In our view, SHKP has strong operations and financial position, with a goodcompletion pipeline in the coming years. We are particularly impressed afterlearning from management that it is exploring alternative ways of landbanking（such as farmland conversion and lease modification） in light of intensifyingcompetition from Mainland developers in government land tenders. We believeprudent financial discipline on land acquisitions should lead to better marginprotection. However, as SHKP has already outperformed comparable peers by5.2 percentage points YTD, we prefer peers like CK Property and NWD atcurrent valuation. Maintain Hold.
　　1HFY17 underlying earnings +57% YoY to HK$14,608mn; dividend +5% YoYSHKP reported a 33% YoY rise in 1HFY17 revenue to HK$46,343mn, boostedby markedly higher sales bookings in HK and China. Rental revenue rose 4%YoY to HK$8,865mn on positive rental reversion and higher rents from newleases. Blended gross margin expanded 4 pct points to 43%, on significantlyhigher profit margins in HK. Headline profit rose 40% YoY to HK$20,659mn.
　　Excluding fair value gains/non-recurring items, underlying profit surged 57%YoY to HK$14,608mn, but was below our HK$15,640mn estimate on higherthan–expected taxes. SHKP has declared an interim dividend of HK$1.1/share（+4.8% YoY）。 The dividend hike is in line with our expectations.
　　Management expects positive rental reversion of 5-15% in FY17In 1HFY17, gross rental income rose 4% YoY to a new record high ofHK$10,803mn, comprising a HK$8,643mn contribution from HK （+4.4% YoY），HK$1,837mn from China （+4.5% YoY in HK$ terms, +12% YoY in Rmb terms）and HK$323mn from Singapore （+1.9% YoY）。 Overall occupancy for theportfolio stood at a high 95% as of Dec-16. Management is currently expectingpositive rental reversion of 5-15% in FY17 for its HK retail/office portfolio. Inour view, the rather upbeat guidance （vs. some peers already guiding fornegative reversion） reflects SHKP's strong management as well as the boostfrom numerous projects undergoing asset enhancement.
　　Target price based on 35% discount to our revised NAV of HK$179.6/shareOur target price is based on a 35% discount to our revised NAV estimate ofHK$179.6/share （HK$174.4/share）， which implies a 2017E PE of 14x. Our targetdiscount is larger than the peer average （at 30%） on its relatively high exposureto the China retail sector where growth is slowing down on a softeningeconomy and increasing threat from e-commerce. Key risks: externaleconomic shocks, liquidity outflow, rate hikes and government measures,which may be both upside and downside risks.