singapore) is classified under "Overseas" instead of "listed subsidiaries, associates and
investments
Source: DBS Vickers
Page 49

HK Property Sector
Property investors
G A V B reak d o w n (% )
HK
Residential
Office
Retail
Hotel
Industrial
Others
F armland
China
Ov erseas
Listed subsidiaries. associates &
inv estments
Other assets
T o t al
Source: DBS Vickers
Page 50
G reat Eag le
16
9
5
1
0
0
0
0
10
24
Ho n g k o n g L an d
61
0
50
10
1
0
0
0
20
19
Hy san
90
10
37
41
0
0
1
0
8
0
Sw ire Pro p s
79
7
50
16
4
1
2
0
17
4
W h arf
67
8
19
37
2
1
0
0
28
0
43
7
100
0
100
2
100
0
100
2
100

HK Property Sector
Appendix: NAV sensitivities

Property developers
% in c reas e in N A V
if t h e f o llo w in g p ric es
ris e b y 1 0 %
Office -HK
Retail - HK
Residential - HK
Hotels - HK & ov erseas
Ch eu n g
K ong
Pro p ert y
1.7%
1.1%
1.5%
1.8%
H an g L u n g
Pro p s
H en d ers o n
L an d
K . W ah
K erry Pro p s
L ai Su n
M T RC
1.3%
2.2%
1.1%
0.0%
1.4%
2.2%
0.7%
0.3%
0.1%
0.7%
2.6%
0.1%
0.7%
0.7%
4.1%
0.5%
5.2%
4.4%
1.8%
0.2%
0.6%
2.8%
1.4%
0.0%
ris e b y 1 0 %
Office -HK
Retail - HK
Residential - HK
N ew W o rld
D ev
Sin o L an d
SH K P
T ai Ch eu n g W h eelo c k &
Co
W in g T ai
Pro p s
0.7%
3.4%
1.8%
2.2%
1.4%
3.2%
1.5%
0.7%
2.0%
2.9%
2.5%
0.6%
2.1%
0.7%
2.9%
2.4%
1.1%
0.4%
3.0%
0.0%
G reat Eag le
Hongk ong
L an d
H y s an
Sw ire Pro p s
W h arf
0.5%
0.1%
1.2%
2.8%
5.6%
1.0%
0.0%
0.1%
4.1%
4.4%
1.1%
0.0%
5.6%
1.8%
0.7%
0.7%
2.4%
4.6%
0.9%
0.2%
7.1%
0.0%
2.3%
0.9%
Source: DBS Vickers
Property investors
ris e b y 1 0 %
Office -HK
Retail - HK
Residential - HK
Source: DBS Vickers
Page 51

HK Property Sector
This page has been left blank intentionally
Page 52

HK Property Sector
STOCK PROFILES
Page 53
HK Property Sector

Bloomberg: 1113 HK | Reuters: 1113.HK
Good earnings visibility, compelling

valuations
BUY
Last Traded Price: HK$57.95 (HSI : 23,517)
Price Target: HK$81.1 (40% upside)
Potential Catalyst: Project sales, new acquisitions & Index inclusion
Where we differ: Market has higher earnings estimate for FY15-16.
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
219
77.2
199
72.2
179
159
67.2
139
62.2
119
57.2
99
52.2
Jun-15
79
Cheung Kong Property (LHS)
Forecasts and Valuation

F Y D ec ( H K $ m)
Turnov er
EBITDA
Pretax Profit
Net Profit
EPS (HK$)
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Estimated NA V (HK$)
Discount to NA V (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
Relative HSI INDEX (RHS)
2014A *
2015F
2016F
46,606
20,390
57,791
52,987
13.73
n.a.
4.2
12.4
13.1
n.a.
n.a.
Cash
n.a.
55,795
20,938
22,164
16,639
4.31
(69)
13.4
8.4
12.7
1.75
3.0
6
6.8
96.5
(40)
59,126
24,519
24,789
18,188
4.71
9
12.3
10.2
10.9
1.93
3.3
4
6.6
101.4
(43)
Nil
4.61
S: 1
Nil
5.21
H: 2
B: 7
* F Y14 net profit included fair v alue changes on

inv estment properties
ICB Industry: Financials
ICB Sector: Real Estate Holding & Development
Principal Business: Property development and investment and hotel
operations in Hong Kong, China, Singapore & the UK.
Source of all data: Company, DBSV, Thomson Reuters, HKEX
Page 54
www.dbsvickers.com
ed-TH / sa- AH
Brisk project sales enhance earnings visibility
Robust and diversified recurring income base
BUY with HK$81.1 TP

Brisk project sales enhance earnings visibility. YTD, CK Property
has achieved contracted sales of c.HK$21bn from Hong Kong, mainly
from two fully-sold projects in Tseung Kwan O, namely Hemera and
The Beaumount II. Aided by strong project sales, we estimate that
the company has locked in the bulk of our projected FY15
development earnings from Hong Kong which enhances its earnings
visibility. In 2H15, CK Property plans to launch Stars by the Harbour
in Hung Hom and The Zumurud in Ho Man Tin for sale. These two
upmarket projects should appeal to upgraders. Elsewhere, CK
Property is also applying for pre-sale consent for two projects in Yuen
Long, including a large-scale project close to Long Ping Station and a
house development. Overall, CK Property's development land bank
is strategically located with a diversified product mix to tap demand
across a wide spectrum of homebuyers
Robust and diversified recurring income base. CK Property
generates recurrent earnings of c.HK$9bn p.a. from rental operations,
hotel business and REIT investment. This provides the company with
greater financial flexibility to reward its shareholders through
dividends. Strong office exposure in Central positions the company as
a key beneficiary of improving market outlook there. Its largest retail
property Wonderful Worlds of Whampoa should benefit from better
transportation connectivity, led by the construction of Kwun Tong
Line Extension. Despite hotel market headwinds, CK Property, the
largest hotel owner-operator in Hong Kong, should fare better than
other hoteliers, given its strong exposure to the long-stay hotel
market which is more resilient. With low gearing & strong property
sales proceeds, CK Property is well placed to pursue new acquisitions
in Hong Kong, Singapore and the UK.
BUY with HK$81.1 TP. The stock is trading at a 40% discount to
our assessed current NAV. Valuation is attractive given the companys
high earnings visibility, sound income quality and strong balance
sheet. Continued rollout of new project launches in Hong Kong and
potential index inclusion could be near-term share price catalysts.
BUY with HK$81.1 TP, based on a 20% discount to our Jun 2016
NAV estimate.
At A Glance
Issued Capital (m shrs)
Mkt Cap (HK$m/US$m)
Major Shareholders (%)
Trust & Li F amily
F ree F loat (%)
3m Av g. Daily V al. (US$m)
3,860
223,668 / 28,853
30.2
69.9
203.5
HK Property Sector
CK Property
Income Statement (HK$m)
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
Balance Sheet (HK$m)
2014A
2015F
2016F
46,606
20,390
(629)
19,761
1,045
(1,879)
38,864
57,791
(3,739)
(1,065)
52,987
n.a.
n.a.
43.7
42.4
6.5
55,795
20,938
(679)
20,259
790
(385)
1,500
22,164
(4,898)
(627)
16,639
20
(69)
37.5
36.3
22.1
59,126
24,519
(734)
23,786
1,793
(790)
24,789
(5,890)
(711)
18,188
6
9
41.5
40.2
23.8
Cash Flow Statement (HK$m)

F Y D ec
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
A ssoc, M I, Inv smt
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
F Y D ec
F ixed A ssets
Other LT A ssets
Cash/ST Inv estments
Other Current A ssets
T o t al A s s et s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
M inority Interests
Shareholders' Equity
T o t al Cap it al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2014A
2015F
2016F
137,383
25,156
32,358
221,143
416,040
5,277
133,958
11,525
38,694
3,560
223,026
416,040
3,860
15,556
114,266
Cash
137,376
25,946
54,478
167,419
385,218
4,200
32,816
67,602
9,384
3,560
267,656
385,218
3,860
(17,324)
184,881
6
141,029
27,739
45,481
170,458
384,708
4,000
32,516
52,802
9,384
3,560
282,446
384,708
3,860
(11,321)
179,424
4
Segmental Breakdown (HK$m)/ Key Assumptions
2014A
2015F
2016F
19,761
(9,123)
629
3,855
(4,802)
10,320
(683)
7,445
6,762
2,841
(10,506)
(9,994)
(17,659)
(577)
(3,418)
20,259
(4,898)
679
5,697
200
21,937
(500)
4,910
4,410
55,000
(2,943)
(56,285)
(4,227)
22,120
(32,880)
23,786
(5,890)
734
(2,740)
250
16,140
(800)
(800)
(15,000)
(7,697)
(1,640)
(24,337)
(8,997)
6,003
F Y D ec
2014A
2015F
2016F
Property sales
Property rental
Hotels and serv iced
suites
Property and project
management
T o t al s ales
33,679
6,821
42,926
6,665
45,855
6,799
5,564
5,635
5,874
542
46,606
569
55,795
598
59,126
K ey as s u mp t io n s
Residential price - HK
Office rental - HK
Retail rental (High street shops) - HK
Retail rental (Shopping centre) - HK
2015F
5 to 10%
8 to 10%
-10 to -20%
0 to 3%
2016F
0 to 5%
5 to 10%
-10%
0 to 3%
Source: Company, DBS Vickers
Page 55
HK Property Sector

Navigating through challenging

times
BUY
Price Target: HK$25.05 (22% upside) (Prev HK$24.8)
Potential Catalyst: Low valuation
Where we differ: Market has slightly higher earnings estimate for FY15.
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
34.1
214
32.1
194
30.1
174
28.1
154
26.1
134
24.1
114
22.1
94
74
20.1
18.1
Jul-11
Jul-12
Jul-13
Hang Lung Properties (LHS)
54
Jul-15
Jul-14
F Y Dec (HK $ m)
Turnov er
EBITDA
Pretax Profit
Net profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
2013A
2014A
2015F
9,138
6,268
6,679
5,050
1.13
(18)
18.2
15.0
0.75
3.6
1
4.2
17,030
12,411
12,665
10,022
2.23
98
9.2
7.6
0.76
3.7
Cash
7.8
11,350 12,504
7,700
8,224
7,753
8,230
5,809
6,184
1.30
1.38
(42)
6
15.9
14.9
12.2
11.4
0.76
0.76
3.7
3.7
Cash
1
4.3
4.4
37.3
38.6
(45)
(47)
B: 13
2016F
(18)
1.46
S: 1
50
1.43
H: 5
* Exclude fair v alue changes on inv estment properties

Principal Business: Property investment in China & Hong Kong
Page 56
www.dbsvickers.com
ed-TH / sa- AH
Mixed asset performance within China portfolio
Ongoing asset enhancement initiatives to maintain

competitiveness
BUY with HK$25.05 TP

Mixed performance within China rental portfolio.Olympia 66
in Dalian is currently 60% pre-committed with tenants including an
ice skating rink and a cinema. The mall's commitment rate is
expected to be c.70% when it opens for business in 4Q15 as
international luxury brands are cautious in store expansion, given
the ongoing anti- corruption campaign. Commitment rate of
Riverside 66 stays at c.91% with 86% of shops having opened for
business. Center 66 saw marginal retail sales growth in 4M15, with
current retail occupancy of 85%. Its office tower's commitment
rate picked up to 60% with daily rents of Rmb4psm. Tenants are
primarily domestic financial companies. Occupancy of Parc 66
improved slightly to 85% but its rental reversion is largely neutral.
Meanwhile, Forum 66 is undergoing tenant remix with occupancy
retreating to 80-85%. Tenant sales fell by a single digit while a
rental cut of >10% is seen on renewal. Palace 66 sees >10%
tenant sales growth with occupancy improving to 88%. Elsewhere,
two Shanghai malls still benefit from positive rental reversions. In
4M15, Plaza 66 registered largely stable retail sales while Grand
Gateway 66 posted mid-single-digit retail sales growth.
Ongoing asset enhancement initiatives to maintain
competitiveness. Asset enhancement works at Plaza 66 will
commence in 3Q15 to give the mall a refresh look and maintain its
competitive edge. This is followed by property enhancement at
Grand Gateway 66, starting from 2Q16, that involves space
reconfiguration and facade improvement. They are collectively
estimated to cost Rmb1.5bn. In Causeway Bay, renovation works
at the main block of Fashion Walk has been completed with H&M
scheduled to open its flagship store at Hang Lung Centre in late
2015. This fast-fashion brand also plans to open another store at
Gala Place in Mongkok in 2016.
BUY with HK$25.05 TP. The stock trades 45% below our
assessed current NAV. We agree that Chinas tough retail market
continues to pose challenges to the companys rental operations.
But this should have been largely discounted in the share price,
given its low valuations. Based on a 35% discount to our Jun
2016 NAV estimate, we set our TP at HK$25.05 and maintain BUY.
At A Glance
M kt Cap (HK$m/US$m)
M ajor Shareholders (%)
Hang Lung Group
A berdeen A sset M anagement Plc
F ree F loat (%)
3m A v g. Daily V al. (US$m)
4,485
92,176 / 11,889
54.05
6.06
39.89
22.9
HK Property Sector
F Y D ec
F Y 13A
F Y 14A
F Y 15F
F Y 16F
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
Preference Div idend
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
Underly ing Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
9,138
6,268
(37)
6,231
53
395
6,679
(1,228)
(401)
5,050
24
(18)
(18.3)
68.6
68.2
17,030
12,411
(49)
12,362
50
253
12,665
(2,214)
(429)
10,022
86
98
98.5
72.9
72.6
11,350
7,700
(49)
7,651
53
50
7,753
(1,512)
(432)
5,809
(33)
(42)
(42.0)
67.8
67.4
12,504
8,224
(49)
8,175
54
0
8,230
(1,605)
(441)
6,184
10
6
6.5
65.8
65.4
F ixed A ssets
138,354 146,048 154,813 162,917
Other LT A ssets
1,045
1,223
1,241
1,259
34,321
39,946
38,527
38,392
8,560
5,962
5,532
6,432
T o t al A s s et s
182,280 193,179 200,112 209,001
ST Debt
1,657
5,657
3,500
3,501
Other Current Liab
6,610
9,487
9,480
9,473
LT Debt
33,322
29,441
33,098
36,097
Other LT Liab
9,524
9,591
10,069
10,561
M inority Interests
6,633
6,676
6,949
7,221
124,534 132,327 137,016 142,147
T o t al Cap it al
182,280 193,179 200,112 209,001
Share Capital (m)
4,479
4,483
4,483
4,483
Net Cash/(Debt)
(658)
4,848
1,929
(1,206)
Working Capital
34,614
30,764
31,079
31,850
Net Gearing (%)
1
Cash
Cash
1
F Y 13A
F Y 14A
F Y 15F
F Y 16F
F Y D ec
F Y 13A
F Y 14A
F Y 15F
F Y 16F
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
6,231
(897)
37
(363)
148
5,156
(9,852)
8,956
(896)
5,060
44
(3,436)
(1,109)
559
4,819
(241)
12,362
(1,197)
49
3,993
155
15,362
(5,296)
1,350
(3,946)
116
71
(3,751)
(1,138)
(4,702)
6,714
6,598
7,651
(1,512)
49
1,380
0
7,568
(5,774)
835
(4,939)
1,500
(3,841)
(1,707)
(4,048)
(1,419)
(2,919)
8,175
(1,605)
49
150
0
6,770
(5,034)
836
(4,198)
3,000
(3,850)
(1,857)
(2,707)
(135)
(3,135)
F Y D ec
F Y 13A
F Y 14A
F Y15F
F Y16F
Property Sales
Property Leasing
T o t al s ale s
2,500
9,814
6,638
7,216
9,138 17,030
3,722
7,628
11,350
4,269
8,235
12,504
K e y a s s u mp t io n s
Office rental - HK
F Y15F
F Y16F
5 to 10%
0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3%
0 to 3%
Page 57
HK Property Sector
Henderson Land
BUY
Parental support

Price Target : HK$55.25 (13% upside) (Prev HK$50.3)
Potential Catalyst: Project sales
Where we differ: Market has slightly higher earnings estimate for FY1516
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
70.0
215
65.0
195
60.0
55.0
175
50.0
155
45.0
135
40.0
115
35.0
95
30.0
25.0
Jul-11
Jul-12
Jul-13
Henderson Land (LHS)
75
Jul-15
Jul-14
F Y Dec (HK$m)
Turnover
EBITDA
Pretax Profit*
Net Profit*
EPS (HK$)
EPS Gth (%)
PE (x)
P/Cash Flow (x)
EV/EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
2013A
2014A
2015F
2016F
23,289
6,014
10,270
8,938
2.76
13
17.7
(696.1)
34.0
0.88
1.8
17
4.17
23,371
6,768
10,951
9,292
2.83
2
17.3
33.0
30.2
1.00
2.0
16
4.03
21,367
6,841
11,096
9,426
2.86
1
17.2
22.1
29.9
1.10
2.2
14
3.89
74.1
(34)
20,104
7,246
11,758
9,907
3.00
5
16.3
23.9
28.2
1.10
2.2
13
3.96
78.9
(38)
1
2.94
S: 4
4
3.02
H: 7
B: 8
* Exclude fair value changes on investment properties.

