• Underlying profit is expected to be 2% higher with growing rental receipts. 
• Residential sales earnings should remain a key swing factor on earnings. 
• BUY with US$8.57 Target Price. 

What ’s New 

Hongkong Land will announce its interim result on 26 July. We forecast the company’s underlying profit be 2% higher y-o-y at US$530m on back of increased rental earnings. Interim DPS is expected to stay stable at US$0.06. 

Gross rental earnings should grow 8% driven by positive rental reversion, improved occupancy of Central office portfolio and contributions from newly completed WF Central in Beijing. In Singapore, residential sales are recognised using percentage of completion method, with Sol Acres and Lake Grande being the main contributors in 1H18. In China, residential sales earnings should come from projects in Chongqing and Chengdu and booking of development profits should remain a key swing factor on the company’s earnings. 

Key things to watch for include the vacancy and rental reversion trend of Central’s office/retail portfolios and Singapore’s office portfolio, the company's outlook of the office market in Hong Kong/Singapore, dividend paid, colour on share buyback, and an update on new investments in the region, among others.

Source: DBS Research - 24 Jul 2018