JPMorgan - Hkproperty 2011 Outlook

Asia Pacific Equity Research
21 November 2010
HK Property 2011 Outlook

Policy intervention getting intensified; stick to landlords
• HK residential property to be the battlefield between policy Hong Kong

interventions and liquidity: The HK government finally appears to be Property
determined to curb housing prices with an unprecedented heavy stamp duty AC
Lucia Kwong, CFA
levied on speculators. We believe this is a strong dose to calm down the (852) 2800-8526
housing market, which has remained heated despite earlier measures and we lucia.yk.kwong@jpmorgan.com
expect 5% downside in the near-term. Although we see a 15% upside in AC
Amy Luk, CFA
2011, policy measures could carry on. (852) 2800 8524
• Landlords a strong preference to ride on solid economic growth and amy.kp.luk@jpmorgan.com
prevailing low cap-rates: Given the new measures, we expect slower Benjamin Lo, CFA
property sales that drive down development NAV. In contrast, commercial (852) 2800-8598
properties are less vulnerable to policy interventions, and are buoyed by the benjamin.mc.lo@jpmorgan.com
resilient demand without significant cap rate expansion. We upgrade our Ryan Li
NAV estimates of landlords by 9-27% while those of developers range from (852) 2800-8529
+3 to -10%. We expect landlords to trade at narrower than LT average NAV ryan.lh.li@jpmorgan.com
discounts given the lower resistance to commercial rental growth and J.P. Morgan Securities (Asia Pacific) Limited
abundant liquidity, while most developers will trade at LT average
discounts or slightly below. As a result, we upgrade Hongkong Land (proxy Hong Kong developers vs investors
Index: 1/1/2007 = 100
to HK office) to OW from N and downgrade Sino Land (largest exposure to 190
Property developers
HK residential) to N from OW. 170 Property investors
• Prefer Wharf, HKL and Hysan: Overall we are neutral on HK Property as 150
130
it offers only 12% upside. Our top picks are Wharf, HKL and Hysan. 110
Positive catalysts would include high earnings which can reflect in higher 90
dividends or increase in book value and revaluation gains. Risks to our PT 70
50
are cap rate expansion due to interest rate hikes, change in liquidity and fund Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10
raising risks. Source: Bloomberg, J.P. Morgan