Principal Business: Property development and investment in Hong
Kong & China with stakes in three listed associates including Hong
Kong & China Gas
Page 58
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ed-TH / sa- AH
Focusing on margins when selling urban redevelopment

projects
Won the tender for a Tuen Mun site

Focusing on margins when selling urban redevelopment
projects. Capitalising on the recently improved sentiment
towards luxury homes, Henderson Land has sold nine luxury
units at 39 Conduit Road in Mid-levels at an effective ASP of
HK$48,800psf, generating c.HK$1.3bn revenue since late Mar
15. When launching single-block urban redevelopment projects
for sale, the company focuses more on margins. High Park
Grand in Prince Edward and Axis in Hung Hom are cases in
point. The offer price sets a new benchmark for their respective
areas. In 2H15, Henderson Land plans to offer Double Cove Ph
4 in Ma On Shan for sale. Encouraging tender results of the
nearby sites could facilitate the launch of this development.
Other single-block residential projects in San Wan Ho, Tai Kok
Tsui and Hung Hom could also be released onto the market at
an appropriate time.
Won the tender for a Tuen Mun site. Henderson Land
acquired a Tuen Mun residential lot for HK$3.63bn through a
government tender in Jun15. This translates into an
accommodation value of HK$4,621psf. Located close to
Harrow International School, the site is earmarked for a lowdensity development with total GFA of 785,341sf. About 1,000
units, including high-rise apartments and detached houses, are
expected to be built with the majority enjoying sea views. The
company has become more proactive in replenishing its land
bank via public tender in recent years, and has bought two
residential sites and one commercial lot with a total land cost of
HK$11.2bn since Nov 13.
BUY with HK$55.25 TP. The stock is trading at a 34%
discount to our assessed current NAV. Major shareholder Lee
Shau Kee has been consistently raising his stake in the company.
This not only indicates a vote of confidence for the company
but also helps support its stock price. BUY with HK$55.25 TP,
which is derived by applying a 30% discount to our Jun 2016
NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Lee Shau-Kee
Cameron Enterprise Inc.
Richbond Inv estment Limited
F ree F loat (%)
3,300
161,718 / 20,858
70.76
7.68
7.2
14.36
26.0
HK Property Sector
Henderson Land
F Y Dec
Turnov er
EBITDA
Depr/Amort
O p g Pro f it
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
Minority Interest
Net Pro f it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
2013A

2014A
2015F
2016F
23,289
23,371
21,367
20,104
6,014
6,768
6,841
7,246
(197)
(176)
(180)
(183)
5 ,8 1 7
6,592
6 ,6 6 1
7 ,0 6 3
5,060
5,475
5,102
4,854
(649)
(495)
(625)
(780)
1 0 ,2 7 0 1 0 , 9 5 1 1 1 ,0 9 6 1 1 ,7 5 8
(1,244)
(1,491)
(1,388)
(1,445)
(88)
(168)
(282)
(406)
8 ,9 3 8
9,292
9 ,4 2 6
9 ,9 0 7
49
0
(9)
(6)
26
4
1
5
25.8
29.0
32.0
36.0
25.0
28.2
31.2
35.1
12.1
13.6
12.5
12.3
F Y Dec
F ixed Assets
Other LT Assets
Other Current Assets
T ot al A sset s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T ot al Capit al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2013A
2014A
2015F
2016F
109,266 120,066 122,308 124,588

85,700
90,808
92,772
95,172
15,858
12,022
18,929
24,701
93,290
94,084
95,091
97,167
304,114 316,980 329,099 341,628
8,679
13,999
6,940
7,340
16,740
18,241
18,141
18,041
43,580
33,724
44,783
48,383
7,115
7,799
7,799
7,799
4,598
5,067
5,291
5,645
223,402 238,150 246,145 254,420
304,114 316,980 329,099 341,628
3,266
3,300
3,300
3,300
(38,344) (37,420) (34,513) (32,741)
83,729
73,866
88,939
96,487
17
16
14
13
F Y Dec
2013A
2014A
2015F
2016F
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O perat ional CF
Capex
Assoc, MI, Inv smt
Inv est ment CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F inanc ing CF
Chg in Cash
Chg in Net Cash
5,817
(1,218)
197
(5,848)
(298)
(1,350)
33
698
731
4,416
(697)
(2,212)
1,507
888
(3,528)
6,592
(1,453)
176
(1,076)
(687)
3,552
(4,383)
4,422
39
(4,142)
(2,297)
(769)
(7,208)
(3,617)
525
6,661
(1,388)
180
93
375
5,921
(245)
3,096
2,851
4,000
(3,664)
(2,200)
(1,864)
6,907
2,907
7,063
(1,445)
183
(826)
350
5,325
(244)
3,076
2,832
4,000
(3,904)
(2,480)
(2,384)
5,772
1,772
F Y Dec
Sales of property
Rental income
Construction
Infrastructure
Hotel operation
Department stores
Others
T ot al sales
2013A
2014A
2015F
2016F
15,743
4,994
1,290
0
194
399
669
23,289
15,466
5,445
888
0
188
431
953
23,371
13,000
5,792
932
0
209
453
982
21,367
11,257
6,163
979
0
219
475
1,011
20,104
K ey assumpt ions
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 59
HK Property Sector
K. Wah International
BUY
Brisk project sales

Price Target : HK$5.47 (44% upside)
Encouraging sales performance to improve balance sheet
Well placed to expedite land acquisitions
Potential Catalyst: New acquisitions, project sales

Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
240
220
6.3
200
5.3
180
160
4.3
140
3.3
120
100
2.3
80
1.3
Jul-11
Jul-12
Jul-13
K.Wah International (LHS)
60
Jul-15
Jul-14

F Y Dec (HK $m)
Turnov er
EBITDA
Pretax Profit
Net Profit
Underling Profit
EPS (HK$)
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Estimated NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
2013A *
2014A *
2015F
2016F
7,288
2,611
3,004
1,647
1,389
0.51
(67)
7.4
(116.9)
9.1
0.15
3.9
14
7.0
2,394
1,026
2,707
1,830
676
0.24
(53)
15.7
(1.5)
23.3
0.15
3.9
47
6.9
3,054
1,182
1,296
670
670
0.24
(1)
15.8
2.1
20.2
0.15
3.9
31
2.6
10.3
(63)
7,448
1,806
2,152
1,415
1,415
0.51
111
7.5
12.4
13.2
0.15
3.9
28
5.4
10.9
(65)
Nil
0.33
S: 0
Nil
0.60
H: 2
B: 2
* Net profit included fair value changes on investment properties

Kong & China
Page 60
www.dbsvickers.com
ed-TH/ sa- AH
BUY with HK$5.47 TP

Encouraging sales performance to improve balance sheet.
K.Wah Internationals project sales performance has been
encouraging YTD. Twin Peaks and Corinthia by the Sea (a
40/60 JV with Sino Land), both in Tseung Kwan O, have been
substantially sold since their respective launches in Mar and Jun.
Pre-tax margins are estimated to be satisfactory at >20%.
These two projects will be the development earnings mainstay
in FY16. In Shanghai, K.Wah International launched The Palace
Ph 2 in May 2015 to positive initial response. About 45 units
have been taken up for c.Rmb700m or Rmb90,000psm.
Inventory sales at Grand Summit are also proceeding well, with
an additional 60 units sold for c.Rmb1.2bn. Elsewhere, the
company has also sold c.300 units each at J Wings Ph 2 and J
Metropolis Ph 2 in Huadu for Rmb600m in total. Overall,
K.Wah International has generated >HK$8bn from property
sales YTD, which should lead to a sharp improvement in its
balance sheet.
Well placed to expedite land acquisitions. After selling
Corinthia by the Sea, K.Wah International plans to launch its
60%-held Yuen Long project near Long Ping Station in late
2015 or early 2016. This is also a JV with Sino Land and should
be popular among local homebuyers. This project should
further strengthen the company's war chest for making new
acquisitions. Capitalising on its improved balance sheet strength,
K.Wah International is expected to expedite its land bank
replenishment with emphasis on Hong Kong.
BUY with HK$5.47 TP. The stock is trading 63% below its
assessed current NAV. Valuation remains inexpensive. The
company's improved financial strength should put it in a better
position to explore acquisition opportunities to expand its NAV.
BUY with HK$5.47 TP. This is based on a 50% discount to our
Jun 2016 NAV estimate.
At A Glance
2,787
Mkt Cap (HK$m/US$m)
10,591 / 1,366
Lui family
60.67
Southeastern A sset Management, Inc.
10.01
F ree F loat (%)
39.33
1.1
HK Property Sector
K. Wah International
F Y Dec
Turnov er
EBITDA
Depr/Amort
EBIT
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Prof it
Tax
Minority Interest
Net Prof it
Underly ing Prof it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
2013A * 2014A *
7,288
2,611
(47)
2,564
140
5
295
3,004
(1,302)
(55)
1,647
1,389
118
(62)
36
35
2,394
1,026
(43)
983
156
67
1,501
2,707
(815)
(62)
1,830
676
(67)
11
43
41
2015F
2016F
F Y Dec
2013A
2014A
2015F
2016F
3,054
1,182
(46)
1,136
130
30
1,296
(552)
(75)
670
670
28
(63)
39
37
7,448
1,806
(48)
1,758
394
0
2,152
(658)
(78)
1,415
1,415
144
111
24
24
F ixed Assets
Other LT Assets
T ot al A sset s
5,746
15,932
5,624
17,348
44,650
8,699
10,634
6,039
24,798
50,170
9,100
10,611
11,789
21,484
52,984
9,519
9,773
11,696
23,079
54,066
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T ot al Capit al
2,620
4,732
6,978
1,225
1,475
27,619
44,650
1,825
4,078
15,948
1,629
1,546
25,145
50,170
1,777
4,158
17,996
1,527
1,773
25,753
52,984
2,800
4,238
16,473
1,421
2,011
27,123
54,066
Share Capital (m)

Net Cash/(Debt)
Working Capital
Net Gearing (%)
2,712
(3,974)
15,619
14
2,787
(11,733)
24,934
47
2,787
(7,984)
27,338
31
2,787
(7,578)
27,736
28
* Net profit included fair value changes on investment properties
F Y Dec
2013A
2014A
2015F
2016F
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
Operat ional CF
Capex
Assoc, MI, Inv smt
Inv est ment CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F inanc ing CF
Chg in Cash
Chg in Net Cash
2,564
983
(769)
(622)
47
43
(2,630)
(7,792)
(546)
(613)
(1,334) (8,001)
(2)
(6)
3,024
(348)
3,021
(354)
(1,997)
8,092
25
25
(202)
(101)
326
28
(1,849) 8,043
(162)
(312)
1,836
(8,403)
1,136
(552)
46
3,934
(600)
3,964
(40)
243
203
2,001
(418)
1,583
5,751
3,750
1,758
(658)
48
(955)
(650)
(457)
(40)
1,322
1,282
(500)
(418)
(918)
(94)
406
F Y Dec
2013A
2014A
2015F
2016F
Sale of properties
Rental income
Hotel operation
T ot al sales
6,924
274
90
7,288
1,968
315
110
2,394
2,606
336
112
3,054
6,932
401
116
7,448
2015F
5 to 10%
8 to 10%
-10 to -20%
0 to 3%
2016F
0 to 5%
5 to 10%
-10%
0 to 3%
K ey assumpt ions
Office rental - HK
Page 61
HK Property Sector
Kerry Properties
Strong asset backing, improving

earnings quality
BUY
Price Target: HK$34 (25% upside) (Prev HK$31.7)
Potential Catalyst: Project sales, improving rental earnings
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
215
45.5
195
40.5
175
155
35.5
135
30.5
115
95
25.5
75
20.5
Jul-11
Jul-12
Jul-13
Kerry Properties (LHS)

F Y Dec ( H K $ m)
Jul-14
55
Jul-15
2015F
2016F
Turnov er
33,158 14,664 10,318
EBITDA
6,845
6,388
3,787
Pretax Profit
6,605
6,589
4,386
4,384
3,096
Net Profit*
4,413
3.03
2.14
EPS (HK$)*
3.06
EPS Gth (%)
(6)
(1)
(29)
PE (x)
8.9
9.0
12.7
P/Cash F low (x)
178.8
4.5
(7.3)
EV /EBITDA (x)
11.0
11.8
19.9
DPS (HK$)
0.90
0.90
0.80
3.3
3.3
2.9
Div Yield (%)
31
29
32
Net Gearing (%)
5.6
3.8
ROE (%)
6.0
Estimated NAV (HK$)
70.2
Prem (Disc) to NAV (%)
(61)
16,637
4,774
4,856
3,543
2.45
14
11.1
8.9
15.8
0.85
3.1
29
4.2
75.6
(64)
Earnings Rev (%)

Consensus EPS (HK$)
Other Broker Recs:
2013A 2014A
B: 12
9
2.54
S: 1
8
2.90
H: 2

Kong & China
Page 62
www.dbsvickers.com
ed-TH / sa- AH
Dragons Range and One & Three Ede Road to dominate nearterm development earnings
Growing rental contributions from China
BUY with HK$34 TP

Dragons Range and One & Three Ede Road to dominate nearterm earnings. Kerry Properties has achieved contracted sales of
c.HK$2.2bn in Hong Kong which came primarily from continued sales at
One & Three Ede Road and Dragon Ranges. These two projects should
dominate Kerry Properties' development earnings in FY15. The company
is applying for pre-sale consent of its 1,100-unit Tuen Mun project which
is expected to go on sale in late 2015. Sales of this project will play a
crucial role in determining whether Kerry Properties can meet its sales
target of HK$6bn in Hong Kong for 2015. In China, the company has
sold c.HK$2.4bn worth of properties so far this year. This includes
proceeds from Hangzhou Zhijiang project and Chengdu Metropolis
Arcadia Court Ph 2 that were launched for sale in Jan 15 and Apr 15
respectively. In 2H15, Kerry Properties plans to launch Enterprise Square
in Shanghai.
Growing rental contributions from China. Occupancy at Jing An
Kerry Centre Ph 2 in Shanghai has improved further to 91-92% with
increased contribution expected in FY15. This, coupled with rising
contributions from the renovated Beijing Kerry Centre, should underpin
near-term rental earnings growth. Riverview Place in Tianjin soft opened
for business in late Apr 15. Commitment rate exceeds 90% and about
50% of tenants, including an ice skating rink and a cinema, have
commenced business. Pre-leasing of retail mall at Kerry Central in
Hangzhou is well underway with c.20% of space being pre-committed.
Meanwhile, pre-leasing of its office portion has also begun. Scheduled
for completion in 2016, this mixed-use development should further
boost the company's rental earnings from China in the medium term.
BUY with HK$34 TP.The stock, trading at 61% discount to our
assessed current NAV, appears inexpensive. Continued rental income
expansion should lead to better earnings quality, and hence higher
valuations. The lifting of home-purchase restrictions in most cities,
relaxation of mortgage lending and interest rate cut should gradually
improve sentiments on China's housing market which would be positive
for the company's project sales. The planned launch of its large-scale
Tuen Mun project, if greeted with good response, could provide upside
on the stock. BUY with HK$34 TP, based on a 55% discount to our Jun
2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Kerry Group Limited
BlackRock, Inc.
F ree F loat (%)
39,325
1,446
/ 5,072
56.9
5.1
38.0
8.6
HK Property Sector
Kerry Properties
F Y D ec
2013A
2014A
2015F
2016F
F Y Dec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
33,158
6,845
(544)
6,300
571
(266)
6,605
(1,689)
(503)
4,413
(4)
(6)
20.6
19.0
25.6
14,664
6,388
(364)
6,023
869
(304)
6,589
(1,355)
(850)
4,384
(56)
(1)
43.6
41.1
20.6
10,318
3,787
(401)
3,386
1,400
(400)
4,386
(567)
(722)
3,096
(30)
(29)
36.7
32.8
12.9
16,637
4,774
(441)
4,334
993
(470)
4,856
(734)
(580)
3,543
61
14
28.7
26.0
15.1
96,143
96,428
97,261
98,065
F ixed Assets
Other LT Assets
20,927
21,824
18,020
18,752
11,662
11,568
10,037
13,257
13,657
15,611
25,485
26,532
1 4 2 , 38 9 1 45 , 4 3 2 1 5 0 ,8 0 3 1 5 6 , 60 6
T o t al A sset s
ST Debt
3,965
3,092
12,746
5,890
10,636
9,372
9,392
9,412
Other Current Liab
LT Debt
31,011
31,147
23,493
32,350
Other LT Liab
7,903
8,408
8,408
8,408
13,120
13,336
14,058
14,638
Minority Interests
75,755
80,079
82,707
85,909
1 4 2 , 38 9 1 45 , 4 3 2 1 5 0 ,8 0 3 1 5 6 , 60 6
T o t al Capit al
Share Capital (m)
1,444
1,445
1,445
1,445
(23,482)
(22,847)
(26,378)
(25,160)
Net Cash/(Debt)
Working Capital
10,719
14,717
13,385
24,487
31
29
32
29
Net Gearing (%)
2 01 3 A
2 0 1 4A
2015F
20 1 6 F
F Y D ec
2013A
2014A
2015F
2016F
F Y D ec
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
6,300
(1,055)
544
(6,506)
(1,461)
(2,177)
(4,867)
(423)
(5,290)
6,320
102
(1,832)
(351)
4,240
(3,228)
(9,548)
6,023
(2,007)
364
3,314
(2,244)
5,452
(3,300)
(234)
(3,534)
(590)
7
(2,001)
109
(2,475)
(557)
33
3,386
(567)
401
(9,104)
(1,576)
(7,460)
(400)
5,629
5,229
2,000
(1,300)
700
(1,531)
(3,531)
4,334
(734)
441
(247)
(1,701)
2,093
(400)
711
311
2,001
(1,186)
815
3,219
1,218
Property rental and

others
Property sales
Logistic operations
Hotel operations
T o t al s ales
2013A
2014A
2015F
2016F
2,147
3,169
3,392
3,597
11,265
19,188
558
33,158
10,274
1,221
14,664
5,630
1,296
10,318
11,687
1,352
16,637
2015F
5 to 10%
8 to 10%
-10 to -20%
0 to 3%
2016F
0 to 5%
5 to 10%
-10%
0 to 3%
K ey a s s u mp t io n s
Office rental - HK
Page 63
HK Property Sector
Lai Sun Development

BUY
Improving income quality

All eyes on Tseung Kwan O project
Growing income from expanding rental portfolio
Potential Catalyst: New acquisitions and growing rental income

Where we differ: n.a.
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
0.4
216
196
0.4
176
0.3
156
0.3
136
116
0.2
96
0.2
0.1
Jul-11
76
Jul-12
Lai Sun Development (LHS)
Jul-13

F Y J ul (HK $ m)
20 13 A * 2 01 4A *
Turnov er
964
2,110
EBITDA
275
703
Pre-tax Profit
2,648
1,602
Net Profit
2,564
1,479
Underly ing profit
(201)
333
12.80
7.37
EPS (HK cent)
EPS Gth (%)
2.4
(42.4)
DPS (HK cent)
0.00
0.25
PE (X)
1.2
2.0
BV Per Share (HK$)
0.95
1.04
65.1
6.7
P/Cash F low (X)
EV /EBITDA (X)
33.3
13.0
Div Yield (%)
0.0
1.7
Net Gearing (%)
13
17
ROE (%)
14.5
7.4
NAV (HK$)
Disc. to NAV (%)
Earnings Rev (%)

Consensus EPS (HK$)
Other Broker Recs:
56
Jul-15
Jul-14
B: 2
2 01 5F
1,603
516
294
227
227
1.13
(84.6)
0.25
13.2
1.09
(8.0)
17.8
1.7
29
1.1
0.84
(82)
20 16 F
1,776
546
270
211
211
1.05
(7.3)
0.25
14.3
1.12
(7.5)
16.8
1.7
33
1.0
0.88
(83)
(7)
0.02
H: 0
(0)
0.02
S: 0
*Net profit included fair v alue changes on inv estment

properties, prov ision for tax indemnity and discount on
acquisition of additional interest in an associate
Principal Business: Engaged in property business in Hong Kong,
China; and media & entertainment through eSun Holdings.
Page 64
www.dbsvickers.com
ed-TH/ sa- AH
All eyes on Tseung Kwan O project. Benefitting from recent

improved sentiment towards the luxury residential market, Lai Sun
Development (LSD) has sold four units at 339 Tai Hang Road for
HK$400m or HK$44,000psf on average YTD. This brings the
cumulative number of units sold to five, since its initial launch in
Aug 14. With pre-tax development margin estimated at >20%,
this 9-unit upmarket development will dominate its near-term
development earnings. Foundation works for its Tseung Kwan O
project (a 50/50 JV with Walter Kwok) and Ma Tau Kok URA
redevelopment project are underway with their respective project
completions slated for 4Q17 and 1Q18. The Tseung Kwan O
project is expected to be offered for pre-sale in 2016. The recent
launch of its neighbouring projects such as Corinthia by the Sea
met with overwhelming response, reflecting strong buying interest
in the area.
Growing income from expanding rental portfolio. Thanks to
the first full-year contribution from 107-112 Leadenhall Street and
maiden income from 100 Leadenhall Street acquired in Nov 14, we
estimate LSDs attributable rental income to grow 20% in FY15.
LSD has been expanding its rental income base through additions
of CCB Tower and two London properties, as well as renovation
works at 36 Queen Street over the past few years. With the
upcoming addition of 50%-owned Observatory Road project in
Tsim Sha Tsui into its investment property portfolio, LSDs rental
income base should be further strengthened, pointing to better
earnings quality.
BUY with HK$0.263 TP. The stock is trading at 82% discount to
our estimated current NAV. Its low valuation should limit downside
risk on share price. A good response to the future launch of its
Tseung Kwan O project should serve as a catalyst to narrow the
stocks deep discount to NAV. BUY with HK$0.263 TP, premised
on a 70% discount to our Jun 2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Lai Sun Garment
F ree F loat (%)
3,014
20,095
/ 389
51.88
48.12
0.7
HK Property Sector
Lai Sun Development
F Y J ul
20 1 3A
20 14 A
2 01 5 F
2 01 6 F
Turnov er
EBITDA
Depr/Amort
EB IT
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Prof it
Tax
Minority Interest
Net Pro f it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
964
275
(30)
2 45
609
(149)
1,943
2,6 48
(46)
(38)
2, 5 64
(201)
10
12
29
25
2,110
703
(36)
66 7
217
(222)
940
1 ,60 2
(90)
(33)
1 , 47 9
333
119
(42)
33
32
1,603
516
(53)
46 3
90
(260)
0
29 4
(32)
(35)
22 7
227
(24)
(85)
32
29
1,776
546
(55)
49 0
110
(330)
0
27 0
(25)
(35)
21 1
211
11
(7)
31
28
F Y J ul
F ixed Assets
Other LT Assets
T o t al A sset s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T o t al Capit al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2 01 3A
20 14 A
20 15 F
20 16 F
11,271
11,202
3,132
902
2 6, 50 6
417
414
5,357
789
402
19,128
2 6,50 6
20,063
(2,516)
3,203
13
13,247
12,068
1,671
977
27 ,9 63
417
433
4,973
916
450
20,775
27 ,9 63
20,063
(3,580)
1,799
17
16,994
12,058
906
1,077
31 ,0 35
500
433
6,889
916
485
21,812
31 ,0 35
20,063
(6,346)
1,050
29
18,044
13,268
1,290
671
3 3, 27 2
2,000
433
6,889
916
519
22,515
3 3, 27 2
20,063
(7,461)
(472)
33
F Y J ul
2 0 13 A
2 0 14 A
2 01 5 F
20 1 6 F
F Y J ul
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O p erat io nal CF
Capex
Assoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
245
(25)
30
(86)
(118)
46
(280)
(1,199)
(1, 47 9 )
3,016
(23)
2, 99 3
1,560
(1,456)
667
(30)
36
22
(249)
446
(1,025)
(462)
( 1,4 8 7 )
(422)
10
(4 1 2 )
(1,453)
(1,031)
463
(32)
53
(600)
(260)
(3 7 6)
(3,040)
700
(2 ,3 4 0)
2,000
(50)
1 ,9 5 0
(766)
(2,766)
490
(25)
55
(594)
(330)
(4 0 3)
(663)
(6 6 3)
1,500
(50)
1 ,4 5 0
384
(1,116)
Property dev elopment and sales

