FY16 core NP miss expectations
　　Shenzhen Investment announced its FY16 results:
　　revenue +15.9% YoY to HK$21.35mn and core net profit+21.1% YoY to HK$2.61bn, with core diluted EPS of HK$0.35.
　　Full-year DPS was HK$0.22, implying a lucrativedividend yield of 6.1% and a 64.3% dividend payout ratio（based on core NP）。 This includes HK$0.05/sh to celebrate its20th anniversary of being listed on the HKEx. Thus, we believethe payout ratio will return to its normal level in FY17/18e.
　　GPM jumped +4.1ppt to 38.7% thanks to theconsiderable contribution of SZ projects, which had a GPMof 49.9% and took a 72.1% share of booked revenue.
　　Net gearing was 38.9%; completed stock wasHK$7.51bn （contracted by 17%）。 The strong balance sheetcan support any asset injection or land acquisitions in FY17e.
　　Trends to watch
　　FY17e sales target is Rmb19.1bn, on a par with FY16. Ithas Rmb31bn of saleable resources – flat with Rmb29bn in FY16– over 80% of which is in SZ. It is wise to scale back slightly toprotect GPM during the tightening period. We expect it may beatexpectations when the physical market becomes warmer.
　　Earnings forecast
　　Maintain FY17e/18e core NP forecast at HK$2,885mn/3,652mn.
　　Valuation and recommendation
　　The stock is trading at 10.3x 2017e P/E. Maintain BUY andraise TP by 6% to HK$4.50 （25% upside）， at 11.8x/9.4x2017e/18e P/E. We revise up its 2017e NAV/sh toHK$8.21/sh due to its updated land bank and schedules. NewTP is at a 45% discount to 2017e NAV.
　　Risks
　　More significant upgrades are released to SZ tightening policies.