Maintain Hold on lack of imminent share price catalyst; target price HK$47.9While we like Henderson’s large agricultural land reserve/good progress inacquiring projects via urban redevelopment （a competitive edge in alternativeland-banking so as to ensure better profitability）， in light of recent tighteningtowards Chinese companies acquiring foreign real estate assets, we doubt ifthe pace of disposal gains （a key boost to financial performance in FY16 and1H17） can be sustained going forward. We see few imminent catalysts for thestock and its current valuation is close to its fair value, in our view. Wemaintain Hold with a target price of HK$47.9.
　　1H17 underlying profit +124% YoY to HK$10,731mn, boosted by disposal gainHenderson reported 1H17 revenue +31% YoY to HK$12,753mn, boosted by a51% YoY surge in development sales bookings. Rental revenue rose slightly by1.5% YoY to HK$2,779mn. Including contributions from associates, rentalrevenue was up 1.8% YoY （HK: +3.1%, China -3.3%）； the China portfolio wasdragged by Rmb depreciation, whereas rental in Rmb was up 2.2% YoY.
　　Boosted by HK$3,944mn disposal gains, underlying profit rose 124% YoY toHK$10,731mn （HK$6,898mn net of disposal gains）。 An interim dividend ofHK$0.48/share was declared （+14.3% YoY）。
　　Meaningful progress in acquisitions of urban redevelopment projectsHenderson saw meaningful progress in the acquisition of urban redevelopmentprojects in 1H17. In particular, six additional projects reached the “at least 80%stake” status, bringing the total number of redevelopment projects to 45 bymid-17 （39 projects by end-16）， with total attributable GFA of about 4mn sf,worth HK$27.8bn or about HK$7,000/sf. In addition, there are 32 urbanredevelopment projects currently undergoing ownership consolidation（ownership of more than 20% but less than 80%）， with total GFA of 0.79mn sf（or about 1.93mn sf upon successful consolidation of ownership）。
　　Target price of HK$47.9 is based on sum-of-the-parts approachOur target price is based on a sum-of-the-parts approach （previously targetdiscount on overall NAV） and implies a 2017E PE of 15x. We believe applying a5-7x PE to HK property development and a 34% target discount to ourestimated value of the respective investment property portfolio is appropriatein an ex-growth market. This is now our new valuation methodology adoptedacross HK developers under our coverage. Risks: government policy, salesmomentum and interest rate trends.