below our expectations. Revenue reached HKD21,568mn, up 31.5% yoy.Net profit reached HKD2,702mn, down 21.4% yoy. EPS reached HKD2.503,down 21.4% yoy. Dividend reached HKD1,081mn, with dividend payout ratioof 40%, up 6.1ppt yoy, positive to stock price.
Key points: 1) Sell Shanghai Qingpu Lot E. SIHL sold Shanghai QingpuLot E and expected to gain HKD1.2bn in 2014. Qingdao International BeerCity began to presale, with planned GFA of around 70k sqm. Xi’an Chanbastill has saleable GFA of 1.5mn sqm. We think its property gross margincould be only improved slightly. 2) SIIC Environment (SIE) grew fast in2013. SIIE’s revenue reached RMB1.2bn, up 50% yoy, with sewagetreatment and water supply capacity of 4.1mn tonnes, up 17.9% yoy. Itswaste handling capacity also reached 3,200 t/d. 3) Other new business isgrowing fast. SIHL has acquired 200MW solar station and began toincrease more financial business in Shanghai Free Trade Zone (FTZ).
Target Price is HKD31.00 and investment rating is ‘Accumulate’. SIHLmight benefit from Shanghai FTZ. But its property business margin is verythin with pressure on sales. Infrastructure is its future profit driver. OurFY14-16 earnings estimates are HKD2.887, HKD2.795 and HKD3.082. OurTP maintains at HKD31.00, representing 10.7x 2014 PE and 0.9x 2014 PB,40.0% discount to our NAV valuation.