Property inv estment
Hotel & Restaurant operations
Others
T o t al sales
2 0 13 A 2 0 1 4A
20 1 5 F
20 1 6 F
1,047
502
539
21
2, 11 0
378
625
578
22
1 ,6 0 3
479
683
590
23
1 ,7 7 6
20 1 5 F
20 1 6 F
100
434
410
19
964
K ey assu mp t io n s
Office rental - HK
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 65
HK Property Sector
MTR Corporation
Cost overrun for Express Rail Link under

the spotlight
HOLD
Potential Catalyst: Negotiation with the government on cost overrun
issue for Express Rail Link
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
208
40.5
188
35.5
168
148
30.5
128
25.5
108
20.5
Jul-11
Jul-12
Jul-13
MTR Corporation (LHS)

F Y D ec ( H K $ m)
Turnov er
EBITDA
Pre-tax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
DPS (HK$)
PE (X)
P/Cash F low (X)
EV /EBITDA (X)
Div Yield (%)
Net Gearing (%)
ROA E (%)
NA V (HK$)
Disc. To NA V (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
Jul-14
88
Jul-15
2013A 2014A
2015F
38,707
14,399
10,602
8,600
1.48
(11)
0.92
23.0
12.3
14.7
2.7
12
5.8
42,129 44,244
16,121 16,822
12,326 10,764
10,068
8,848
1.72
1.51
(13)
(12)
1.05
1.05
19.8
22.5
12.2
11.7
13.1
12.6
3.1
3.1
12
11
6.1
5.2
39.6
42.1
(14)
(19)
40,156
15,423
14,258
11,571
1.99
34
1.05
17.1
11.5
13.7
3.1
8
7.3
B: 4
2016F
1
1.80
S: 3

Principal Business: Operates a pre-dominantly rail-based
transportation system in HK with exposure to residential and
commercial markets
Page 66
www.dbsvickers.com
ed-JS / sa- AH
(5)
1.77
H: 6
Overwhelming response to project launches
Successful project tenders lay the foundation for future growth
HOLD with HK$36.2 TP

Overwhelming response to project launches. Hemera in Tseung Kwan
O, a JV with the CK Property-led consortium, was offered for sale in early
Apr15. Market response was overwhelming, with all 1648 units sold out at
an ASP of HK$9,100psf. This completed project should generate pretax
earnings of c.HK$1.9bn to MTRC in FY15. In late Apr, MTRC launched
Tiara in Shenzhen for pre-sale and has since sold c.700 units. Located above
the depot of the Shenzhen Metro Longhua Line, Tiara has 1,698 residential
units and a 10,000sm retail arcade, with total GFA of 206,167sm. MTRC
acquired the site for c.Rmb2bn or Rmb9,710psm in 2011. Total investment
is estimated at Rmb4.1bn. Construction works are underway with project to
be completed in 2017. Taking into account profit sharing with Shenzhen
Municipality, a complete sale of Tiara should produce pre-tax earnings of
c.Rmb1bn to MTRC.
Successful project tenders lay the foundation for future growth. In

1H15, MTRC successfully tendered out three development projects (Tin
Wing Stop, and Lohas Park Packages 6 and 7) which altogether offer 5,150
units upon completion. This represents the bulk of new units to be built on
the sites supplied in 1H15. In the Lohas Park Package 7 tender, MTRC will
retain ownership of the retail portion. It will pay HK$4.98bn to the winning
developer, Wheelock & Co, which covers land premium and construction
costs for the retail portion. Since 2014, MTRC has added three retail
projects at Maritime Square in Tsing Yi, Tai Wai Station and Lohas Park
Package 7 to its development pipeline. When completed from 4Q17
onwards, these retail malls will provide a combined GFA of 1.26m sf and
will further expand its rental income base. MTRC is now offering the Yuen
Long Station site for tender on behalf of the government. It also plans to
put out for tender 1-2 more packages at Lohas Park before end-2015.
HOLD with HK$36.2 TP. Trading 14% below our assessed current NAV,
the stock is fairly valued. MTRC's recurrent earnings should improve, which
could help bridge the anticipated gap in development earnings from Hong
Kong in FY16-19. However, cost overrun for Express Rail Link led by project
delays remains as issue for the company and will dictate near-term share
price performance. HOLD with HK$36.2 TP. This is derived by applying
respective target discounts of 25% and 35% to our estimated Jun 2016
valuations of development and investment properties.
At A Glance
Mkt Cap (HK$m/US$m)
The F inancial Secretary Incorp
F ree F loat (%)
5,841
198,876 / 25,651
76.11
23.89
16.9
HK Property Sector
MTR Corporation
F Y Dec
2013A

2014A
2015F
2016F
F Y Dec
2013A
2014A
2015F
2016F
Turnov er
38,707
40,156
42,129
44,244
EBITDA
14,399
15,423
16,121
16,822
Depr/Amort
(3,372)
(3,485)
(3,607)
(3,734)
EB IT
1 1 ,0 2 7 1 1 , 9 3 8 1 2 , 5 1 4 1 3 ,0 8 8
Property dev elopment
profit
1,396
4,216
1,954
0
Assoc
158
121
183
346
Interest (Exp)/Inc
(732)
(545)
(700)
(900)
(1,247)
(1,472)
(1,625)
(1,770)
V ariable pay ment to
KCRC
Exceptionals
Pre- T ax Pro f it
1 0 , 6 0 2 1 4 , 2 5 8 1 2 ,3 2 6 1 0 , 7 6 4
Tax
(1,819)
(2,496)
(2,064)
(1,719)
Minority Interest
(183)
(191)
(194)
(197)
Un d erly in g Pro f it
8 , 6 0 0 1 1 , 5 7 1 1 0 ,0 6 8
8,848
Sales Growth (%)
8
4
5
5
Net Profit Gr (%)
(11)
35
(13)
(12)
EBITDA Mgn (%)
37.2
38.4
38.3
38.0
Opg Mgn (%)
28.5
29.7
29.7
29.6
Tax Rate (%)
17.2
17.5
16.7
16.0
F ixed Assets
163,156 170,656 171,180 171,940
Other LT Assets
28,122
29,660
45,611
50,982
17,769
19,420
16,108
20,117
6,776
7,416
7,316
7,216
T o t al A sset s
215,823 227,152 240,216 250,255
ST Debt
47
546
722
722
Other Current Liab
16,905
20,683
24,312
26,132
LT Debt
24,464
19,961
23,785
27,785
Other LT Liab
21,705
22,480
22,446
22,416
Minority Interests
145
157
351
548
152,557 163,325 168,599 172,652
T o t al Cap it al
215,823 227,152 240,216 250,255
Share Capital (m)
5,799
5,809
5,809
5,809
Net Cash/(Debt)
(18,007) (12,352) (19,630) (19,591)
Working Capital
7,593
5,607
(1,610)
479
Net Gearing (%)
12
8
12
11
F Y Dec
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
Assoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
2013A
2014A
2015F
2016F
11,027
11,938
12,514
13,088
(1,343)
(1,127)
(2,064)
(1,719)
3,372
3,485
3,607
3,734
895
1,006
150
150
813
742
1 4 ,7 6 4 1 6 , 0 4 4 1 4 , 2 0 7 1 5 ,2 5 3
(13,356) (12,359) (16,232)
(7,780)
4,861
13,490
1,204
(750)
( 8 ,4 9 5 )
1 , 1 3 1 (1 5 , 0 2 7 ) ( 8 , 5 3 0 )
1,223
(3,649)
4,000
4,000
136
377
(4,772)
(5,097)
(6,108)
(6,134)
(752)
(602)
(384)
(581)
( 4 ,1 6 5 ) ( 8 , 9 7 1 ) (2 , 4 9 2 ) ( 2 , 7 1 4 )
2,104
8,204
(3,312)
4,009
881
11,853
(7,312)
9
F Y Dec
2013A
2014A
2015F
2016F
HK transportation
operations
HK station commercial
businesses
HK Property rental &
management businesses
Mainland China &
international subsidiaries
Other businesses
T ot al sales
15,166
16,223
17,101
18,101
4,588
4,963
5,182
5,389
3,778
4,190
4,457
4,636
13,246 12,627 13,080 13,698

1,929
2,153
2,308
2,419
38,707 40,156 42,129 44,244
K ey assumpt ions
Office rental - HK
2015F 2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 67
HK Property Sector

BUY
On the right track

Unlocking hidden hotel value
Strong project launch pipeline ahead

Where we differ: Market has slightly higher earnings estimate. For FY15
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
222
15.3
202
182
13.3
162
11.3
142
122
9.3
102
7.3
82
5.3
Jul-11
Jul-12
Jul-13
New World Development (LHS)
Jul-14
62
Jul-15

F Y J u n (H K $ m)
T urnov er
EBIT DA
Pretax Prof it
Net prof it
Underly ing Prof it
EPS (HK $)
EPS G t h (% )
PE (x)
P/Cash F low (x)
EV /EBIT DA (x)
DPS (HK $)
Div Y ield (% )
Net G earing (% )
RO E (% )
Est . NA V (HK $)
Discount t o NA V (% )
Earnings Rev (% )
Consensus EPS (HK $)
O t her Brok er Recs:
2013A * 2014A *
46,780
12,707
23,311
14,149
6,327
1.02
9
8.7
6.5
13.8
0.42
4.8
45
10.8
56,501
15,358
19,076
9,725
6,507
0.92
(10)
9.6
8.8
11.4
0.42
4.8
34
6.5
B: 9
2015F
2016F
50,110
10,974
11,832
6,680
6,680
0.76
(17)
11.7
22.8
16.0
0.42
4.8
25
4.0
17.4
(49)
58,059
13,215
13,498
7,532
7,532
0.84
11
10.5
43.4
13.3
0.42
4.8
25
4.2
19.6
(55)
(12)
0.81
S: 0
(2)
0.90
H: 5
* Net profit included fair v alue changes on inv estment

properties

Principal Business: Engaged in property and hotel businesses in
Hong Kong and China, service and infrastructure operations,
department store and telecommunication operations
Page 68
www.dbsvickers.com
ed-TH / sa- AH

Unlocking hidden hotel value. In Jun15, New World
Development completed the injection of three hotels in Hong
Kong (Grand Hyatt and Renaissance Harbour View in Wan Chai,
and Hyatt Regency in Tsim Sha Tsui) for HK$18.5bn (or
HK$10.4m/room) into a joint venture with Abu Dhabi
Investment Authority. Property yield is estimated at c.4.5%
based on disposal prices and FY14 EBITDA. The company will
own 50% of this joint venture through a 64%-held subsidiary.
New World Development attempted to spin off these three
hotels in mid-2013 but failed given the volatile stock market.
Capital generated from this asset injection exceeds HK$10bn.
This not only lowers it gearing by 6ppts to 27% but also
strengthens its financial muscle for land bank expansion in
Hong Kong. This should be positive for its long-term growth.
Strong project launch pipeline ahead. In FY15, New World
Development achieved contracted sales of c.HK$16bn, with
The Pavilia Hill being a key contributor. In 2H15, the company
has a strong project launch pipeline with a diversified product
mix. New World is selling Skypark, a JV with Urban Renewal
Authority. Located in the heart of Mongkok, Skypark contains
439 units, mainly small-sized ones. The company is also
applying for pre-sale consents for The Parkhill in Yuen Long and
The Clearwater Bay in Sai Kung. Elsewhere, Double Cove Ph 4
in Ma On Shan, a JV with Henderson Land, is also expected to
go on sale in 2H15.
BUY with HK$11.74 TP. The stock is trading 49% below our
appraised current NAV. Valuation remains inexpensive from a
historical perspective. Improving execution capability should
warrant a higher stock valuation over the long term. The
upcoming launches, if met with encouraging response, could
serve as a positive share catalyst. Our TP of HK$11.74 is derived
by applying a 40% target discount to our Jun 2016 NAV
estimate. BUY.
At A Glance
Mkt Cap (HK$m/US$m)
Cheng Yu Tung F amily
F ree F loat (%)
8,995
79,427 / 10,244
43.41
56.59
26.7
HK Property Sector
F Y J un
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
U n d erly in g Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
2013A

2014A
2015F
2016F
46,780
56,501
50,110
58,059
12,707
15,358
10,974
13,215
(1,880)
(2,273)
(2,455)
(2,651)
10,827 13,085
8,519 10,564
4,720
3,097
4,023
3,772
(695)
(844)
(710)
(838)
8,460
3,739
23,311 19,076 11,832 13,498
(4,795)
(5,738)
(2,421)
(3,210)
(4,368)
(3,612)
(2,732)
(2,756)
14,149
9,725
6,680
7,532
6,327
6,507
6,680
7,532
31
21
(11)
16
40
(31)
(31)
13
27.2
27.2
21.9
22.8
23.1
23.2
17.0
18.2
20.6
30.1
20.5
23.8

F Y J un
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
2013A
F Y J un
2013A
2014A
2015F
2016F
F ixed A ssets
89,221
98,050
100,664
101,684
Other LT A ssets
118,374
116,509
116,069
109,076
40,260
61,823
73,948
74,303
84,335
92,845
101,399
113,832
T o t al A s s et s
332,189 369,227 392,079 398,895
ST Debt
27,183
32,349
25,604
33,324
Other Current Liab
37,964
37,721
37,671
37,621
LT Debt
77,348
88,230
96,975
91,255
Other LT Liab
11,949
10,651
10,651
10,651
M inority Interests
38,614
40,468
43,365
44,621
139,131
159,808
177,813
181,423
T o t al Cap it al
332,189 369,227 392,079 398,895
Share Capital (m)
6,312
8,664
8,664
8,664
Net Cash/(Debt)
(62,495)
(54,739)
(44,614)
(46,259)
Working Capital
59,448
84,598
112,071
117,189
Net Gearing (%)
45
34
25
25

2014A
2015F
2016F
10,827
13,085
8,519
10,564
(3,956)
(3,813)
(2,421)
(3,210)
1,880
2,273
2,455
2,651
(4,180)
(8,084)
(7,554) (11,383)
(53)
(149)
0
0
4,519
3,313
999
(1,378)
(5,487)
(6,352)
(2,000)
(2,000)
1,297
2,773
20,276
12,091
(4,190) (3,579) 18,276 10,091
16,023
13,515
2,000
2,000
132
13,119
(2,191)
(1,886)
(6,286)
(7,093)
(2,610)
(2,613)
(2,865)
(3,265)
11,354 22,135
(7,151) (8,358)
11,682
21,869
12,124
356
(4,340)
8,354
10,124
(1,644)
F Y J un
Property Inv estment
Property Dev elopment
Serv ices
Infrastructure
Hotels
Department Stores
Others
T o t al s ales
2013A
2014A
2015F
2016F
2,188
24,249
9,669
2,224
3,482
3,954
1,014
46,780
2,348
29,329
13,787
2,346
3,751
3,975
964
56,501
2,453
22,202
14,131
2,369
4,040
3,936
978
50,110
2,539
32,258
14,343
2,393
1,463
4,073
990
58,059
Office rental - HK
2015F
2016F
5 to 10%
0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3%
0 to 3%
Page 69
HK Property Sector
Sino Land
BUY
Building a better future

In acquisition mode
Corinthia by the Sea was well received
Potential Catalyst: New acquisitions, project sales

Where we differ: Market has similar earnings estimate for FY15-16.
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
16.7
216
15.7
196
14.7
176
13.7
12.7
156
11.7
136
10.7
116
9.7
96
8.7
7.7
Jul-11
Jul-12
Jul-13
Sino Land (LHS)
76
Jul-15
Jul-14
F Y J un (HK $m)
Turnov er
EBITDA
Pretax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
P/Cash Flow (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
2013A 2014A
7,819
3,452
7,210
6,636
1.12
23
10.4
32.9
23.4
0.50
4.3
Cash
6.8
7,451
5,339
6,208
5,022
0.84
(25)
13.9
29.5
15.1
0.50
4.3
Cash
4.6
B: 10
2015F
2016F
22,141
4,667
5,862
4,943
0.82
(3)
14.3
11.6
17.3
0.50
4.3
Cash
4.4
22.7
(49)
13,869
5,339
6,724
5,335
0.88
7
13.3
(38.3)
15.1
0.50
4.3
Cash
4.6
23.3
(50)
13
0.84
S: 1
9
0.89
H: 6

In acquisition mode.Sino Land has been stepping up its land
banking pace in Hong Kong of late. The company bought a
residential site in Sai Kung for HK$609m through a tender in
Apr 15. This acquisition further strengthens its presence in the
Sai Kung area. Sino Land has also joined hands with Billion
Development and CSI Properties to secure a commercial site for
HK$3.04bn via tender in May 15. Sino Land has a 30% stake in
this site which is expected to be developed into an office tower
for sale. At the same time, Sino Land is expanding its footprint
into the Australian hospitality sector. A consortium equally
owned by the company and Singapore-based Far East
Organization (controlled by ultimate major shareholder, the Ng
Family) acquired the 416-room The Westin Sydney for A$445m
or HK$2.74bn from GIC via a private bidding process. Despite a
string of new investments, Sino Land should remain in net cash
position, and still have a strong war chest for further
acquisitions in Hong Kong and overseas.
Corinthia by the Sea was well received. Sino Land launched
Corinthia by the Sea in Tseung Kwan O for sale in Jun 15.
Market response was overwhelming, with 515 units or 96% of
the total already sold for c.HK$5bn. Based on ASP of
HK$14,300psf, we estimate the project will generate pretax
earnings of >HK$1.2bn when fully sold. Sino Land has a 60%
stake in this project with the balance held by K.Wah
International. After selling Corinthia by the Sea, Sino Land plans
to offer The Fairmont in Mid-levels for sale. The Fairmont
contains 27 luxurious apartments which should be well sought
after by the well-heeled.
BUY with HK$15.14 TP. The stock, trading at 49% discount to
our assessed current NAV, is appealing and its key attraction is
its impeccable balance sheet which allows Sino Land to pursue
acquisitions in Hong Kong and overseas to enhance its NAV. A
positive response to the planned launch of The Fairmont could
provide upside on stock. BUY with HK$15.14 TP, premised on a
35% discount to our Jun 2016 NAV estimate.
* Exclude fair value changes on investment properties

