Earnings in 1Q2019 jumped YoY by 10.8% YoY, in line with ourexpectation. Sales and net profit in 1Q2019 went up YoY by 3.6% and10.8%, respectively. Revenue growth in the first quarter of 2019 was mainlydue to the better performance of water resources business and propertyinvestment and development business during the period. We expect sales ofGD Land to further ramp up in 2Q2019 as two property projects in tier-1 citiesare currently in the sale stage. GDI acquired new water projects in April 2019at a consideration of approximately HK$1.9 bn, and we expect that morewater projects will be acquired in the future as the Company maintained a netcash position of more than HK$8 bn as at the end of 2018.
We raise our earnings estimates for the period from 2019 to 2021 undermore upbeat assumptions. Water resources sales and property investment& development sales together contributed 74% of consolidated revenues ofGDI in 2018 and is expected to further rise to 77% in 2019. Consolidated netearnings of GDI from 2019 to 2021 are estimated to grow by 16.3%/ 7.3%/0.6% to HK$5,830 mn/ HK$6,257 mn/ HK$6,292 mn, respectively. EPSestimates from 2019 to 2021 are HK$0.8918 / HK$0.9571/ HK$0.9624,respectively.
We reiterate the "Accumulate" investment rating and raise the TP toHK$17.80. We reiterate our "Accumulate" investment rating given theCompany’s stability, high growth prospect, high dividend yield and thedefensiveness of its businesses. We raise our TP to HK$17.80 and the newTP translates to 20.0x FY19 PER/ 18.6x FY20 PER or 2.7x FY19 PBR/ 2.6xFY20 PBR.