国华网安(000004.CN)

Henderson Land:Starting to harvest

时间:12-12-12 00:00    来源:大和证券(香港)

What’s new

The uncertainty resulting from thegovernment’s measures has startedto ease.

What’s the impact

Still in harvesting mode.

Although the sale of The Reach wasdisrupted by the announcement ofnew government measures,Henderson Land has sold more than70% of Double Cove Phase 1. Asmore than 70% of the units in TheReach are less than 700 sq ft in size,we expect end-user demand forthem to be solid.

In our view, the sale of Double Coveand The Reach, as well as upcomingprojects from redeveloping oldbuildings, marks the beginning of aharvesting phase for the company.

As Double Cove and The Reach aremulti-year projects, we think theircompletion will augment HendersonLand’s property sales profit growthover 2012-14.

Abundant agricultural land andother sites to capitalise onland-conversion opportunities.

With more than 40m sq ft ofagricultural land (of which 9m sq ftis in the government’s NewDevelopment Areas), the companywould be the biggest beneficiary ifthere were progress in facilitatingagricultural-land conversion.

China earnings taking off.

Positive rental reversions at WorldFinancial Centre in Beijing and newcontributions from Shanghaiproperties should underpin acontinued rise in gross rentalincome from China, which nowexceeds HKD1bn. We also expect itsChina property-sales profit to pickup in the coming years, as it rolls outprojects in more cities.

What we recommend

We believe the company isharvesting its investments inagricultural land, old buildings, andChina. With the uncertainty relatedto the government measures startingto ease, we upgrade our rating toBuy (1), from Hold (3), and raise oursix-month target price to HKD67.30,on a 30% discount (40% previously)to our end-2013 NAV forecast ofHKD96.2. The key risks to our callwould be a significant fall inproperty demand in Hong Kong.