Principal Business: Property development and investment, hotel
operations, primarily in Hong Kong
Page 70
www.dbsvickers.com
ed-JS/ sa- AH
At A Glance
Mkt Cap (HK$m/US$m)
Tsim Sha Tsui Properties
F ree F loat (%)
71,080
6,086
/ 9,169
50.98
49.02
9.6
HK Property Sector
Sino Land
F Y J un
2013A
2014A
2015F
2016F
F Y J un
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
Minority Interest
N et Pro f it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
7,819
3,452
(78)
3,374
3,599
238
7,210
(537)
(37)
6,636
(7)
25
44.2
43.2
7.5
7,451
5,339
(78)
5,261
812
135
6,208
(1,146)
(40)
5,022
(5)
(24)
71.7
70.6
18.5
22,141
4,667
(77)
4,590
918
355
5,862
(816)
(104)
4,943
197
(2)
21.1
20.7
13.9
13,869
5,339
(76)
5,262
1,247
215
6,724
(931)
(458)
5,335
(37)
8
38.5
37.9
13.8
F ixed Assets
56,474
58,302
59,895
61,267
Other LT Assets
32,014
31,880
37,488
35,985
12,370
14,967
11,688
7,734
28,406
31,780
30,224
37,511
T ot al A sset s
129,263 136,929 139,295 142,497
ST Debt
4,553
121
1,350
1,801
Other Current Liab
8,434
10,978
10,828
10,878
LT Debt
5,640
7,920
5,690
4,739
Other LT Liab
4,651
4,961
4,961
4,961
Minority Interests
1,179
1,284
1,284
1,284
Shareholders' Equity 104,806 111,665 115,182 118,834
T ot al Capit al
129,263 136,929 139,295 142,497
Share Capital (m)
5,948
6,017
6,017
6,017
Net Cash/(Debt)
1,750
6,372
4,093
639
Working Capital
27,789
35,649
29,734
32,567
Net Gearing (%)
Cash
Cash
Cash
Cash
2013A
2014A
2015F
2016F
F Y J un
2013A
2014A
2015F
2016F
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
Assoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
3,374
(497)
78
(676)
(670)
1 ,6 0 8
1,820
1,710
3 ,5 3 0
473
(47)
(2,341)
3,331
1 ,4 1 7
6,555
6,081
5,261
(823)
78
(1,603)
(1,367)
1,545
2,855
2,170
5,025
(2,194)
(4)
(2,276)
276
(4,199)
2,372
4,566
4,590
(816)
77
1,421
5,272
(100)
(4,151)
(4,251)
(1,000)
(3,100)
(200)
(4,300)
(3,280)
(2,280)
5,262
(931)
76
(7,192)
(2 ,7 8 5 )
(100)
3,220
3 ,1 2 0
(500)
(3,489)
(300)
(4 ,2 8 9 )
(3,954)
(3,454)
F Y J un
Property rental
Property sales
Hotel operations
Property management
and other serv ices
Inv estments in securities
F inancing
T ot al sales
2013A
2014A
2015F
2016F
2,569
3,359
848
980
2,757
2,741
863
982
2,866
17,204
903
1,061
2,940
8,779
918
1,125
62
1
7,819
106
2
7,451
106
2
22,141
106
2
13,869
K ey assumpt ions
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 71
HK Property Sector

Solid earnings, attractive valuations
BUY
Price Target : HK$150 (30% upside) (Prev HK$142.0)
Potential Catalyst: Project sales, land acquisitions
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
147.2
211
137.2
191
127.2
171
117.2
151
107.2
131
97.2
111
87.2
91
77.2
Jul-11
Jul-12
Jul-13
Sun Hung Kai Properties (LHS)

F Y J un (HK $m)
Turnov er
EBITDA
Pretax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)

Consensus EPS (HK$)
Other Broker Recs:
71
Jul-15
Jul-14
2013A
2014A
53,793
75,100
21,024
26,860
22,152
26,644
18,619
21,415
7.05
7.95
(16)
13
16.3
14.5
14.0 14,760.2
18.6
14.5
3.35
3.35
2.9
2.9
12
16
5.1
5.3
B: 14
2015F
58,559
24,136
23,741
18,899
6.69
(16)
17.2
49.9
16.2
3.35
2.9
14
4.4
190.6
(40)
2016F
96,075
32,241
30,886
24,443
8.65
29
13.3
9.1
12.1
3.35
2.9
11
5.3
199.9
(42)
(4)
7.70
S: 4
8
8.58
H: 2
* Exclude fair value changes on investment properties

Principal Business: A leading property developer and investor in HK,
with exposure to hotel, logistics, telecom, construction and
transportation infrastructure businesses
Page 72
www.dbsvickers.com
ed- JS / sa- AH
High earnings visibility on strong project ales
Proactive in replenishing residential land bank for future growth
BUY with HK$150 TP

High earnings visibility on strong project sales. Since the initial
launch of Ultima Ph 1 in Ho Man Tin in mid-Jun 15, SHKP has sold 76
luxury apartments. Other luxury house developments such as 50 Stanley
Village Road also sold well. Overall, since Jul-14, SHKP achieved
contracted sales of c.HK$31bn from Hong Kong, and has locked in a
significant portion of our projected development earnings from Hong
Kong for FY16. However, contracted sales from China are significantly
lower at c.HK$4-5bn although market sentiment in some cities such as
Foshan has improved of late as a result of policy relaxation. Going into
2H15, SHKP has a strong project launch pipeline in Hong Kong. It has
obtained pre-sale consent for Century Link Ph 2 in Tung Chung. Other
major projects for sale include Grand YOHO development, Acappella and
Twin Regency in Yuen Long. These are mass-market projects, targeting
mainly local buyers.
Proactive in replenishing residential land bank for future growth.
Tenant sales from retail malls posted low single-digit growth YTD, with
overall rental reversion staying at over 10%. YOHO Midtown mall in
Yuen Long and Parc Central in Guangzhou have been substantially preleased, with opening targeted for FY16. This should spice up SHKP's
rental income. SHKP has been active in restocking its land bank with the
acquisition of three residential lots in Tai Po, Tuen Mun and Tseung
Kwan O YTD. These sites are earmarked for developing small-to-medium
sized units for which underlying demand is less affected by cooling
measures. Aided by proceeds from robust project sales and the exercise
of bonus warrants, SHKP is financially sound to pursue more land
acquisitions to propel future growth.
BUY with HK$150 TP. The stock, trading at 40% discount to our
appraised current NAV, is attractively valued with room for further share
price appreciation. Rental income base should further expand with
increased rental footage, pointing to better earnings quality. The planned
pre-sale of residential projects in Tung Chung/Yuen Long, if greeted with
good market response, could boost the sentiment towards the stock.
BUY with HK$150 TP, based on a 25% discount to our Jun 2016 NAV
estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Kwok F amily
Adolfa Limited
Credit Suisse Trust Limited
HSBC Trustee (Guernsey ) Limited
Kwok Ping Sheung, Walter
F ree F loat (%)
2,875
330,885 / 42,677
25.94
9.95
7.57
7.54
7.48
41.52
72.6
HK Property Sector
F Y J un
Turnover
EBITDA
Depr/Amort
Opg Profit
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre-Tax Profit
Tax
Minority Interest
Net Profit
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
2013A

2014A
2015F
2016F
53,793
75,100
58,559
96,075
21,024
26,860
24,136
32,241
(1,724)
(1,878)
(1,934)
(1,992)
19,300 24,982 22,202 30,249
3,353
3,072
3,168
2,979
(1,887)
(2,050)
(2,235)
(2,435)
1,571
733
421
22,152 26,644 23,741 30,886
(2,957)
(4,562)
(3,993)
(5,563)
(576)
(667)
(849)
(880)
18,619 21,415 18,899 24,443
(21)
40
(22)
64
(14)
15
(12)
29
39.1
35.8
41.2
33.6
35.9
33.3
37.9
31.5
13.3
17.1
16.8
18.0

F Y J un
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
Operational CF
Capex
Assoc, MI, Invsmt
Inv estment CF
Net Chg in Debt
New Capital
Dividend
Other financing CF
F inancing CF
Chg in Cash
Chg in Net Cash
2013A
19,300
(3,496)
1,724
1,655
(1,005)
18,178
(10,668)
5,973
(4,695)
(6,771)
(3,353)
(3,677)
(13,801)
(318)
6,453
F Y J un
Fixed Assets
Other LT Assets
Cash/ST Investments
T ot al A ssets
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T ot al Capital
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2013A
2014A
2015F
2016F
281,637 303,016 317,464 323,802

62,647
61,655
62,488
65,018
17,176
19,275
29,638
55,028
151,436 173,102 191,318 188,748
512,896 557,048 600,907 632,596
8,060
9,241
9,806
10,086
43,257
37,314
37,514
37,714
56,570
74,490
83,925
93,645
14,480
16,314
16,314
16,314
4,617
4,906
5,558
6,241
385,912 414,783 447,791 468,596
512,896 557,048 600,907 632,596
2,670
2,725
2,820
2,820
(48,159) (65,203) (64,840) (49,450)
117,295 145,822 173,636 195,976
12
16
14
11

2014A
2015F
2016F
24,982 22,202 30,249

(3,218) (3,993) (5,563)
1,878
1,934
1,992
(26,155) (17,616)
3,420
(684)
(3,197) 2,527 30,098
(14,169) (2,500) (2,500)
6,527
2,942
542
(7,642)
442 (1,958)
19,787 10,000 10,000
9,374
(4,331) (9,345) (9,665)
(1,603) (2,635) (3,085)
13,853 7,394 (2,750)
3,014 10,363 25,390
(16,773)
363 15,390
F Y J un
2013A
2014A
2015F
2016F
Property sales
Rental income
Hotel operation
Others
T ot al sales
16,427
12,750
3,383
21,233
53,793
33,607
14,977
3,930
22,586
75,100
14,653
15,887
4,171
23,849
58,559
50,054
16,790
4,230
25,001
96,075
Key assumpt ions

Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 73
HK Property Sector
Tai Cheung
Crystallising value of Metropole

Square
BUY
Potential Catalyst: Asset sales
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
218
7.7
198
7.2
178
6.7
6.2
158
5.7
138
5.2
118
4.7
98
4.2
Jul-11
Jul-12
Tai Cheung (LHS)
Jul-13

F Y M ar (HK $m)
2014A * 2015 A *
Turnov er
EBITDA
Pretax Profit
Net Profit
EPS (HK$)
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
78
Jul-15
Jul-14
100
6
1,175
1,013
1.64
79
4.0
50.1
335.0
0.30
4.6
Cash
16.5
454
119
645
554
0.90
(45)
7.3
9.4
17.1
0.30
4.6
Cash
8.2
2016 F
2017F
953
220
387
347
0.56
(37)
11.7
5.4
9.3
0.30
4.6
Cash
5.0
18.9
(65)
1,077
229
401
360
0.58
4
11.3
4.7
8.9
0.30
4.6
Cash
5.0
19.2
(66)
Nil
Nil
* Net profit included fair v alue gains upon reclassification of a

property for sale into an inv estment property
Principal Business: Engaged primarily in property development and
leasing, and hotel operations in Hong Kong
Page 74
www.dbsvickers.com
ed- JS / sa- AH
Strata-titled sales of Metropole Square is underway
Repulse Bay luxury project to drive medium-term earnings
BUY with HK$8.65 TP

Strata-titled sales of Metropole Square is underway. Tai
Cheung has commenced strata-titled sales of Metropole Square
in Shatin. This building has been converted into office use from
industrial under the government's revitalisation policy for
industrial properties. Reportedly, the company has sold about
four floors for >HK$400m or c.HK$6,000psf on average. We
estimate that Metropole Square, if fully sold, should generate
sales proceeds of >HK$2.5bn. This further strengthens its net
cash holdings which stood at HK$2.22bn (or HK$3.59/sh) as of
Mar 2015. Hence, Tai Cheung should be able to continue with
its generous dividend policy and is well positioned to pursue
land acquisitions in Hong Kong when opportunity knocks.
Repulse Bay luxury project to drive medium-term earnings.
Recently, activities in the luxury home market are exhibiting
signs of improvement which may facilitate sales of its Plunketts
Road project on the Peak. And Tai Cheung will soon complete
the foundation works of its Repulse Bay luxury development.
Superstructure works are expected to commence in 2H15 with
targeted completion in late 2016/early 2017. This project
contains seven luxurious houses with 42,000sf GFA, and should
be the companys key medium-term earnings catalyst.
BUY with HK$8.65 TP. The stock is trading at 65% discount
to our appraised current NAV. Excluding net cash, the
remaining stub is trading at 80% discount. Prospective dividend
yield for FY16-17 stands at 4.6%. The low valuation should
lend strong support to its share price. Strata-titled disposal of
Metropole Square should help to unlock the companys NAV
and in turn drive its share price. BUY with HK$8.65 TP. This is
based on a target discount of 55% to our Jun 2016 NAV
estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Chan Pun Dav id
Chan Poon Wai Kuen
F ree F loat (%)
618
4,070 / 525
29
16
55
0.2
HK Property Sector
Tai Cheung
F Y M ar
2014A
2015A
2016F
2017F
Turnover
EBITDA
Depr/Amort
EBIT
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Prof it
Tax
Minority Interest
Net Prof it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
100
6
(1)
5
138
25
1,007
1,175
(162)
1,013
(90)
79
6.1
5.4
13.8
454
119
(1)
119
139
18
370
645
(92)
554
353
(45)
26.3
26.1
14.2
953
220
(1)
219
148
20
387
(39)
347
110
(37)
23.1
23.0
10.2
1,077
229
(1)
229
151
22
401
(41)
360
13
4
21.3
21.2
10.3

F Y M ar
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
Operat ional CF
Capex
Assoc, MI, Inv smt
Inv est ment CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F inanc ing CF
Chg in Cash
Chg in Net Cash
F Y M ar
2014A
2015A
2016F
2017F
F ixed Assets
Other LT Assets
T ot al A sset s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T ot al Capit al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
1,791
206
2,133
2,752
6,882
107
78
159
6,537
6,882
617
2,026
4,700
Cash
11
245
2,321
4,783
7,359
104
108
226
6,921
7,359
617
2,217
6,892
Cash
11
245
2,991
4,272
7,518
104
105
226
7,083
7,518
617
2,887
7,054
Cash
10
245
3,786
3,649
7,690
104
102
226
7,258
7,690
617
3,682
7,229
Cash
2014A
2015A
2016F
2017F
5
(62)
1
72
3
19
(30)
162
132
(6)
(185)
(191)
(40)
(34)
119
(92)
1
295
17
341
(104)
139
35
(3)
(185)
(188)
188
191
219
(39)
1
508
20
708
148
148
(185)
(185)
670
670
229
(41)
1
620
22
830
151
151
(185)
(185)
795
795
F Y M ar
and leasing
Property management
T ot al sales
2014A
2015A
2016F
2017F
93
447
945
1,069
8
100
8
454
8
953
8
1,077
K ey assumpt ions
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 75
HK Property Sector
Wheelock & Co
BUY
Rising exposure in Tseung Kwan O

Expands foothold in Tseung Kwan O
Strong project launch pipeline

Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
51.5
206
46.5
186
41.5
166
36.5
146
31.5
126
26.5
106
21.5
86
16.5
Jul-11
Jul-12
Jul-13
Wheelock & Co (LHS)

F Y Dec (HK$m)
2013A
Turnover
EBITDA
Pretax Profit
Net profit*
EPS (HK$)
EPS Gth (%)
PE (x)
EV/EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NAV (HK$)
Discount to NAV
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs
35,071
15,537
17,487
7,822
3.85
8
9.8
20.7
1.00
2.7
57
4.9
66
Jul-15
Jul-14
2014A
2015F
2016F
40,953
16,524
16,910
8,103
3.99
4
9.4
19.5
1.07
2.8
51
4.5
48,918
19,402
18,796
9,679
4.76
19
7.9
16.6
1.20
3.2
49
4.9
50.5
(26)
56,280
21,519
21,203
11,247
5.54
16
6.8
14.9
1.20
3.2
45
5.4
56.5
(34)
0
5.05
S: 1
11
5.65
H: 2
B: 6
* Exclude net property revaluation surplus

Principal Business: Engaged in property business in Hong Kong and
Singapore, container terminal operation, CME businesses through
Wheelock Properties and Wharf
Page 76
www.dbsvickers.com
ed- JS / sa- AH

Expands foothold in Tseung Kwan O. Wheelock won the
tender for Lohas Park Package 7 in Tseung Kwan O in Jun 15.
This came after it secured the development rights of the nearby
Lohas Park Package 5 in Nov 14. Lohas Park Package 7 has GFA
of 1.24m sf which splits into 0.76m sf for residential use and
0.48m sf for retail purpose. Two residential towers with 1,250
units will be built atop a retail mall. Land premium for the
entire project is fixed at HK$3.88bn. MTRC will own the
shopping mall by paying Wheelock HK$4.98bn. The profit from
selling the residential portion will be shared between MTRC
and Wheelock in accordance with an undisclosed ratio. We see
this arrangement as beneficial to Wheelock because it could
improve the return on equity by reducing the upfront capital
commitment. Currently, Wheelock has six development projects
in Tseung Kwan O which offer a combined GFA of 4.2m sf.
This makes the company the largest developer in the area.
Strong project launch pipeline. Wheelock generated
c.HK$2.8bn contracted sales from Hong Kong in 1H15.
Launched in Apr 14, Peninsula East, developed by its 57%-held
listed subsidiary Wharf, was completely sold out. The Mount
Nicholson luxury project, 50%-held by Wharf, will go on sale
soon. Wheelock also intends to offer its own projects in Shau
Kei Wan and Tseung Kwan O for sale in 2H15. Elsewhere,
Wheelock is looking to sell One Harbour Gate on the Hung
Hom waterfront on an en bloc basis. This office development
should be a profit driver when completed in FY16.
BUY with HK$42.35 TP The stock is trading at a 26%
discount to our assessed current NAV. The company has
demonstrated improving execution capability that is driving
growth and adding value to shareholders. This in turn warrants
a higher stock valuation. The upcoming sale of One Harbour
Gate should play a crucial role in driving its share price
performance. BUY with HK$42.35 TP, based on a 25%
discount to our Jun 2016 NAV estimate. Any move to unlock
the value of its stake in Wharf could prompt a further re-rating
of the stock.
At A Glance
Mkt Cap (HK$m/US$m)
Woo's F amily
F ree F loat (%)
76,296
2,032
/ 9,840
60.73
39.27
8.0
HK Property Sector
Wheelock & Co
F Y Dec
Turnover
EBITDA
Depr/Amort
EBIT
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Prof it
Tax
Minority Interest
Net prof it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
2013A
2014A
2015F
2016F
35,071
15,537
(1,452)
14,085
3,092
(1,251)
1,561
17,487
(3,080)
(6,585)
7,822
6
8
44.3
40.2
17.6
40,953
16,524
(1,528)
14,996
2,600
(1,198)
512
16,910
(3,472)
(5,335)
8,103
17
4
40.3
36.6
20.5
48,918
19,402
(1,559)
17,844
2,319
(1,367)
18,796
(3,358)
(5,758)
9,679
19
19
39.7
36.5
17.9
56,280
21,519
(1,590)
19,929
2,941
(1,667)
21,203
(3,650)
(6,306)
11,247
15
16
38.2
35.4
17.2

