HK Land

HK Land: CLSA upgraded the counter to a BUY, with PT of US$9.00, implying 22% upside. Current valuation is undemanding at 29% NAV discount vs. 5-year average of 24% and office upcycle average of 18%. Current PB of 0.68x also looks undemanding against 5-year average of 0.67x and upcycle average of 0.84. CLSA have upgraded FY13 Central office rental forecast from +5% to +8%. They expect just a 2% rental decline in 1H13 to be followed by a 10% rental increase in 2H13. The expectations for HKLand is still among one of the lowest in the sector, and that the counter correlates closely with HKEX (3383HK) which seems to still have lots of steam behind its rally. The improvement in the Hong Kong stock market year-to-date and higher HKEx share price, which have been the leading indicators of Central office rentals and HKLand share price, are positive signals for HKLand.