1Q2020 operating results missed expectation with net earnings downYoY by 17.6% to HK$986 mn. Despite the impact from the COVID-19outbreak, revenue in 1Q2020 grew slightly by 0.6% to HK$3,415 mn mainlydue to the better performance in water business and properties businessduring the period. Profit before tax in the first quarter decreased by 22.0% toHK$1,387 mn, which was caused by a decrease in the fair value of theCompany's investment properties. In 1Q2020, sales of other water resourceprojects jumped YoY by 54.7% to HK$652 mn, while sales from GD Landsurged 143.4% YoY to HK$441 mn.
　　We have trimmed our earnings estimates for GDI as its non-corebusinesses are expected to be under pressure in 2020. We expect thetotal sales of the non-core businesses （excluding water and propertybusinesses） of GDI to fall YoY by 22.9% to HK$2.53 bn in 2020. However, weexpect a YoY sales rebound of 32.7% to be seen from these non-corebusinesses in 2021. In contrast, we expect water resources and propertyinvestment and development sales to experience stable growth. Our revisedEPS estimates from 2020 to 2022 are HK$0.745/ HK$0.845/ HK$0.878,respectively.
　　We maintain the investment rating of "Accumulate" but cut our TP toHK$17.00. We remain positive on the outlook of GDI and maintain our currentinvestment rating, but we cut our TP due to earnings estimates revisions. Thenew TP corresponds to 22.8x/ 20.0x/ 19.4x FY20 to FY22 PER or 2.6x/ 2.5x/2.4x FY20 to FY22 PBR.