F Y Dec
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
Operat ional CF
Capex
Assoc, MI, Invsmt
Inv est ment CF
Net Chg in Debt
New Capital
Dividend
Other financing CF
F inancing CF
Chg in Cash
Chg in Net Cash
F Y Dec
Fixed Assets
Other LT Assets
Cash/ST Investments
T otal A ssets
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T otal Capital
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2013A
2014A
2015F
2016F
306,195
341,912
348,082
354,364
58,058
59,180
60,968
67,087
29,691
21,566
17,847
18,702
92,870
94,909
103,968
106,038
486,814 517,567 530,865 546,191
11,964
10,744
18,000
12,000
40,281
47,521
47,571
47,621
111,676
107,134
97,878
101,878
11,321
12,252
12,252
12,252
144,990
148,710
153,704
159,285
166,582
191,206
201,460
213,154
486,814 517,567 530,865 546,191
2,032
5,898
5,898
5,898
(94,295)
(96,599)
(98,318)
(95,463)
70,316
58,210
56,244
65,119
57
51
49
45
2013A
2014A
2015F
2016F
14,085
(3,233)
1,452
(11,203)
(1,260)
(159)
(15,762)
601
(15,161)
21,411
(5,572)
48
15,887
567
(20,844)
14,996
(3,358)
1,528
2,632
(1,865)
13,933
(9,008)
(2,115)
(11,123)
(5,546)
(5,219)
(10,765)
(7,955)
(2,409)
17,844
(3,358)
1,559
(7,009)
(3,067)
5,968
(2,100)
231
(1,869)
(2,000)
(5,819)
(7,819)
(3,720)
(1,720)
19,929
(3,650)
1,590
180
(3,567)
14,481
(2,100)
(3,477)
(5,577)
(2,000)
(6,049)
(8,049)
855
2,855
F Y Dec
Investment Property
Development Property
Hotels
CME
Logistics
Investment and others
Key assumpt ions

Office rental - HK
2013A
2014A
2015F
2016F
11,767
13,430
1,498
3,684
3,226
1,466
35,071
14,013
17,198
1,600
3,522
3,319
1,301
40,953
15,012
23,699
1,729
3,654
3,459
1,366
48,918
15,896
29,815
1,808
3,754
3,573
1,434
56,280
2015F
5 to 10%
8 to 10%
2016F
0 to 5%
5 to 10%
Page 77
HK Property Sector
Wing Tai Properties

BUY
Strong financials for growth

Well placed to pursue value-accretive acquisitions
Improving take-up at re-launched Homantin Hillside
Potential Catalyst: Project sales and new acquisitions

BUY with HK$6.05 TP

Well placed to pursue value-accretive acquisitions. With low
gearing (Dec 14: 10%) and its diversified funding sources, Wing
Tai Properties (WTP) is well equipped for making new acquisitions
to bolster its long-term growth. In addition to participating in
public tenders in Hong Kong, WTP is exploring investment
opportunities in Londons commercial market. WTP currently
owns two investment properties in London, one at Brook Street
and the other at One Savile Row. If any acquisitions materialise,
these should further strengthen WTPs recurring earnings base
and diversify its asset concentration.
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
219
6.0
199
5.5
5.0
179
4.5
159
4.0
139
3.5
119
3.0
99
2.5
2.0
Jul-11
Jul-12
Jul-13
Wing Tai Properties (LHS)

F Y Dec (HK $ m)
Turnov er
EBITDA
Pretax Profit
Net Profit
EPS (HK$)
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Estimated NAV (HK$)
Discount to NAV (%)
Earnings Rev (%)
Jul-14
79
Jul-15
2 01 3 A * 2 01 4 A *
2,054
628
2,753
2,661
1.99
(44)
2.3
15.0
13.5
0.14
2.9
16
13.6
1,784
627
2,033
1,944
1.45
(27)
3.2
14.5
13.5
0.14
2.9
10
8.9
20 15 F
2 0 16 F
1,113
533
456
396
0.30
(80)
15.6
3.7
15.9
0.14
2.9
12
1.7
14.8
(69)
892
507
365
315
0.24
(20)
19.6
(9.5)
16.7
0.14
2.9
12
1.4
15.1
(70)
* Net profit included fair v alue changes on inv estment properties

Principal Business: Engaged in property development, property
investment, hotel investment and management
Page 78
www.dbsvickers.com
ed-TH / sa- AH
Improving take-up at re-launched Homantin Hillside. Nearterm development earnings will stem primarily from inventory
sales at The Warren in Tai Hang and Providence Bay/Providence
Peak/The Graces in Tai Po. WTP re-launched Homantin Hillside in
May 15 and has since sold 17 units, bringing the total number of
units sold to 24. The corresponding profit will be recognised in
FY16. The company also intends to offer Upper Riverside in
Shanghai, a 50/50 JV with Nan Fung, for sale upon the project's
completion in Sep15. Trophy asset Landmark East continues to
shine with healthy rental reversion of >15% expected in FY15,
which underpins the rental earnings growth. We forecast gross
rental income to increase at a 2-year CAGR of 4% during FY1416.
BUY with HK$6.05 TP. The stock is trading inexpensively at a
69% discount to our appraised current NAV. We remain positive
on its share price performance in view of its solid development
pipeline, improving earnings quality and strong balance sheet.
BUY with HK$6.05 TP, premised on a 60% discount to our Jun
2016 NAV estimates.
At A Glance
Mkt Cap (HK$m/US$m)
Wing Tai Hldgs & Cheng's F amily
Sun Hung Kai Properties Ltd
F ree F loat (%)
6,183
1,341
/ 798
50.6
13.7
35.70
0.2
HK Property Sector
Wing Tai Properties
F Y Dec
2013A
2014A
2015F
2016F
Turnov er
EBITDA
Depr/Amort
EB IT
Associates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
Minority Interest
Net Pro f it
Sales Growth (%)
Net Profit Gr (%)
EBITDA Mgn (%)
Opg Mgn (%)
Tax Rate (%)
2,054
628
(20)
608
169
(146)
2,121
2,753
(91)
(0)
2,661
52
(44)
31
30
3
1,784
627
(18)
609
2
(116)
1,539
2,033
(90)
1,944
(13)
(27)
35
34
4
1,113
533
(19)
514
73
(131)
456
(60)
396
(38)
(80)
48
46
13
892
507
(20)
487
46
(168)
365
(50)
315
(20)
(20)
57
55
14

F Y Dec
EBIT
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
Assoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
F Y Dec
F ixed Assets
Other LT Assets
T ot al A sset s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
T ot al Cap it al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
2 0 13 A
20 1 4 A
20 1 5 F
2 0 1 6F
19,071
20,645
20,777
20,909
2,825
3,019
2,435
1,166
1,253
1,606
1,166
1,045
3,557
2,258
3,468
4,963
2 6 ,7 0 5 27 ,5 28 2 7 , 84 5 2 8 ,0 8 3
1,740
64
1,236
1,236
796
470
470
470
2,947
3,815
2,643
2,643
327
499
499
499
2
1
1
1
20,894
22,679
22,997
23,235
2 6 ,7 0 5 27 ,5 28 2 7 , 84 5 2 8 ,0 8 3
1,335
1,339
1,339
1,339
(3,445)
(2,286)
(2,727)
(2,847)
2,274
3,331
2,928
4,303
16
10
12
12
2013A
2014A
2015F
2016F
608
(21)
20
(137)
(229)
241
(352)
(199)
(5 5 0 )
608
(181)
(14)
414
104
(504)
609
(89)
18
1,029
(100)
1,467
42
(196)
(153)
(743)
(181)
(36)
(960)
354
1,097
514
(60)
19
(2,379)
1,031
(8 7 6 )
(40)
657
617
(181)
(1 8 1 )
(440)
(440)
487
(50)
20
(2,951)
1,279
(1,215)
(40)
1,315
1,275
(181)
(181)
(120)
(120)
F Y Dec
Property inv estment
and management
Hospitality inv estment
and management
Garment manufacturing
Branded product
distribution
Inv esting
T o t al sales
2013A
2 01 4 A
2015F
2016F
1,010
564
944
669
245
708
728
141
147
136
138
318
-
22
2,054
23
1,784
24
1 ,1 1 3
26
892
2015F
2016F
Office rental - HK
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 79
HK Property Sector
Great Eagle
HOLD
Well positioned for acquisitions

On acquisition mode
Overseas hotels recovering
Potential Catalyst: n.a.

Where we differ: Market has higher earnings estimates for FY15-16
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
38.0
204
33.0
184
164
28.0
144
23.0
124
104
18.0
84
13.0
Jul-11
Jul-12
Jul-13
Great Eagle (LHS)

F Y Dec ( H K $ m)
Turnov er
EBITDA
Pretax Profit
Net Profit^
EPS (HK$)^
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)*
Div Yield (%)
Net Gearing (%)
ROE (%)
Est NA V (HK$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
64
Jul-15
Jul-14
2013A 2014A
5,419
1,992
1,850
1,680
2.63
(8.1)
10.5
5.3
19.5
2.16
7.8
31.8
3.6
5,594
2,187
2,049
1,919
2.92
11.4
9.5
36.4
17.7
0.74
2.7
34.6
3.8
B: 1
2015F
2016F
5,472
1,997
1,773
1,648
2.51
(14.1)
11.0
10.3
19.4
0.74
2.7
34.2
3.1
72.9
(62)
5,756
2,066
1,729
1,614
2.46
(2.1)
11.2
12.8
18.8
0.74
2.7
32.0
3.0
74.4
(63)
(2)
2.75
S: 5
(5)
2.94
H: 3
^ Exclude fair v alue changes on inv estment properties

* Include special DPS of HK$1.5 in F Y13
Principal Business: Engaged in hotel operation and holds c.62%
stake in Champion REIT and c.58% of Langham Hospitality Trust
Page 80
www.dbsvickers.com
ed-JS / sa- AH

On acquisition mode. Following the spin-off of three Hong
Kong hotels to Langham Hospitality Investments (LHI) in May
13, Great Eagle (GE) has been on a buying spree and acquired
one office building (123 Mission Street), one residential site (Tai
Po in Hong Kong) and three hotels (one in Washington, two in
Shanghai) for a total consideration of c.HK$7bn. In San
Francisco where GE has been operating for decades, the
company bought a prime site for hotel development for
c.US$20m and, through its U.S. Fund, a residential/ commercial
site for c.US$21m in 1H15. Even after factoring the payment
for the HUB hotel in 2015, GE should remain financially healthy
for acquisition opportunities.
Overseas hotels recovering. GEs overseas hotel operations
are generally picking up except for Langham Place, Fifth
Avenue, New York, which should register a mild decline in
RevPAR due to increased hotel supply. Acquired in Jul 14,
Washington Hotel has been shut for renovation since Dec 14
and is expected to re-open as Eaton in 2016. With EBITDA
turnaround at The Langham, Chicago and first full-period
contribution from The Langham, Xintiandi, Shanghai, we
estimate FY15 hotel EBITDA to grow >20% to HK$631m. We
have revised down FY15-16 earnings by 2-5%, mainly to reflect
lower contribution from LHI and reduced interest income.
HOLD with HK$30.5 TP. The stock is now trading at a 62%
discount to our estimated current NAV. Valuation is not
expensive, but we do not see any near-term re-rating catalyst.
Maintain HOLD with HK$30.5 TP, based on a 60% discount to
our Jun 2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Lo Ka Shui
Surewit F inance
Green J acket Limited
F ree F loat (%)
665
18,378 / 2,371
56.36
6.94
5.02
31.68
1.8
HK Property Sector
Great Eagle
F Y D ec
2013A
2014A
2015F
2016F
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
5,419
1,992
(122)
1,869
(26)
6
1,850
(169)
(2)
1,680
(4.6)
(6.8)
36.8
34.5
9.1
5,594
2,187
(143)
2,044
(27)
125
(93)
2,049
(127)
(2)
1,919
3.2
14.2
39.1
36.5
6.2
5,472
1,997
(158)
1,839
(27)
(39)
1,773
(122)
(2)
1,648
(2.2)
(14.1)
36.5
33.6
6.9
5,756
2,066
(169)
1,898
(24)
(144)
1,729
(113)
(2)
1,614
5.2
(2.1)
35.9
33.0
6.5
F ixed A ssets
Other LT A ssets
T o t al A s s et s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
M inority Interests
T o t al Cap it al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)

F Y D ec
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
2013A
2014A
2015F
2016F
81,977
85,686
86,168
86,505
2,381
2,453
4,088
4,308
10,712
10,198
9,669
10,376
2,702
3,608
3,748
4,177
97,772 101,945 103,673 105,366
7,042
3,231
9,455
3,919
3,300
3,473
3,685
3,897
19,347
24,682
18,458
23,993
995
1,183
1,183
1,183
17,131
17,608
17,610
17,613
49,956
51,770
53,283
54,761
97,772 101,945 103,673 105,366
639
656
656
656
(15,873)
(17,902)
(18,244)
(17,536)
3,071
7,103
277
6,737
32
35
34
32
2013A
2014A
2015F
2016F
1,869
(415)
122
326
1,003
2,905
(6,356)
(2,678)
(9,034)
10,500
66
(1,395)
2,730
11,900
5,772
(4,728)
2,044
(261)
143
(2,434)
746
238
(1,110)
(3,360)
(4,470)
327
17
(1,123)
(59)
(838)
(5,071)
(5,398)
1,839
(122)
158
72
(309)
1,638
(2,086)
1,060
(1,025)
(486)
(657)
(1,143)
(530)
(530)
1,898
(113)
169
(217)
(434)
1,302
(500)
1,068
568
(486)
(677)
(1,163)
708
708
F Y D ec
2013A
2014A
2015F
2016F
Rental income
312
Building management
fee income
23
Hotel operation
3,481
Income from Champion
1,222
REIT/ Langham Hospitality
Other operations
381
T o t al s a les
5,419
392
264
213
25
3,361
1,333
26
3,487
1,207
27
3,694
1,335
483
5,594
487
5,472
487
5,756
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 81
HK Property Sector
Hongkong Land
Bloomberg: HKL SP | Reuters: HKLD.SI
BUY
Last Traded Price: US$7.7 (STI : 3,285)
Price Target : US$9.32 (21% upside) (Prev US$8.13)
Riding on Central office market

upturn
Potential Catalyst: Improving Central office market

Where we differ: Market has similar earnings estimate for FY15.
Benefitting from improving office sector in Central
First foray into Shanghai market
Analyst
Jeff YAU CFA, +852 2820 4912
BUY with US$9.32 TP

Benefitting from improving office market in Central. The
office leasing market in Central has been gathering momentum,
particularly from 2Q15, thanks to growing demand from
Mainland Chinese firms. This has resulted in office vacancy
there reaching its six-year low. New financial liberalisation
measures between Hong Kong and China, such as mutual fund
recognition scheme, should bode well for office demand in
Central where new supply remains tight in the coming 2-3
years. These exert upward rental pressure for Centrals offices.
With strong office exposure in Central, Hongkong Land is set to
be the prime beneficiary of favourable market outlook.
Allen CHAN +852 2971 1932

Price Relative
US$
Relative Index
206
8.8
186
7.8
166
6.8
146
126
5.8
106
4.8
86
3.8
Jul-11
Jul-12
Jul-13
HongKong Land (LHS)
Jul-14
66
Jul-15
Relative STI INDEX (RHS)
F Y Dec ( US$ m)
Turnov er
EBITDA
Pretax Profit
Underly ing Net Profit*
EPS (US$)*
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (US$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est NAV (US$)
Discount to NAV (%)
Earnings Rev (%)
Consensus EPS (US$)
Other Broker Recs:
2013A 2014A
1,857
907
1,088
935
0.40
20
19.4
17.3
23.0
0.18
2.3
11
3.5
1,876
1,014
1,121
930
0.40
(1)
19.5
21.7
20.5
0.19
2.5
10
3.4
B: 14
2015F
2016F
2,252
988
1,103
896
0.38
(4)
20.2
33.0
21.1
0.19
2.5
11
3.2
10.6
(28)
2,138
997
1,121
914
0.39
2
19.8
40.6
20.9
0.19
2.5
13
3.2
11.6
(34)
2
0.38
S: 2
5
0.41
H: 2

Principal Business: A leading property investment, management and
development group with the majority of earnings derived from
rentals in the core CBD of HK
Page 82
www.dbsvickers.com
ed-TH / sa- AH
First foray into Shanghai market. In May 15, Hongkong

Land entered into an agreement with China-based CIFI
Holdings to co-develop a site in Shanghai. This marked the
companys first foray in Shanghai and should be part of its plan
to grow its portfolio in prime cities in Asia. Located in Pudong
New District, the site has been earmarked for residential, office
and commercial development with a planned GFA of
226,667sm. Total investment cost is estimated at Rmb7.3bn or
Rmb32,200psm. Hongkong Land and CIFI each owns a 50%
stake in this joint venture. Overall, the companys residential
business in China is bearing fruit. WF CENTRAL in Beijing is due
for completion in late 2016 and will be retained for long-term
investment. Overall, China is gradually becoming an
increasingly important source of earnings for Hongkong Land
over time.
BUY with US$9.32 TP. The stock is trading at a 28% discount
to our assessed current NAV, against its 10-year average of
20%. We see scope for further share price appreciation in light
of the rising office market in Central. Proposed inclusion in the
MSCI Hong Kong Index should further add to its investment
appeal. BUY with US$9.32 TP. This is premised on a 20%
discount to our Jun 2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
J ardine Strategic
F ree F loat (%)
2,353
140,463 / 18,117
50.01
49.99
19.8
HK Property Sector
Hongkong Land
Income Statement (US$m)
Balance Sheet (US$m)
F Y D ec
2013A
2014A
2015F
2016F
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
1,857
907
(2)
904
235
(64)
12
1,088
(149)
(4)
935
67
20
48.8
48.7
13.7
1,876
1,014
(2)
1,012
123
(69)
56
1,121
(188)
(3)
930
1
(1)
54.0
53.9
16.8
2,252
988
(2)
986
197
(79)
1,103
(204)
(3)
896
20
(4)
43.9
43.8
18.5
2,138
997
(2)
994
214
(87)
1,121
(204)
(3)
914
(5)
2
46.6
46.5
18.2
F ixed A ssets
Other LT A ssets
T o t al A s s et s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
M inority Interests
T o t al Cap it al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)
Cash Flow Statement (US$m)

F Y D ec
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
2013A
2014A
2015F
2016F
23,602
23,722
24,223
24,735
5,027
5,020
5,110
5,217
1,406
1,663
874
484
2,961
3,228
4,135
5,145
32,996 33,633 34,343 35,580
712
289
450
500
1,480
1,544
1,534
1,524
3,719
4,031
3,670
3,920
185
171
171
171
42
50
48
45
26,857
27,548
28,471
29,421
32,996 33,633 34,343 35,580
2,353
2,353
2,353
2,353
(3,025)
(2,657)
(3,245)
(3,935)
2,175
3,058
3,025
3,606
10
11
13
11
Segmental Breakdown (US$m)/ Key Assumptions
2013A
2014A
2015F
2016F
904
(139)
2
66
74
908
(40)
(337)
(378)
287
(405)
1
(117)
414
127
1,012
(134)
2
(251)
70
699
(38)
126
88
(91)
(426)
(516)
271
361
986
(204)
2
(344)
(96)
344
(30)
(450)
(480)
(200)
(453)
(653)
(788)
(588)
994
(204)
2
(447)
(103)
242
(30)
(450)
(480)
300
(453)
(153)
(390)
(690)
F Y D ec
Rental income
Serv ices and
mgmt charges
Sale of trading
properties
T o t al s a les
2013A
2014A
2015F
2016F
811
843
843
872
120
124
132
139
926
1,857
910
1,876
1,277
2,252
1,126
2,138
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 83
HK Property Sector
Hysan Development
BUY
Inexpensive valuations

Office rental reversion, albeit moderated, remains positive
Riding into retail market headwind
Potential Catalyst: Higher rental reversion

Where we differ: Market has slightly higher earnings estimates for
FY15-16
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
208
40.7
188
168
35.7
Office rental reversion, albeit moderated, remains positive.