Hong Kong property – Summary of price target and net asset value changes
Last Price Potential
(HK$) New Old Dec-2011 Price Targets upside/ NAV
Company Ticker 10-Nov-10 Ratings Ratings New Old % Change (downside) New Old % Chg
Cheung Kong 0001.HK 123.80 OW OW 141.4 115.0 23% 17% 169.8 151.3 12%
Sun Hung Kai 0016.HK 135.50 OW OW 155.0 138.0 12% 15% 180.4 174.5 3%
Henderson Land 0012.HK 57.80 OW OW 63.0 55.0 15% 11% 78.9 87.5 -10%
Sino Land 0083.HK 16.56 N OW 14.9 16.5 -10% -9% 21.3 20.9 2%
New World Dev 0017.HK 16.28 OW OW 19.1 19.1 0% 20% 29.0 29.7 -2%
Kerry Properties 0683.HK 42.65 OW OW 51.5 45.0 14% 23% 73.8 64.5 14%
Hang Lung Pty 0101.HK 36.40 N N 35.0 33.0 6% -3% 34.8 33.8 3%
Hang Lung Group 0010.HK 50.70 N N 46.5 43.0 8% -7% 62.8 62.8 0%
Great Eagle 0041.HK 24.60 OW OW 27.8 24.9 12% 14% 50.6 46.6 9%
Hysan 0014.HK 32.50 OW OW 38.1 38.1 0% 17% 50.2 50.2 0%
Hongkong Land HKL.SP 7.05 OW N 8.8 5.5 60% 28% 9.9 7.8 27%
Swire Pacific 0019.HK 120.90 OW OW 128.2 128.2 0% 5% 183.0 183.0 0%
Wharf 0004.HK 54.80 OW NC 65.5 NA NA 20% 76.1 NA NA
Fortune REIT FRT.SP 4.01 OW OW 4.9 4.9 0% 22% 4.9 4.9 0%
Link REIT 0823.HK 24.35 N N 27.0 27.0 0% 13% 27.0 27.0 0%
Champion REIT 2778.HK 4.50 N N 4.1 3.7 10% -10% 4.1 NA NA
Average 9% 12% 3.9%
Sources: Company data, Bloomberg, J.P. Morgan estimates
See page 60 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Lucia Kwong, CFA Asia Pacific Equity Research
(852) 2800-8526 21 November 2010
lucia.yk.kwong@jpmorgan.com
Table of Contents
Hong Kong Property 2011 Outlook .........................................3
Key theme: Increasing resistance on housing price growth; go commercial ...............3
Impact of latest round of restrictive policies................................................................3
Sector strategy..............................................................................................................5
Stock picks...................................................................................................................6
Key risks to our investment case..................................................................................9
Residential market outlook....................................................11
Are we in a property bubble?.....................................................................................12
Commercial property outlook ...............................................16
Company earnings and NAV outlook ...................................20
Earnings downgrade, NAV maintained .....................................................................20
Summary of NAV breakdown ................................................28
Summary of financials: Cheung Kong Holdings .................40
Summary of financials: Sun Hung Kai Properties ...............41
Summary of financials: Henderson Land Development .....42
Summary of financials: Sino Land Company Ltd. ...............43
Summary of financials: New World Development ...............44
Summary of financials: Kerry Properties .............................45
Summary of financials: Hang Lung Properties....................46
Summary of financials: Hang Lung Group...........................47
Summary of financials: Great Eagle Holdings .....................48
Summary of financials: Hysan Development .......................49
Summary of financials: Hongkong Land Holdings..............50
Summary of financials: Swire Pacific ...................................51
Summary of financials: Wharf Holdings...............................52
Summary of financials: Link REIT.........................................54
Summary of financials: Champion REIT ..............................55
Valuations: NAV and P/BV bands .........................................56
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(852) 2800-8526 21 November 2010
Hong Kong Property 2011 Outlook

Key theme: Increasing resistance on housing price growth;
go commercial
Real estate will be the battlefield between liquidity and policy interventions
Consensus view is beginning to be that QE2 would pump excess liquidity into the
Hong Kong economy. Contrary to the Asian emerging markets where there could be
incremental currency appreciation or capital controls, the HKD/USD peg offers no
flexibility and liquidity can be easily be transferred into asset inflation, the most
prominent being real estate. The eventual implementation of QE2 would fuel asset
price growth in the next 6-9 months. The battle between policies and liquidity would
continue in the next 9-12 months, in our view.
Restrictive measures may be partly effective, finally

The government has announced various rounds of tightening policy every few
months starting Feb 2010, but the original belief is that the measures are reactive and
ineffective to curb speculative demand on residential. The announcement of the new
round of measures on Nov 19 (Friday) caught us by surprise especially on imposing
the heavy Special Stamp Duty (SSD). Although the government stepped up in the
strength and depth of its restrictive policy, we think the impact may be short-term
and may only impact projects which attract a lot of speculative demands.
But required return is coming down sharply in a low-rate environment

With the inflation hedge becoming imminent and real estate increasingly
commoditized, the required returns (cap rates) would stay low if not compressed
further, given the low funding costs and returns from alternative means of
investments. For long-term investors who do not intend to flip the property in 1-2
years and have high cash balance for downpayment, the policies will not affect their
home purchase plan at all. The commercial properties are even less affected by the
policies which mainly target residential properties.
Impact of latest round of restrictive policies

