We have revised up Henderson Land’s (00012 HK or "HLD") contractsales to reflect the impact of the new vacancy tax. Looking forward, amidconcerns about the vacancy tax, HLD should pick up the pace of unsoldresidential property sales. We have revised our Hong Kong contract salesprojections by +33.8%/ +15.8%/ +8.5% in 2018/ 2019/ 2020, respectively. Therevised contract sales forecasts will be translated into 1.0%/ 21.9%/ 47.1%increase in recognized property sales in 2018/ 2019/ 2020, respectively.
HLD made a bonus issue of 1 new share for every 10 shares held byshareholders. The 1-for-10 bonus share was effectively issued on 21 June,which raises HLD’s share base from 4,001 million to 4,401 million. Theissuance of bonus share does not affect HLD’s fundamentals.
We revise our TP to HKD46.97 based on the enlarged number of sharesand maintain our "Neutral" investment rating. Even though we expectHLD to speed up its residential property sales given the new vacancy tax, weexpect that the market should be able to digest the unsold units without priceconcession. We slightly revise up our NAV discount on HLD from 32% to 35%to reflect the negative impact on the stock market brought by a hastened ratehike cycle in the US. Our new TP implies 10.3x/ 12.3x/ 17.3x FY18/ FY19/FY20 underlying PER and 0.65x/ 0.61x/ 0.58x FY18/ FY19/ FY20 PBR.