Office occupancy stays firm at c.98-99%. Rental reversion should
moderate to c.13% from FY14s 17%. In 2015, c.29% of leases
will be up for renewal and rent review, including Manulife
Financials lease that is slated to expire in Dec 15. This anchor
tenant, occupying c.140,000sf of office space at Lee Gardens One,
may consider relocating some of its business operations to its selfowned and newly built One Bay East in Kwun Tong. Given tight
vacancy in Causeway Bay, Hysan should face no difficulty to fill up
the space that is possibly vacated by Manulife Financial, and hence
vacancy risk should not be overstated.
148
30.7
128
108
25.7
88
20.7
Jul-11
Jul-12
Jul-13
Hysan Development (LHS)

F Y D ec ( H K $ m)
2013A
Turnov er
EBITDA
Pretax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NA V (HK$)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
3,063
2,466
2,522
2,043
1.92
26
16.6
13.6
16.2
1.17
3.7
5
3.4
Jul-14
68
Jul-15
2014A
2015F
2016F
3,224
2,623
2,689
2,163
2.03
6
15.7
12.5
15.2
1.23
3.9
4
3.3
3,335
2,685
2,750
2,202
2.07
2
15.4
12.6
14.8
1.26
3.9
4
3.2
62.2
(49)
3,402
2,742
2,787
2,232
2.10
1
15.2
12.4
14.5
1.30
4.1
4
3.2
63.6
(50)
(0)
2.15
S: 3
0
2.21
H: 7
B: 8

Principal Business: Property leasing with focus on Causeway Bay
Page 84
www.dbsvickers.com
ed-TH / sa- AH
Riding into retail market headwind. In 4M15, Hysans retail

tenant sales growth was estimated at 60%. Excluding one anchor
tenant at Hysan Place, retail tenant sales dropped 5% with a
similar fall seen across Lee Gardens hub and Hysan Place, given the
market headwinds. Lee Theatre hub remains a bright spot with
11% tenants sales growth registered. The company has been
refining its trade mix at Hysan Place to improve its retail offering.
Key tenant DFS is carrying out renovations on B1/F to house new
cosmetics tenants. Overall, retail rental reversion has moderated to
c.20%. Gearing is currently low at <5%. Capitalising on its strong
balance sheet, Hysan has been exploring acquisition opportunities
in Hong Kong and overseas to diversify its asset base and bolster
its future earnings growth.
BUY with HK$38.15 TP. The stock is trading at a 49% discount
to our appraised current NAV, which compares favourably its 10year average of 36%. In view of strong asset backing, steady
earnings and healthy financial position, we reiterate BUY call but
lowered our TP to HK$38.15, based on a wider target discount of
40% on Jun 2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Lee Hy san Estate Co.
Silchester International Inv estors
F ree F loat (%)
1,064
33,938 / 4,377
40.7
9.0
50.25
8.0
HK Property Sector
Hysan Development
F Y D ec
2013A
2014A
2015F
2016F
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
3,063
2,466
(16)
2,450
237
(166)
1
2,522
(372)
(107)
2,043
23
26
80.5
80.0
14.7
3,224
2,623
(17)
2,606
245
(160)
(2)
2,689
(386)
(140)
2,163
5
6
81.4
80.8
14.4
3,335
2,685
(17)
2,668
252
(170)
2,750
(401)
(146)
2,202
3
2
80.5
80.0
14.6
3,402
2,742
(17)
2,725
259
(197)
2,787
(406)
(149)
2,232
2
1
80.6
80.1
14.6
F ixed A ssets
Other LT A ssets
T o t al A s s et s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
M inority Interests
T o t al Cap it al
Share Capital (m)
Net Cash/(Debt)
Working Capital
Net Gearing (%)

F Y D ec
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
2013A
2014A
2015F
2016F
65,926
69,445
71,041
73,790
5,147
5,103
5,355
5,614
4,123
3,640
3,769
3,667
898
835
820
805
76,094 79,023 80,985 83,876
1,055
1,589
250
450
1,166
1,220
1,205
1,190
6,449
4,858
6,197
6,197
1,243
1,227
1,227
1,227
2,855
3,089
3,203
3,357
63,326
67,040
68,903
71,455
76,094 79,023 80,985 83,876
1,064
1,064
1,064
1,064
(3,381)
(2,807)
(2,678)
(2,980)
2,800
1,666
3,134
2,832
5
4
4
4
2013A
2014A
2015F
2016F
2,450
(225)
16
22
10
2,273
(704)
(2,200)
(2,904)
1,626
(1,172)
(165)
289
(342)
(1,968)
2,606
(317)
17
79
10
2,395
(359)
589
230
(1,100)
(1,369)
(201)
(2,670)
(45)
1,055
2,668
(401)
17
2,284
(582)
68
(514)
(1,403)
(238)
(1,641)
129
129
2,725
(406)
17
2,336
(1,008)
68
(940)
200
(1,434)
(265)
(1,499)
(102)
(302)
F Y D ec
2013A
2014A
2015F
2016F
Property rental
income
T o t al s ales
3,063
3,063
3,224
3,224
3,335
3,335
3,402
3,402
2015F
2016F
Office rental - HK
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 85
HK Property Sector
Swire Properties
BUY
Well grounded

Firm office occupancy, weaker retail tenants sales
Joint venture with China Motor Bus to redevelop a Chai Wan

site
Potential Catalyst: Improving office market

Where we differ: Market has similar earnings estimate for FY15-16
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
31.4
206
29.4
27.4
186
25.4
166
23.4
146
21.4
126
19.4
106
17.4
15.4
Jan-12
86
Jan-13
Swire Properties (LHS)

F Y D ec ( H K $ m)
2013A
Turnov er
EBITDA
Pretax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
P/Cash F low (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Est. NA V (HK$)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
12,935
8,692
7,357
6,348
1.09
(8)
21.5
15.4
19.7
0.60
2.6
16
3.2
Jan-14
Jan-15
2014A
2015F
2016F
15,387
9,412
8,530
7,152
1.22
13
19.1
12.7
18.2
0.66
2.8
16
3.5
16,108
9,836
8,645
7,284
1.25
2
18.8
13.7
17.4
0.66
2.8
18
3.5
38.2
(39)
17,848
10,150
8,777
7,423
1.27
2
18.4
9.5
16.9
0.66
2.8
18
3.4
40.3
(42)
1
1.25
S: 1
2
1.29
H: 3
B: 11

Principal Business: Property investment and development in Hong
Kong, China & US
Page 86
www.dbsvickers.com
ed-TH / sa- AH
BUY with HK$30.2 TP

Firm office occupancy, weaker retail tenants sales. Office
occupancy at Pacific Place stayed stable at 94% in Mar-15. However,
rental reversion turned negative at 4% in 1Q15 as the expiring leases
were signed during the previous market peak. Occupancy of Island
East portfolio remained high at 98-100%. But office rental reversion
moderated to 8-19% in 1Q15 from FY14's 14-27%. Retail malls
delivered mixed performances. Tenants' sales at Pacific Place Mall
and Citygate Outlets Mall fell 14.5% and 2.3% in 1Q15 respectively.
Falling tenants' sales should constrain the company's reversionary
growth in the years ahead. On the other hand, Cityplaza Mall
benefitted from its HK$100m asset enhancement programme
completed in 2014, with an 11.3% rise in retail sales.
Joint venture with China Motor Bus to redevelop a Chai Wan
site. Inventory sales at Arezzo in Mid-levels are progressing smoothly.
Since its initial launch in Sep 14, Swire Properties has sold >80% of
the total 127 units at an ASP of HK$27,800psf. Arezzo will dominate
the companys development earnings in FY15 with estimated pre-tax
margins fat at >35%. To replenish its development land bank, Swire
Properties has formed a joint venture with China Motor Bus (CMB) to
conditionally acquire a piece of land in Chai Wan (which used to be
the former CMB's bus depot) for HK$850m or HK$1,228psf. Swire
Properties and CMB will hold 80% and 20% stakes in this joint
venture respectively. The Town Planning Board has granted the
planning permission for redeveloping this industrial site into a
residential/commercial complex. The company is responsible for
coordinating the planning and the implementation of redevelopment,
including the submission of land exchange application. If approved,
this project is expected to yield GFA of c.692,000sf.
BUY with HK$30.2 TP. Trading at a 39% discount to our appraised
current NAV, the stock remains inexpensive, given its solid rental
income stream. The company should stand to benefit from the
improving office sector outlook, which could in turn justify a higher
valuation. BUY with HK$30.2 TP. This is based on a 25% discount to
our Jun 2016 NAV estimate.
At A Glance
Mkt Cap (HK$m/US$m)
Swire Pacific
F ree F loat (%)
5,850
136,597 / 17,618
82
18
10.0
HK Property Sector
Swire Properties
F Y D ec
2013A
2014A
2015F
2016F
F Y Dec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
U n d erly in g Pro f it
A d j. U n d erly in g
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
12,935
8,692
(391)
8,301
269
(1,307)
94
7,357
(898)
(111)
6,348
6,348
(8)
(8)
67.2
64.2
12.2
15,387
9,412
(360)
9,052
648
(1,199)
29
8,530
(1,172)
(206)
7,152
7,152
19
13
61.2
58.8
13.7
16,108
9,836
(378)
9,458
541
(1,353)
17,848
10,150
(397)
9,753
527
(1,503)
8,645
(1,297)
(64)
7,284
7,284
5
2
61.1
58.7
15.0
8,777
(1,320)
(34)
7,423
7,423
11
2
56.9
54.6
15.0
F ixed Assets
220,933
226,658
235,556
247,182
Other LT Assets
17,832
19,938
20,164
21,223
2,521
2,874
2,936
5,893
10,671
10,885
11,458
8,051
T o t al A sset s
2 5 1 , 9 5 7 2 6 0 , 3 5 5 2 7 0 , 1 1 4 2 8 2 ,3 4 9
ST Debt
7,589
4,201
4,904
7,456
Other Current Liab
8,218
8,193
8,393
8,593
LT Debt
26,946
32,744
36,041
37,490
Other LT Liab
6,054
6,670
6,670
6,670
Minority Interests
800
856
802
719
202,350
207,691
213,304
221,421
T o t al Cap it al
2 5 1 , 9 5 7 2 6 0 , 3 5 5 2 7 0 , 1 1 4 2 8 2 ,3 4 9
Share Capital (m)
5,850
5,850
5,850
5,850
Net Cash/(Debt)
(32,014)
(34,071)
(38,009)
(39,053)
Working Capital
(2,615)
1,365
1,097
(2,105)
Net Gearing (%)
16
16
18
18
20 1 3 A
2014A
2015F
2016F
F Y D ec
2013A
2014A
EBIT
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
A ssoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
8,301
(1,314)
391
185
(1,182)
6,381
(5,371)
(433)
(5,804)
3,382
(3,401)
15
(4)
573
(2,809)
9,052
(760)
360
1,403
(782)
9,273
(4,943)
(1,449)
(6,392)
2,530
(3,771)
(1,256)
(2,497)
384
(2,146)
2015F
2016F
9,458
9,753
(1,297)
(1,320)
378
397
127
4,257
(1,551)
(1,850)
7,115 11,237
(7,086)
(7,468)
12
(835)
(7,074) (8,303)
4,000
4,001
(3,979)
(3,978)
21
23
62
2,957
(3,938)
(1,044)
F Y D ec
2013A
2014A
2015F
2016F
Property Inv estment

Property trading
Hotels
T o t al s ales
9,786
2,207
942
12,935
10,456
3,842
1,089
15,387
10,861
4,119
1,128
16,108
11,278
5,395
1,176
17,848
2015F
5 to 10%
8 to 10%
-10 to -20%
0 to 3%
2016F
0 to 5%
5 to 10%
-10%
0 to 3%
K ey A s s u mp t io n s
Office rental - HK
Page 87
HK Property Sector
Wharf Holdings
HOLD
A mixed bag

China property sales exhibit improving signs
Challenging retail scene in Hong Kong; expanding rental

footage in China
Potential Catalyst: Project sales in China, parent stake increase

Where we differ: Market has slightly higher earnings estimate for FY1516
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
208
80.2
188
70.2
168
60.2
148
50.2
128
108
40.2
88
30.2
Jul-11
Jul-12
Wharf (LHS)

F Y D ec ( H K $ m)
Turnov er
EBITDA
Pretax Profit
Net Profit*
EPS (HK$)*
EPS Gth (%)
PE (x)
EV /EBITDA (x)
DPS (HK$)
Div Yield (%)
Net Gearing (%)
ROE (%)
Estimated NA V (HK$)
Earnings Rev (%)
Consensus EPS (HK$)
Other Broker Recs:
Jul-13
68
Jul-15
Jul-14
2013A
2014A
2015F
2016F
31,887
14,007
15,008
11,298
3.73
2
13.2
15.5
1.70
3.5
21
4.3
38,136
15,172
14,089
10,474
3.46
(7)
14.2
14.3
1.81
3.7
19
3.6
37,964
15,534
15,084
11,922
3.93
14
12.5
14.0
1.96
4.0
20
3.8
86.3
(43)
39,567
16,535
16,426
13,141
4.34
10
11.3
13.1
2.03
4.1
21
4.1
89.8
(45)
Nil
4.01
S: 1
Nil
4.43
H: 10
B: 6

Principal Business: Engaged in property investments, property
developments, container terminal operations and communication,
media and entertainment businesses.
Page 88
www.dbsvickers.com
ed-TH / sa- AH
China property sales exhibit improving signs. Property sales in

China have been showing signs of improvement in recent months,
especially in first-tier cities, following the relaxation of mortgage
lending policy and interest rate cut. In May 15, Wharf achieved
contracted sales of Rmb2.6bn, up from Rmb2.2bn in Apr-15 and
Rmb1bn in Mar-15. This brings cumulative contracted sales in 5M15
to Rmb7.3bn, with a significant portion from projects in eastern
China (Shanghai, Hangzhou and Suzhou).
Challenging retail scene in Hong Kong, expanding rental
footage in China. In 1Q15, retail tenants sales at Harbour City and
Times Square fell 5% and 7.1% respectively, against a 2.3% decline
in the overall market. A strong local currency discourages tourists
and local shoppers from spending in Hong Kong and should bode
badly for the retail market in the months ahead. This should drag
Wharfs retail rental income. Niccolo by Marco Polo, a premier hotel
at Chengdu IFS, has recently opened for business, and the serviced
apartments are scheduled to open in late 2015. These, coupled with
two newly built office towers, should provide an additional flow of
shoppers to Chengdu IFS Mall which is seeing rising income
contributions. Wuxi IFS should make its first rental income in FY15.
Coupled with the additions of Changsha IFS and Chongqing IFS into
Wharf's rental portfolio in FY16/17, the company should register
growing rental income stream from China.
HOLD with HK$53.85 TP. The stock is trading at a 43% discount
to our appraised current NAV. Despite undemanding valuation, the
challenging retail scene in Hong Kong may cloud its earnings
visibility. Based on a target discount of 40% to our Jun 2016 NAV
estimate, we derive our TP at HK$53.85, and rate the counter HOLD,
Nonetheless, Its parent Wheelock & Co has raised its stake in the
company to >57% from 55% in Dec 14. Any further stake increase
by Wheelock could help limit the downside risk on its share price.
At A Glance
Mkt Cap (HK$m/US$m)
Wheelock
F ree F loat (%)
3,031
149,126 / 19,234
57.04
42.96
47.7
HK Property Sector
Wharf Holdings
F Y D ec
Turnov er
EBITDA
Depr/A mort
EB IT
A ssociates Inc
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
Sales Grow th (%)
Net Profit Gr (%)
EBITDA M gn (%)
Opg M gn (%)
Tax Rate (%)
2013A

2014A
2015F
2016F
31,887
38,136
37,964
39,567
14,007
15,172
15,534
16,535
(1,445)
(1,522)
(1,552)
(1,583)
12,562 13,650 13,982 14,952
2,716
1,437
2,319
2,941
(1,090)
(1,067)
(1,217)
(1,467)
820
69
15,008 14,089 15,084 16,426
(2,869)
(3,187)
(2,690)
(2,790)
(841)
(428)
(473)
(494)
11,298 10,474 11,922 13,141
3
20
(0)
4
2
(7)
14
10
43.9
39.8
40.9
41.8
39.4
35.8
36.8
37.8
19.1
22.6
17.8
17.0

F Y D ec
2013A
F Y Dec
2013A
2014A
2015F
2016F
F ixed Assets
285,258
326,917
330,483
337,128
Other LT Assets
46,693
47,291
49,379
55,798
24,515
18,725
13,132
3,977
58,586
51,725
59,112
66,516
T o t al A sset s
415,052 444,658 452,106 463,419
ST Debt
9,502
8,653
6,500
6,500
Other Current Liab
37,243
40,752
40,802
40,852
LT Debt
73,085
69,331
69,484
67,484
Other LT Liab
10,967
11,811
11,811
11,811
Minority Interests
8,698
8,616
8,589
8,583
275,557
305,495
314,920
328,188
T o t al Cap it al
415,052 444,658 452,106 463,419
Share Capital (m)
3,030
3,030
3,030
3,030
Net Cash/(Debt)
(58,072)
(59,259)
(62,852)
(70,007)
Working Capital
36,356
21,045
24,942
23,141
Net Gearing (%)
21
19
20
21

2014A
2015F
2016F
EBIT
12,562
13,650
Tax Paid
(3,105)
(3,028)
Depr/A mort
1,445
1,522
Chg in Wkg Cap
5,543
6,992
Othr Non-Cash
(640)
(883)
O p erat io n al CF
15,805
18,253
Capex
(14,036)
(11,277)
2,035
558
In v es t men t CF
(12,001) (10,719)
Net Chg in Debt
8,646
(7,456)
New Capital
48
Div idend
(5,691)
(5,871)
Other financing CF
F in an c in g CF
3,003 (13,327)
Chg in Cash
6,807
(5,793)
Chg in Net Cash
(1,839)
1,663
13,982
(2,690)
1,552
(6,337)
(2,217)
4,290
(2,100)
231
(1,869)
(2,000)
(6,015)
(8,015)
(5,594)
(3,594)
14,952
(2,790)
1,583
(6,254)
(2,567)
4,924
(2,100)
(3,477)
(5,577)
(2,000)
(6,501)
(8,501)
(9,155)
(7,155)
F Y Dec
2013A
2014A
2015F
2016F
Inv estment Property

Hotels
Logistics
Communications, media
and entertainment
Dev elopment Property
Inv estment and others
T o t al s a le s
10,985
1,526
3,226
13,253
1,600
3,319
14,400
1,729
3,459
15,272
1,808
3,573
3,684
11,514
952
31,887
3,522
15,539
903
38,136
3,654
13,775
948
37,964
3,754
14,163
996
39,567
Office rental - HK
2015F
2016F
5 to 10% 0 to 5%
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 89
HK Property Sector
Champion REIT
BUY
On the road to recovery

Citibank Plazas occupancy is recovering
Langham Place continues to grow steadily
Potential Catalyst: Higher office rent at Citibank Plaza