Special Stamp Duty (SSD) – curbing speculative demand
According to the latest announcement by the Government on the SSD, all home
buyers with the official Sales and Purchase Agreement signed on or after Nov 20 will
be subject to an ad valorem SSD on top of original stamp duty. Such SSD is charged
on people who resell their property within 24 months after purchases, and is set at a
rate of 5% to 15% (regressive with respect to length of ownership) calculated based
on the sales price (refer to Table 3 for details). As a result, investors who flipped
their property within 24 month, their transaction costs would become 5% to 15% (on
transacted value) more expensive. We believe this SSD will lead to a one-off
adjustment on housing prices and should drive away most of the speculators demand
which aim at a shorter investment time-frame, and this may also increase their
duration and force them to take into consideration the impact of interest rate changes
for a longer time frame when making such investment decision. Net-net, sales
volume in the short term will shrink significantly and put pressure on price. Given
that year-to-date property price rose 20%, we expect property price to fall by 5% and
expect full year 2010 price change to be +15%.
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(852) 2800-8526 21 November 2010
Residential rents may cease its uptrend

In the residential rental market, we expect the implementation of SSD will lengthen
the average holding period of properties, so property owners will be more inclined to
lease out their residential properties. This may create a supply influx in the rental
market and may cease the uptrend in residential rents (which was up 13% till
3Q2010). Overall speaking, we believe supply of property for lease will increase and
this will put pressure on rent, but the impact may not be as direct compared to
property price and rent should stay stagnant for some time.
Further lowering loan-to-value (LTV) ratio – limited impact

Apart from the introduction of SSD, the HKMA also further lowered the LTV for
residential property valued HK$8 mn or above, home not for self-occupation, home
held via registered company and all commercial property (Refer to Table 1 for
details). In our view, the lowering of LTV will not have much impact on the
transaction volume in the high-end segment, as a lot of buyers in that segment are
wealthier and can fund the increased down payment by varying their assets
allocations. Especially for Mainland buyers, who account for one-third of the luxury
market (according to Centaline), plenty of them are cash-rich and do not take up any
mortgage (i.e. all equity) upon purchases. Long-term investors, we believe, will trade
down to more mass-end segments with smaller lump sum, and more people may
bridge the funding gap by using mortgage insurance at HKMC. Impact on the
primary market in particular may not be big too as there are a lot of ways developers
could adopt to help the buyers. Some developers (e.g Cheung Kong via AMTD) offer
second mortgage to bridge the buyers’ funding gap, or some offer more flexible
payment methods which decrease the initial lump sum buyers have to pay.
Table 1: New restrictive policies announced on Nov 19, 2010

Measures JPM view on potential impact
Increasing land supply
(1) Target to make available enough land for 20,000 private residential units annually Takes time to realize; current Land Sales by Application system does not favor a
over the next 10 years big increase in land supply
(2) Making sure the Land Application List for the next Financial Year will have more than
9,000 units
Curbing speculative demand
(1) Introduction of a special stamp duty (SSD), which will be charged equally to buyers Effective in driving speculators away from the housing market, but long-term
and sellers on property resold within 24 months investors are not affected; expect lower transaction volume; part of the costs could
(2) Deferred payment of stamp duty (including the special stamp duty) is disallowed for be borne by vendor which are reflected in the transacted prices
all property (vs >HK$12 mn property value before)
Further restrictions in mortgages
Hong Kong Monetary Authority (HKMA)
(1) For residential valued at $12 mn or more, the LTV ratio is capped at 50% (vs 60% Long-term investors may trade down to mass-end segments; more reliance on
previously) mortgage insurance. Some developers may offer second mortgage to bridge the
(2) For residential valued at $8 to $12 mn, the LTV ratio is capped at 60% (vs 70% funding gap
previously), maximum loan amount is HK$6.0 mn (new)
(3) For residential valued at below $8 mn, the LTV ratio will maintain at 70%, but
maximum loan amount is HK$4.8 mn (new)
(4) For residential not intended to be self-occupied, the LTV ratio is capped at 50% (vs
60% previously)
(5) For residential bought under registered Company, the LTV ratio is capped at 50% (vs
70% previously)
(6) For industrial and commercial properties, the LTV ratio is capped at 50% regardless Minimal impact on office and retail transactions given already low LTV
the property value (vs 70% previously)
Hong Kong Mortgage Corporation (HKMC)
(1) Mortgage loan with 90% LTV ratio, the max. mortgage size will be lowered to
HK$6.12 mn ( vsHK$7.2 mn previously)
Source: HKSAR Government.
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(852) 2800-8526 21 November 2010
Table 2: New stamp duty schedule (including Special Stamp Duty)

