Underlying net profit declined 26.0% yoy in 2018 due to decreasingsaleable residential units. Revenue contributions from property salesdropped 64.1% yoy in 2018, leading to a 16.0% yoy fall in revenue toHKD9,408 million. Property leasing business performed well in 2018.Underlying net profit declined 26.0% yoy to HKD4,093 million in 2018, 5.2%above our expectations.
HLP divested some non-core investment properties in Hong Kong tosupplement the decrease in contribution from development properties,resulting in HKD96 million in gains on disposal in 2018. Leasing portfoliodelivered decent results in both Hong Kong and mainland China. Totalleasing revenue increased 3.0% yoy in Hong Kong with a significant 7.3%yoy growth in residential & serviced apartments. Rental growth momentum inmainland China was particularly strong in 2H18 with 6% yoy growth in RMBterms. However, Shenyang Forum 66 still remained the worst performingshopping mall in terms of revenue growth, but there were signs ofimprovement.
We maintain our TP at HKD19.60 and revise our investment ratingdownward to "Neutral". HLP is unlikely to raise dividend during 2019-2020,but we are expecting a 1 cent increase in DPS in 2021. Our TP represents a45% discount to the revised 2019 NAV estimate of HKD35.7. Our TP implies24.3x/ 25.0x/ 23.9x for 2019/ 2020/ 2021 underlying PER and 0.63x/ 0.62x/0.62x for 2019/ 2020/ 2021 PBR.