Where we differ: Market has slightly higher DPU estimate for FY15
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
221
4.9
201
4.4
181
161
3.9
141
3.4
121
101
2.9
81
2.4
Jul-11
Jul-12
Jul-13
Champion REIT (LHS)
61
Jul-15
Jul-14

F Y Dec ( HK $ m)
2013A
2014A
2015F
2016F
Turnov er
Net property income
Net Profit
Distribution income
DPU (HK$)
DPU Gth (%)
Div Yield (%)
Gross Gearing (%)
Book V alue (HK$)
P/Book V alue (x)
2,179
1,748
2,199
1,201
0.21
1
5.2
23
7.94
0.5
2,288
1,800
1,929
1,171
0.20
(3)
5.1
23
8.06
0.5
2,282
1,756
1,009
1,057
0.18
(10)
4.5
23
8.14
0.5
2,574
2,027
1,150
1,206
0.21
13
5.2
22
8.38
0.5
B: 5
Nil
0.20
S: 2
DPU Rev (%)

Consensus DPU (HK$)
Other Broker Recs:
Nil
0.21
H: 6

ICB Sector: REITs
Principal Business: Leasing of Citibank Plaza and Langham Place in
Hong Kong
Page 90
www.dbsvickers.com
ed- JS / sa- MH
BUY with HK$ 4.68 TP

Citibank Plazas occupancy is recovering. Champion REIT has
leased a total of 9 entire floors, or 12.3% of office space, at
Citibank Plaza to four financial services tenants, which reportedly
include BlackRock, Bloomberg, Thomson Reuters. Coupled with
other smaller transactions, committed occupancy of Citibank
Plaza has recovered markedly to c.94-95%. But negative rental
reversion continues as rents for committed leases were at low
HK$70psf, falling short of expiring rents of HK$98psf for FY15.
With shrinking office space available for leasing and rising
demand in Central, Champion REIT should have regained pricing
power for Citibank Plaza, with current effective asking rents of
c.HK$85psf. We estimate Citibank Plazas revenue will decline
9% in FY15, but expand 16% in FY16 on the back of higher
occupancy.
Langham Place continues to grow steadily. Despite slowing
inbound tourism led by strong local currency, tenant sales at
Langham Place Mall registered solid growth of c.10% in 1Q15.
Solid rental reversion of 15-20% is expected when 25.8% of
leases are up for renewal in FY15. Langham Place Office Tower is
currently fully let. About 15% of floor area is scheduled to be
rolled over in 2015, with mildly positive rental growth expected.
Overall we expect the revenue from Langham Place to increase at
2-year CAGR of 9% in FY14-16.
BUY with HK$4.68 TP. Champion REIT offers distribution yields of
4.5% for FY15 and 5.2% for FY16. New financial liberalisation
measures between Hong Kong and China, such as mutual fund
recognition scheme should bode well for office demand in
Central over the longer term, which would in turn be positive for
Citibank Plaza. BUY with HK$4.68 TP. Near-term, negotiations
with Citibank, which occupies 18% of space at Citibank Plaza
with its lease expiring in mid 2016, is among the key events to
keep a watch on. Since Champion REIT does not hedge interest
cost for any bank borrowings, potential interest rate hike remains
its key investment risk.
At A Glance
Mkt Cap (HK$m/US$m)
Great Eagle
F ree F loat (%)
23,208
5,759
/ 2,993
61.8
38.3
3.5
HK Property Sector
Champion REIT
F Y Dec
Gross rev enue
Property expenses
Net p ro p ert y in c o me
Other expenses
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
Minority Interest
Net Pro f it
Dist rib u t io n in c o me
Sales Growth (%)
Distr. Inc Gr (%)
DPU Growth (%)
2013A
2014A
2015F
2016F
F Y D ec
2,179
(431)
1,748
(230)
(329)
1,147
2,335
(136)
2,199
1,201
6
1
1
2,288
(488)
1,800
(233)
(314)
890
2,143
(215)
1,929
1,171
5
(3)
(3)
2,282
(526)
1,756
(229)
(318)
1,209
(199)
1,009
1,057
(0)
(10)
(10)
2,574
(547)
2,027
(262)
(388)
1,377
(227)
1,150
1,206
13
14
13
F ixed Assets
Other LT Assets
T o t al A sset s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
Minority Interests
Unitholders' F und
T o t al Cap it al
Share Capital (m)
Gross Debt
Working Capital
Book NAV (HK$)
Gross Gearing (%)
2013A
2014A
2015F
2016F
62,438
63,082
64,679
61,509
4
4
4
1,066
1,005
998
1,124
249
201
201
201
62,824 63,648 64,285 66,008
2,200
3,700
6,993
2,434
2,373
2,328
2,408
7,629
14,584
12,384
10,884
405
417
417
417
45,364
46,275
46,957
48,600
62,824 63,648 64,285 66,008
5,745
5,771
5,799
5,714
(14,704) (14,704) (14,704) (14,704)
(8,112)
(1,167)
(3,329)
(4,783)
8.06
8.14
8.38
7.94
23
23
23
22
F Y D ec
2013A
2014A
2015F
2016F
Pre-tax income
Tax Paid
Depr/Amort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
Assoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
1,209
1,377
2,335
2,143
(285)
(110)
(199)
(227)
77
(5)
(918)
(757)
95
109
1,208
1,270
1,104
1,259
(2,311)
(39)
(20)
(20)
13
8
10
12
(2,298)
(31)
(10)
(8)
1,978
(1,179)
(1,228)
(1,102)
(1,126)
(40)
(73)
759 (1,301) (1,102) (1,126)
(331)
(61)
(7)
126
(2,309)
(61)
(7)
126
F Y Dec
Rental income
Carpark income
Building management
fee income
Rental-related income
2013A
2014A
2015F
2016F
1,926
36
2,017
37
1,998
39
2,271
41
190
28
2,179
208
26
2,288
219
26
2,282
236
26
2,574
Office rental - HK
2015F
2016F
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 91
HK Property Sector
Fortune REIT
BUY
Taking sure-footed steps

Steady reversionary growth, resilient income
Unlocking value through ongoing enhancement works
Potential Catalyst: positvei rental reversion, asset enhancemnet

initiatives
Where we differ: Market has similar DPU estimate for FY15
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
230
9.0
210
8.0
190
7.0
170
6.0
150
5.0
130
4.0
110
3.0
Jul-11
Jul-12
Jul-13
Fortune REIT (LHS)
DPU Rev (%)

Consensus DPU (HK$)
Other Broker Recs:
Jul-14

F Y D ec ( H K $ m)
2013A
Turnov er
Net property income
Pretax Profit
Net Profit
Distribution income
DPU (HK$)
DPU Gth (%)
Div Yield (%)
Gross Gearing (%)
Book V alue (HK$)
P/Book V alue (x)
90
Jul-15
1,317
928
3,782
3,649
642
0.36
11
4.8
32
10.26
0.7
2014A
2015F
2016F
1,656
1,161
4,102
3,931
781
0.42
16
5.6
29
11.93
0.6
1,872
1,315
1,102
918
859
0.46
9
6.1
30
12.75
0.6
1,968
1,382
907
722
883
0.46
2
6.2
29
13.44
0.6
B: 7
Nil
0.46
S: 0

ICB Sector: REITs
Principal Business: Leasing of retail rental properties
Page 92
www.dbsvickers.com
ed-TH / sa- MH
Nil
0.48
H: 4
BUY with HK$9.15 TP

Steady reversionary growth, resilient income. In 1Q15,
rental reversion, albeit lower than FY14's 23.6%, stayed
healthy at 18.4%. Portfolio occupancy remained firm at 98.1%
as of Mar 2015 despite frictional vacancy at Belvedere Square
led by its asset enhancement initiative. Coupled with
contributions from Laguna Plaza acquired in Jan 15, Fortune
REIT's rental receipts should rise by 13% in FY15, followed by
5% growth in FY16. With some 60% of rental income derived
from tenants in non-discretionary retail sector with stable
demand, Fortune REIT's income stream should be sheltered
from the prevailing retail slump led by slowdown in inbound
tourism. This points to income resilience. The disposal of Nob
Hill Square at an exit yield of 2.9% not only unlocked the
property's embedded value but also improved its balance sheet.
This paves way for future value-accretive acquisitions.
Unlocking value through ongoing enhancement works.
Asset enhancement works at Belvedere Square Ph 3 is in good
progress. The first renovated area (50,000sf) has been fully
leased and re-opened for business. Higher-paying new tenants
include a new Chinese restaurant and a wide variety of
household goods stores. Renovation works for the remaining
portion is now underway to improve the layout so as to attract
high-yielding retailers. Full completion is expected in late 2015.
Fortune REIT is planning the next large scale AEI at Fortune
Kingswood with the objective of turning it into a regional mall
with the aid of better retail offerings.
BUY with HK$9.15 TP. Fortune REIT offers distribution yields
of 6.1% for FY15 and 6.2% for FY16. In view of its resilient
earnings, upside from AEI and steady growth outlook, we
remain positive on its long-term investment value. BUY with
HK$9.15 TP. Nevertheless, interest rate hike remains a key
investment risk.
At A Glance
Mkt Cap (HK$m/US$m)
Schroders Plc
F ree F loat (%)
14,083
1,883
/ 1,817
28.4
13.0
71.6
2.6
HK Property Sector
Fortune REIT
F Y D ec
2013A
Turnov er
Property op. expenses*
N et p ro p ert y in c o me
Interest (Exp)/Inc
Exceptional gain/(loss)
Total trust (expenses)/
income
Pre- T ax Pro f it
Tax
M inority Interest
N et Pro f it
D is t rib u t io n in c o me
Sales Grow th (%)
Distr. Inc Gr (%)
DPU Grow th (%)
2014A
2015F
2016F
1,317
1,656
1,872
1,968
(389)
(495)
(557)
(585)
928 1,161 1,315 1,382
(153)
(208)
(267)
(310)
3,204
3,293
215
(160)
(197)
(144)
3,782 4,102 1,102
(133)
(171)
(184)
3,649 3,931
918
642
781
859
18
26
13
17
22
10
11
16
9
(165)
907
(186)
722
883
5
3
2
* Include manager's performance fee

F Y D ec
Profit before tax
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
In v es t men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
F Y D ec
2013A
2014A
2015F
2016F
F ixed A ssets
Other LT A ssets
T o t al A s s et s
ST Debt
Other Current Liab
LT Debt
Other LT Liab
M inority Interests
Unitholders' F und
T o t al Cap it al
Share Capital (m)
Total Debt
Working Capital
Book NA V (HK$)
Gross gearing (%)
29,338
67
858
67
30,330
970
1,003
8,860
387
19,109
30,330
1,863
(9,830)
(1,048)
10.26
32
32,816
32
688
61
33,597
940
989
8,881
412
22,376
33,597
1,876
(9,821)
(1,180)
11.93
29
35,943
32
653
62
36,690
3,160
1,002
8,023
412
24,094
36,690
1,890
(11,183)
(3,446)
12.75
30
37,602
32
509
63
38,206
4,139
1,010
7,044
412
25,601
38,206
1,905
(11,183)
(4,577)
13.44
29
2013A
2014A
2015F
2016F
3,782
(112)
0
36
(2,902)
804
(5,733)
5
(5,728)
4,988
958
(588)
(153)
5,204
280
(4,707)
4,102
(165)
0
56
(2,956)
1,037
(156)
10
(216)
(51)
(726)
(214)
(991)
(170)
(119)
1,102
(184)
0
5
158
1,081
(1,406)
(1,406)
1,362
(805)
(267)
290
(35)
(1,397)
907
(186)
0
5
420
1,147
(100)
(100)
(881)
(310)
(1,191)
(144)
(144)
F Y D ec
Based rent and other
income
Charge out collection
T o t al s ales
2013A
2014A
2015F
2016F
1,070
1,356
1,523
1,600
247
1,317
300
1,656
349
1,872
367
1,968
2015F
-10 to -20%
0 to 3%
2016F
-10%
0 to 3%
Page 93
HK Property Sector
Prosperity REIT
BUY
Growth on track

Price Target: HK$3.00 (12% upside) (Prev HK$3.23)
Healthy reversionary growth to continue
Minimising interest rate risks
Potential Catalyst: Rental reversion and asset enhancement initiatives

Where we differ: Market has similar DPU estimates for FY15-16
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
3.2
205
185
2.7
165
2.2
145
125
1.7
105
1.2
Jul-11
Jul-12
Jul-13
Prosperity REIT (LHS)

FY Dec (HK$m)
2013A
Turnover
Net property income
Net Profit
Distribution income
DPU (HK$)
DPU Gth (%)
Div Yield (%)
Gross Gearing (%)
Book Value (HK$)
P/Book Value (x)
DPU Rev (%)
Cons ensus DPU (HK$)
Other Broker Recs:
342
267
696
209
0.15
10
5.6
21
4.57
0.6
Jul-14
85
Jul-15
2014A
2015F
2016F
403
312
466
231
0.16
9
6.1
29
4.70
0.6
436
339
151
244
0.17
5
6.4
27
4.77
0.6
457
356
153
249
0.17
0
6.4
27
4.84
0.6
2
0.17
S: 0
1
0.18
H: 2
B: 2

ICB Sector: REITs
Principal Business: Leasing of office and industrial properties in
Hong Kong
Page 94
www.dbsvickers.com
ed-TH / sa- MH
BUY with HK$3.00 TP

Healthy reversionary growth to continue. Currently, Prosperity
REITs portfolio occupancy stays firm at c.98-99%, supported by
improved occupancies at Prosperity Place and 9 Chong Yip Street,
both in Kwun Tong. In FY15, c.39% of leases are scheduled for
expiry. An anchor tenant, which occupies c.55,500sf or 21% of
GRA at Metropolis Tower in Hung Hom, has already committed to
renew its lease. The overall rental reversion is estimated at c.20%,
with Prosperity Millennia Plaza in North Point and Prosperity Place
in Kwun Tong faring better. Prosperity Millennia Plaza saw its key
tenants renew their contracts with decent rental growth. At
Prosperity Place, about 30% of GRA has been converted into
commercial use. Prosperity REIT aims to convert a further 20% of
space to house more higher-paying commercial tenants. With
positive rental reversion working its way through the portfolio,
Prosperity REIT should see 2-year CAGR of 6% in revenue from
FY14-16.
Minimising interest rate risks. In 1H15, Prosperity REIT entered
into an interest rate swap arrangement to hedge interest costs for
HK$1.4bn loans starting from Jun 15, when the interest rate
swaps for the same notional amount expired. Meanwhile, c.55%
of Prosperity REITs indebtedness has been hedged to fixed rates.
This should help mitigate the interest rate risk and in turn provide
Prosperity REIT with higher earnings visibility.
BUY with HK$3.00 TP. Prosperity REIT is trading at distribution
yields of 6.4% for FY15-16. In view of its steady growth prospects,
we maintain our BUY call with HK$3.00 TP
At A Glance
Mkt Cap (HK$m/ US$m)
Major Shareholders ( %)
Cheung Kong Property (Holdings)
Nove l Trend Holdings Limite d
Free Float (%)
3m Avg. Daily Val. (US$m)
3, 813
1,428
/ 492
19.3
12.3
61.5
0.8
HK Property Sector
Prosperity REIT
FY Dec
2013A
2014A
2015F
2016F
342
(75)
267
(51)
(42)
551
724
(29)
696
209
11
12
10
403
(91)
312
(70)
(69)
326
498
(32)
466
231
18
11
9
436
(96)
339
(60)
(65)
215
(64)
151
244
8
6
5
457
(101)
356
(61)
(76)
219
(66)
153
249
5
2
0
Gross revenue
Property expense
Net property income
Other expenses
Interest (Exp)/Inc
Exce ptionals
Pre-Ta x Profit
Tax
Minority Interest
Net Profit
Distribution income
Sales Growth (%)
Distr. Inc Gr (% )
DPU Growth (%)

FY Dec
Pre-tax income
Tax Paid
Chg in Wkg Cap
Othr Non-Cas h
Operational CF
Capex
Assoc, M I, Invsmt
Inve stme nt CF
Net Chg in Debt
New Capital
Dividend
Other financing CF
Fina ncing CF
Chg in Cash
Chg in Net Cash
FY Dec
2013A
2014A
2015F
2016F
Fixed As sets
Other LT As sets
Cash/ST Investments
Total Assets
ST Debt
Other Current Liabilitie s
LT Debt
Other LT Lia b
Minority Interests
Unitholders' Fund
Total Capital
Share Capital ( m)
Gross Debt
Working Capital
Book NAV (HK$)
Gross Gearing (%)
8,518
58
9
8,585
25
283
1,754
162
6,361
8,585
1,396
(1,795)
(241)
4.57
21
9,890 10,145 10,395

65
61
54
10
10
10
9, 965 10,217 10,459
338
351
359
2,801
2,801
2,801
158
202
246
6,669
6,864
7,054
9, 965 10,217 10,459
1,420
1,439
1,459
(2,854) (2,805) (2,805)
(263)
(279)
(295)
4.70
4.77
4.84
29
27
27
2013A
2014A
2015F
2016F
724
(16)
14
(467)
256
(15)
0
( 15)
5
(200)
(32)
(226)
14
9
498
(20)
29
(199)
308
(248)
0
(248)
217
(221)
(48)
(52)
7
(210)
215
(21)
5
115
314
(15)
0
( 15)
(238)
(65)
(303)
(4)
(4)
219
(22)
5
127
330
(15)
0
(15)
(247)
(76)
(322)
(8)
(8)
FY Dec
Rental income
Carpark Income
Total sa les
Key assumptions
Office rental - HK
2013A
2014A
2015F
2016F
272
21
50
342
326
24
53
403
354
25
56
436
372
26
59
457
2015F
2016F
8 to 10% 5 to 10%
Page 95
HK Property Sector
Sunlight REIT
BUY
All eyes on capital redeployment

Enhanced financial muscle for acquisition
Steadily growing
BUY with HK$4.22 TP
Potential Catalyst: Rental reversions and new acquisitons

Where we differ: Market has slightly higher DPU estimates for FY15-16
Analyst
Allen CHAN +852 2971 1932
Jeff YAU CFA, +852 2820 4912
Price Relative
HK$
Relative Index
4.2
210
3.7
190
170
3.2
150
2.7
130
2.2
110
1.7
Jul-11
Jul-12
Jul-13
Sunlight REIT (LHS)
90
Jul-15
Jul-14
FY Jun (HK$m)
Turnover
Net property income
Net Profit
Distribution income
DPU (HK$)
DPU Gth (%)
Div Yield (%)
Gross Gearing (%)
Book Value (HK$)
P/Book Value (x)
DPU Rev (%)
Cons ensus DPU (HK$)
Other Broker Recs:
2013A
630
491
1,675
286
0.18
4
4.8
26
6.52
0.6
2014A
689
535
1,230
325
0.20
13
5.4
24
7.06
0.5
2015F
751
578
324
349
0.21
7
5.7
22
7.72
0.5
2016F
765
586
334
359
0.22
2
5.9
22
7.95
0.5
B: 2
Nil
0.22
S: 0
Nil
0.23
H: 1

ICB Sector: REITs
Principal Business: Leasing of office and retail properties in Hong
Kong
Page 96
www.dbsvickers.com
ed-TH / sa- MH
Enhanced financial muscle for acquisition. In May 15, Sunlight