Criteria Stamp duty to buyers Stamp duty to both buyers
and sellers
Property held 6 months or less Normal stamp duty 15% on transaction value
Property held for 6-12 months Normal stamp duty 10% on transaction value
Property held for 12-24 months Normal stamp duty 5% on transaction value
Property held for more than 24 months Normal stamp duty None
Source: HKSAR Government, J.P. Morgan.
Sector strategy
Housing prices still risk on the upside
We were bullish on HK property for 15 months given the liquidity, increasing
Mainland Chinese participation (though now accounting for only 5-10% of
transactions), economic fundamentals remaining intact etc. The differences between
now and a year ago are:
1) the scale of liquidity (US$600B add-on for QE2) and prolonged low-interest rate
environment, which raises risk appetite massively
2) stronger asset price cushion backed by resilient economic growth, so although
housing price rally exceeded expectations in YTD10 this can be explained by
fundamentals and not liquidity yet
3) land supply remains contained vs. our anticipation of influx of supply
4) residential rents are getting less affordable – which induces even more forced /
buying by end-users
5) Hong Kong property market may be increasingly "Chinalized" - More funds

from affluent Mainland Chinese households may flow to Hong Kong property
assets and treat properties as commodities despite the ultra-low yields.
Housing prices may ease off by end-10 due to policies but have 15% upside in
2011
With the government getting more determined to squeeze the housing bubble, the
residential prices are under pressure in the near-term. Nevertheless, housing prices
are still supported by limited housing supply together with prevailing low borrowing
costs, and could have a 15% upside before affordability hits 50% (the maximum
mortgage-loan-to-income ratio allowed by the HKMA), especially if buyers take
lower loan-to-value ratio.
Prefer commercial to residential as commercial rent revisions could have less

resistance
Obviously, landlords are far less vulnerable to policy interventions and rents are on
upward pressure. We see better rental upside for office (+15% to +30%) than
residential (+10%), while we believe retail properties can still fetch steady growth in
2011 and beyond in an inflationary environment. We expect other properties
(industrial properties and car park etc) to continue to see significant cap rate squeeze.
Our rental affordability study shows that housing rental levels are barely affordable
by domestic households and hence the upside from here is capped. In contrast, office
rental demand is set to be fueled by companies' expansion in Asia and/or China, and
would likely tolerate higher operating costs and office rents in the region.
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(852) 2800-8526 21 November 2010
Table 3: Summary of 2011E estimates

Old New New
2010E 2011E 2010E 2011E 2012E
Residential Price growth +15% +10% +15% +15% 0%
Office Rental growth +5% to +25% +10% to +15% +12% to +37% +15% to +30% +5%
Cap rate (by Dec) 4.50% to 5.00% 5.00% to 5.50% 4.50 to 4.75% 4.50 to 4.75% 4.75 to 5.00%
Capital value +5 to +25% 0% to +5% +12% to +40% +15 to +30% +5%
Retail Rental growth +10% to +12% +8% to +10% +10% to +12% +8% to +10% +5%
Cap rate (by Dec) 5.00% to 5.50% 5.25 to 5.50% 5.00% to 5.50% 5.25 to 5.50% 5.25 to 5.50%
Capital value +10% to +12% +6% to +10% +10% to +12% +8% to +10% +5%
Source: Company data, J.P. Morgan estimates.
Stock picks
Property developers could continue to trade at valuation discounts to landlords
Since May-10, share price performance of developers has lagged landlords.
Developers on average trade at long-term average NAV discount or 1 s.d. below the
average. In contrast, property landlords have been trading at par to and up to 1 s.d.
above the long-term average NAV discounts. Such valuation gap is not common
throughout the past cycles but did happen in 1H08 when office rents peaked while
residential prices edged up. This could be the opposite of 1H08 as office and retail
rents and capital values have better upside than residential, in our view.
Figure 1: Year-to-date performance of major Hong Kong developers and investors

