Underlying net profit declined 3.9% yoy in 1H19 as there were norevenue contributions from property sales. Hang Lung Properties’ （"HLP"）property leasing revenue edged up 2.1% yoy to HK$4,204 million, withleasing revenue going up by 0.9% yoy to HK$2,190 million in mainland Chinaand by 3.4% yoy to HK$2,014 million in Hong Kong, respectively. There wereno revenue contributions from property sales during the interim period. HLP’smainland China portfolio delivered promising results as total leasing revenuegrew 7.4% yoy in RMB terms, supported by increase of 8.2% yoy and 4.5%yoy in the shopping mall portfolio and office portfolio, respectively.
　　Shopping malls in mainland China performed very well in 1H19. Allshopping malls in mainland China recorded positive rental revenue growth （inRMB terms） in 1H19, except for Shanghai Grand Gateway 66 due torenovation. Strong improvement in retail sales has been seen in and outsideShanghai. 4 new investment properties in mainland China will come online in2H19. Leasing portfolio in Hong Kong experienced mild growth in 1H19, butwe are cautious about growth in 2H19.
　　We raise our TP to HK$20.40 and revise our investment rating upward to"Accumulate". We reiterate our view that HLP is unlikely to raise dividendduring 2019-2020 given its high capital requirement on capex for both theinvestment properties under development and land cost payment for theHangzhou project. Our TP implies 21.2x/ 19.5x/ 18.7x for 2019/ 2020/ 2021underlying PER and 0.65x/ 0.64x/ 0.63x for 2019/ 2020/ 2021 PBR.