REIT agreed to dispose three non-core properties for c.HK$920m.
The implied exit yield is attractively low at c.2.1% based on NPI for
1HFY15. The disposals will be completed in 3Q15. Sunlight REIT
currently has no intention to repay any major bank loans with sales
proceeds. We believe the capital will be re-deployed for new
acquisitions in addition to unit repurchases and raising its dividend
payout. With stronger financial muscle and a healthy gearing (Dec
14: 23.3%), Sunlight REIT should be better positioned to explore
acquisition opportunities.
Steadily growing. Occupancy at Sunlight Tower currently stays
high at c.99%. With a spot rate of c.HK$40psf higher than
expiring rents, positive rental reversion is expected to continue in
FY16. Continued solid rental reversion is driving up the passing
rents at Sheung Shui Centre Shopping Arcade, which was 9.8% yo-y higher at HK$110.2psf as of Mar-15. Retail offerings further
improved following the recruitment of new F&B outlets. Despite
ongoing renovations, occupancy at Metro City Ph1 property
remains firm at 97-98% with healthy rental growth upon lease
renewals and new lettings. Overall, we estimate total revenue to
grow steadily by 9% in FY15. Currently, interest cost for c.78% of
total debts is hedged into fixed rates. In light of the fact that
HK$1.5bn worth of interest rate swaps (IRS) are due for expiry in
Jun16, Sunlight REIT considers entering into a forward start IRS
when opportunities arise, to minimise the interest rate risk.
BUY with HK$ 4.22 TP. Sunlight REIT offers distribution yields of
5.7-5.9% for FY15-16. In view of its defensive earnings profiles
and healthy reversionary growth, we maintain BUY with HK$4.22
TP.
At A Glance
Mkt Cap (HK$m/US$m)
Shau Kee Financial Enterprises
He nderson Land
Silchester International Investors Limited
Free Float (%)
3m Avg. Daily Val. (US$m)
6,079
1,638
/ 784
23.0
14.2
7.0
62.8
0.8
HK Property Sector
Sunlight REIT
FY Jun
2013A
2014A
2015F
2016F
Gross revenue
Property expense
Net property income
Other expenses
Interest (Exp)/Inc
Exce ptionals
Pre-Ta x Profit
Tax
Minority Interest
Net Profit
Distribution income
Sales Grow th (%)
Distr. Inc Gr (% )
DPU Growth (%)
630
(140)
491
(83)
(125)
1,443
1,726
(51)
1,675
286
8
5
4
689
(154)
535
(95)
(111)
961
1,290
(60)
1,230
325
9
14
13
751
(173)
578
(102)
(99)
377
(53)
324
349
9
7
7
765
(179)
586
(94)
(100)
391
(57)
334
359
2
3
2
FY Jun
Fixed As sets
Other LT As sets
Cash/ST Investments
Total Assets
ST Debt
Other Current Liabilitie s
LT Debt
Other LT Lia b
Minority Interests
Unitholders' Fund
Total Capital
Share Capital (m)
Gross Debt
Working Capital
Book NAV (HK$)
Gross Gearing (%)
2013A
2014A
2015F
2016F
14,409
236
329
182
15,156
450
3,875
300
10,532
15,156
1,616
(3,875)
61
6.52
26
15,391
242
345
174
16,152
487
3,872
297
11,495
16,152
1,628
(3,872)
32
7.06
24
16,557
242
340
174
17,313
492
3,872
297
12,652
17,313
1,638
(3,872)
22
7.72
22
16,105
242
1,256
174
17,777
497
3,872
297
13,110
17,777
1,649
(3,872)
933
7.95
22
FY Jun
2013A
2014A
2015F
2016F
Pre-tax income
Tax Paid
Chg in Wkg Cap
Othr Non-Cas h
Operational CF
Capex
Assoc, M I, Invsmt
Inve stme nt CF
Net Chg in Debt
New Capital
Dividend
Other financing CF
Fina ncing CF
Chg in Cash
Chg in Net Cash
1,726
(20)
21
(1,282)
445
73
38
111
(25)
(7)
(277)
(144)
(452)
103
128
1,290
(28)
24
(811)
474
(35)
(92)
(127)
(5)
(304)
(117)
(426)
(80)
(80)
377
(53)
5
140
469
(30)
4
(26)
(4)
(341)
(103)
(447)
(5)
(5)
391
(57)
5
141
480
890
8
897
(354)
(108)
(462)
916
916
FY Jun
Rental income
Carpark Income
Total sa les
2013A
2014A
2015F
2016F
506
26
98
630
552
30
107
689
598
33
119
751
608
33
124
765
Key assumptions
Office rental - HK
Retail rental (High stree t s hops) - HK
2015F
2016F
8 to 10% 5 to 10%
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 97
HK Property Sector
The Link REIT

BUY
Seeking growth and diversification

Price Target : HK$49.1 (9% upside) (Prev HK$50)
Multiple growth drivers in place
New ventures to enhance and diversify earnings over the

longer term
Potential Catalyst: Asset enhancement initiatives

Where we differ: Market has similar DPU estimate for FY16-17.
Analyst
Jeff YAU CFA, +852 2820 4912
Allen CHAN +852 2971 1932
Price Relative
HK$
Relative Index
56.2
207
51.2
187
46.2
167
41.2
147
36.2
127
31.2
107
26.2
21.2
Jul-11
Jul-12
The Link REIT (LHS)
Jul-13
87
Jul-15
Jul-14
F Y M ar ( HK $ m)
2014A 2015A
Gross rev enue

Net property income
Net Profit
Distribution income
DPU (HK$)
DPU Gth (%)
Div Yield (%)
Gross Gearing (%)
Book NAV (HK$)
P/Book NAV (x)
7,155
5,202
17,305
3,830
1.66
13
3.7
11
41.69
1.1
DPU Rev (%)

Consensus DPU (HK$)
Other Broker Recs:
7,723
5,669
27,230
4,192
1.83
10
4.1
12
51.53
0.9
B: 6
2016F
2017F
8,455
6,245
4,564
4,564
1.99
9
4.4
13
54.50
0.8
9,011
6,703
4,903
4,903
2.14
7
4.7
13
57.71
0.8
Nil
1.98
S: 2
Nil
2.12
H: 9

ICB Sector: REITs
Principal Business: Leasing of retail and car park facilities in Hong
Kong
Page 98
www.dbsvickers.com
ed-TH / sa- MH
BUY with HK$49.1 TP

Multiple growth drivers in place. The Link REIT is less
vulnerable to the retail market's slowdown. Its tenants average
monthly retail gross sales grew 6% on psf basis in FY15, which
should in turn sustain its reversionary growth in the years ahead.
To enhance the portfolio value, The Link REIT is currently
carrying out six asset enhancement projects with estimated
capex of HK$1.28bn. These include the repositioning of Lung
Cheung Plaza which will be integrated with the neighbouring
Wong Tai Sin Plaza into one shopping mall and rebranded as
Temple Mall. Synergetic benefits are expected through the
reduction of duplication in trades and enriching tenant mix.
Moreover, another ten asset enhancement projects are pending
statutory approvals.
New ventures to enhance and diversify earnings over the
longer term. Despite the acquisition of an office site in Kwun
Tong in Jan 15, The Link REIT's gearing stayed low at 12% as
of Mar 15. Even after the completion of the Beijing EC Mall
acquisition in Apr 15, there is still plenty of room for The Link
REIT to gear up for new investments in Hong Kong and China.
In China, it will seek acquisition opportunities in first-tier cities
such as Beijing and Shanghai, with a focus on mid-market
retail properties and office properties in good locations. The
Link REIT aims not only to bolster its long-term growth but also
to diversify its earnings base through these new ventures.
BUY with HK$49.1 TP. The Link REIT offers distribution yields
of 4.4% for FY16 and 4.7% for FY17. These translate into yield
spreads of 2.6-2.9%, against its average of 2%. Hence, interest
rate hike concerns should have been largely priced in. Despite
its increased risk profile led by new ventures, we maintain our
BUY call at this stage with a HK$49.1 TP.
At A Glance
Mkt Cap (HK$m/US$m)
The Capital Group Companies, Inc.
Blackrock, Inc.
F ree F loat (%)
2,293
103,431 / 13,343
9.94
7.01
100.00
40.5
HK Property Sector
The Link REIT
F Y M ar
Gross rev enue
Property expenses
N et p ro p ert y in c
Other expenses
Interest (Exp)/Inc
Exceptionals
Pre- T ax Pro f it
Tax
Minority Interest
N et Pro f it
D is t rib u t io n in c
Sales Growth (%)
Distr. Inc Gr (%)
DPU Growth (%)

2015A
2016F
2017F
F Y M ar
7,155
7,723
(1,953)
(2,054)
5,202
5,669
(222)
(437)
(365)
(327)
13,445
23,144
18,060 28,049
(755)
(819)
17,305 27,230
3,830
4,192
10
8
14
9
13
10
8,455
(2,211)
6,245
(324)
(454)
5,466
(902)
4,564
4,564
9
9
9
9,011
(2,308)
6,703
(341)
(489)
5,872
(969)
4,903
4,903
7
7
7
F ixed Assets
109,969
138,455
149,419
157,572
Other LT Assets
400
862
546
546
2,794
3,448
2,658
3,038
303
379
389
399
T o t al A sset s
113,466 143,144 153,012 161,555
ST Debt
2,825
1,940
3,500
300
Other Current Liab
2,707
2,940
2,940
2,940
LT Debt
9,699
15,130
16,630
21,030
Other LT Liab
1,884
5,028
5,028
5,028
Minority Interests
Unitholders' F und
96,351
118,106
124,914
132,256
T o t al Cap it al
113,466 143,144 153,012 161,555
Share Capital (m)
2,311
2,292
2,292
2,292
Gross Debt
(12,524)
(17,070)
(20,130)
(21,330)
Working Capital
(2,435)
(1,053)
(3,393)
197
Book NAV (HK$)
41.69
51.53
54.50
57.71
Gross Gearing (%)
11
12
13
13
2014A
2014A
2015A
2016F
2017F
F Y M ar
2014A
2015A
2016F
2017F
Pre-tax income
Tax Paid
Depr/A mort
Chg in Wkg Cap
Othr Non-Cash
O p erat io n al CF
Capex
A ssoc, MI, Inv smt
In v est men t CF
Net Chg in Debt
New Capital
Div idend
Other financing CF
F in an c in g CF
Chg in Cash
Chg in Net Cash
18,060
(469)
20
96
(13,048)
4,659
(1,023)
(713)
(1,736)
(817)
(2,800)
(403)
(4,020)
(1,097)
(280)
28,049
(585)
23
(196)
(22,438)
4,853
513
(5,123)
(4,610)
4,437
(956)
(4,030)
1,979
1,430
1,673
(2,764)
5,466
(902)
23
(10)
354
4,931
(3,945)
44
(3,901)
3,060
(4,382)
(498)
(1,821)
(790)
(3,850)
5,872
(969)
23
(10)
389
5,306
(720)
(143)
(863)
1,200
(4,731)
(532)
(4,063)
380
(820)
F Y M ar
2014A
Rental income from retail

properties
5,326
Rental income from China
properties
Gross rental receipts from
carparks
1,494
Other rev enues
335
7,155
2015A
2016F
2017F
5,711
6,114
6,542
200
205
1,656
356
7,723
1,771
370
8,455
1,881
383
9,011
2015F
2016F
-10 to -20%
-10%
0 to 3% 0 to 3%
Page 99

HK Property Sector
Page 100

HK Property Sector
Page 101

HK Property Sector
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

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This report is prepared by DBS Vickers (Hong Kong) Limited (DBSVHK), a direct wholly-owned subsidiary of DBS Vickers Securities Holdings Pte
Ltd ("DBSVH"). This report is intended for clients of DBSV Group only and no part of this document may be (i) copied, photocopied or duplicated
in any form or by any means or (ii) redistributed without the prior written consent of DBSVHK.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to
DBSVHK and/or DBSVH) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are
subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not
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information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate
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in the securities mentioned in this document. DBSVHK, DBS Bank Ltd and their associates, their directors, and/or employees may have positions in,
and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other
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Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it
may not contain all material information concerning the company (or companies) referred to in this report.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
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UPON as a representation and/or warranty by DBSVHK and/or DBSVH (and/or any persons associated with the aforesaid entities), that:
a.
such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
b.
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nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months.
ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies
and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation
was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is
published, the analyst and his / her spouse and/or relatives and/or associate who are financially dependent on the analyst, do not hold interests in
the securities recommended in this report (interest includes direct or indirect ownership of securities, directorships and trustee positions).
Page 102

HK Property Sector
COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1.
DBSVHK and its subsidiaries do not have a proprietary position in the securities recommended in this report as of the date the report is
published.
2.
DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates beneficially own a total of 1% or more of any class of common equity
securities of Fortune Real Estate Investment Trust (778 HK), Langham Hospitality Investment Limited (1270 HK) and Yuexiu Real Estate
Investment Trust (405 HK) mentioned in this document as of the latest available date of the updated information.
3.
Compensation for investment banking services:
DBSVHK, DBSVUSA, DBS Bank Ltd and/or other affiliates have received compensation, within the past 12 months, and within the next
3 months may receive or intends to seek compensation for investment banking services from Henderson Land Development Company
Limited (12 HK), The Wharf Holdings Limited (4 HK) and The Link Real Estate Investment Trust (823 HK) mentioned in this document.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking
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any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact
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referred to herein should contact DBS Vickers Securities (USA) Inc (DBSVUSA) directly and not its affiliate.
In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
DBS Vickers (Hong Kong) Limited
th
18 Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong
Tel: (852) 2820-4888, Fax: (852) 2868-1523
Page 103

HK Property Sector
As i a n E q u i t i e s S a l e s , S a l e s Tr a d i n g a n d R e s e a r c h Co n t a c t s
Singa pore
Hong Kong
London
Ne w York
Tha ila nd
Indone sia
Sa le s He a ds
Ke nne th Ta ng
Andre w Au
Gra ha m Booth
Ela ine Yu
Na risa ra Vise skosin
Rica rdo Sila e n, CFA
65-6398
852-2820
44-20-7618
1-212-826
662-657
6221 3003
Te l :
6951
4992
1881
3553
7759
4911
E ma i l :
ke nne thta ng@ dbsvicke rs.com
a ndre w_a u@hk.dbsvicke rs.com
gra ha mbooth@dbs.com
e la ine yu@ us.dbsvicke rs.com
Na risa ra V@ th.dbsvicke rs.com
rica rdo.sila e n@ id.dbsvicke rs.com
Singa pore
Hong Kong
London
Ne w York
S a l e s Tr a d i n g Co n t a c t s
Loh Chong Jin
Fra nco La w
Cha rle s Da vie s
Bre nda Wong
65-6398
852-2971
44-20-7618
1-212-826
Te l :
7304
1828
1883
3558
E ma i l :
chongjin@ dbsvicke rs.com
fra nco_la w@hk.dbsvicke rs.com
cha rle sda vie s@dbs.com
bre nda wong@ us.dbsvicke rs.com
Re giona l
Singa pore
Hong Kong
M a la ysia
Tha ila nd
Indone sia
R e s e a r c h Co n t a c t s
Timothy Wong
Ja nice Chua
Ca rol Wu
Wong Ming Te k
Cha npe n Siritha na ra tta na kul
M a yna rd Pria ja ya Arif
65-6682
65-6682
852-2863
603-2604
662-657
6221 3003
Te l :
3691
3692
8841
3970
7824
4930
E ma i l :
timothywong@dbs.com
ja nice chua st@dbs.com
ca rol_wu@hk.dbsvicke rs.com
mingte k@ a llia nce dbs.com
cha npe n@ th.dbsvicke rs.com
ma yna rd.a rif@ id.dbsvicke rs.com
D B S V ic k ers Sec u rit ies - R eg io n al O f f ic es

HO NG K O NG
DBS V ickers (Hong Kong) Ltd
18th F loor Man Yee Building
68 Des V oeux Road Central
Central, Hong Kong
Tel: 852-2820 4888
F ax: 852-2868 1523
Participant of The Stock Exchange
of Hong Kong Limited
M A L A Y SIA
A llianceDBS Research Sdn Bhd
19th F loor, Menara Multi-Purpose
Capital Square, 8 J alan Munshi A bdullah
50100 Kuala Lumpur
Tel: 603 2604 3333
F ax: 603 2604 3921
SIN G A PO R E
DBS Bank Ltd
12 Marina Boulev ard
Lev el 40
Marina Bay F inancial Centre
Tower 3, Singapore 018982
Tel: 65-6878 8888
IN D O N ESIA
PT DBS V ickers Securities (Indonesia)
DBS Bank Tow er
Ciputra World 1, 32/F
J l. Prof. Dr. Satrio Kav . 3-5
J akarta 12940, Indonesia
Tel: 62-21- 3003 4900
F ax: 62-21- 3003 4943
U N IT ED ST A T ES
DBS V ickers Securities (USA ) Inc
777 Third A v enue
Suite 26A
New York, New York 10017
Tel: 1-212-826 1888
F ax: 1-212-826 8704
Member of F INRA and SIPC
U N IT ED K IN G D O M
DBS V ickers Securities (UK) Ltd
4th F loor Paternoster House
65 St Paul's Churchy ard
London EC4M 8A B
Tel: 44-20-7618 1888
F ax: 44-20-7618 1900
Regulated by The F inancial Serv ices A uthority
T H A IL A N D
DBS V ickers Securities (Thailand) Co Ltd
15th F loor Siam Tow er
989 Rama 1 Road
Pathumwan, Bangkok 10330
Tel: 66-2-658 1222
F ax: 66-2-658 1269
Page 104

HK Property Focus: Stable Residential Prices on Solid Local DemandHome price to median household income ratio

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HK Property Focus: Stable Residential Prices on Solid Local DemandHome price to median household income ratio

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China / Hong Kong Industry Focus

DBS Group Research . Equity

Hong Kong great place to make

Stable residential prices on solid local demand

Central to lead the pack in the office market upturn;

Developers are attractively valued; prefer office

Top picks: Cheung Kong Property, SHKP and

Market view. Local homebuyers are supporting the

Recommendation and valuation

Propert y Dev elopers

Source: Thomson Reuters, DBS Vickers

(852) 2820 4912

Appendix: Asset breakdown

Appendix: NAV sensitivities

Cheung Kong Property (1113 HK)

Hang Lung Properties (101 HK)

Henderson Land (12 HK)

K. Wah International (173 HK)

Kerry Properties (683 HK)

Lai Sun Development (488 HK)

MTR Corporation (66 HK)

New World Development (17 HK)

Sino Land (83 HK)

Sun Hung Kai Properties (16 HK)

Tai Cheung (88 HK)

Wheelock & Co (20 HK)

Wing Tai Properties (369 HK)

Great Eagle (41 HK)

Hongkong Land (HKL SP)

Hysan Development (14 HK)

Swire Properties (1972 HK)

Wharf Holdings (4 HK)

Champion REIT (2778 HK)

Fortune REIT (778 HK)

Prosperity REIT (808 HK)

Sunlight REIT (435 HK)

The Link REIT (823 HK)

Note: Prices used as of 8 July 2015

China / Hong Kong Industry Focus

for grey goods traders/day trippers should be hit the most.

China / Hong Kong Industry Focus

Difficult to meet the down-payment requirement. Since the

Tighter mortgage lending rules for mass market projects. In

Ratio of housing price to household income (private

Source: Centaline Property Agency, Census and Statistics Department,

Housing affordability ratio

Source: Centaline Property Agency

China / Hong Kong Industry Focus

Number of Registered Marriage in Hong Kong

Source: Centaline Property Agency

Yearly primary market transactions value

Number of Divorce Decrees Granted in Hong Kong

Parental support. Nowadays, it is increasingly common for

Source: Centaline Property Agency

Monthly primary market transactions volume

Source: Centaline Property Agency

China / Hong Kong Industry Focus

Kwan O. La Lumiere in Hung Hom, launched in late Feb, has

New project launches since Jan 2015

% sold A SP (HK $ psf )

Source: Companies, Local press, DBS Vickers

Thanks to the buoyant primary market, we estimate that

volume in the secondary market averaged c.3,300units per