Hysan 47%
Champion REIT 38%
HK Land 38%
Swire 29%
Hang Lung Group 29%
Fortune REIT 28%
Property Investors 25%
Wharf 22%
Link REIT 21%
Great Eagle 21%
Cheung Kong 20%
Hang Lung Properties 17%
SHKP 15%
Property Developers 12%
Hang Seng Property 10%
K Wah International 9%
Sino Land 8%
Hang Seng Index 8%
Kerry Properties 6%
NWD -1%
Henderson -3%
Kowloon Dev -5%
-10% 0% 10% 20% 30% 40% 50%
*Until Nov 19, 2010

Source: Bloomberg
Dec-11 PTs based on long-term discounts to NAV for developers, 1 s.d. above
long-term NAV discounts for landlords
We remain overweight on Hong Kong property as a whole but the preference is
heavily skewed towards landlords while we believe the upside of developers is
capped by anticipated cooling off of the residential property market in the next 6
months.
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(852) 2800-8526 21 November 2010
We roll over our price targets of the Hong Kong property companies to Dec-11 and
derive our PTs based on long-term NAV discount for most developers (except
Henderson Land which we apply 0.5 s.d. below LT average). For landlords we apply
1 s.d. above LT average as we believe they are more defensive. The narrower NAV
discounts mainly factor in the possibility of rents and capital values overshooting our
forecasts due to liquidity.
Beware of the “Winner's Curse” for developers when replenishing land

Another concern is that residential developers may incur higher risks if they continue
to replenish landbank at high prices. Developers' landbank are still below the late
1990s peak and would run low again after the launches in 2010/11. Developers may
not necessarily be re-rated if they buy land now or can be even de-rated if they buy at
record prices.
Decentralized landlords could be re-rated

With Hongkong Land, the prime landlord running strongly in 2010, we believe there
could be a catch-up in valuations of the decentralized landlords in 2011. Our target
NAV discounts are 1s.d. above long-term average across all landlords.
Top picks: Wharf, Hongkong Land, Hysan

Wharf (0004.HK)
The two core assets, Harbour City (HC) and Times Square, are located in prime retail
but non-CBD areas. Since the introduction of the Individual Visit Scheme in 2003,
average retail sales in HC have been reaching record highs in the December month
each year. It is a major destination for mainland visitors. Its offices should be
attractive locations for decentralized tenants, who do not necessarily need to be in
Central but prefer to have an office in convenient districts with good amenities.
Besides, income contribution from China properties would gradually increase as core
projects are completed and booked.
Hongkong Land (HKLD.SI)

With the highest exposure in Central office (lettable area 4 million sq ft) accounting
for 68% of GAV, Hongkong Land is a key beneficiary of the office rental up-cycle.
We expect Central to continue to lead the other districts in rental growth in 2011
given the tight supply in Central and robust demand from Chinese companies and
financial institutions. Our cap rate assumption of 4.5% for Central in a low interest
rate environment compares with the long-term average of 4.8%.
Hysan (0014.HK)
As the largest commercial landlord in Causeway Bay, Hysan will not only be
benefited from the office rental uptrend and decentralization of tenants from CBD
but also stable growth in retail rental thanks to high-end retailers. The company is
turning more active in asset enhancement in adding value to the investment
properties portfolio. We believe the stock will get re-rated on Hysan Place
completion (former Hennessy Centre). We expect the core earnings to increase by
18% largely driven by the completion of this major property.
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(852) 2800-8526 21 November 2010
Table 4: Summary of ratings and price target changes

Last Price Potential
(HK$) Ratings Dec-2011 Price Targets upside/
New
Company Ticker 19-Nov-10 Old New Old % Chg (downside)
Cheung Kong 0001.HK 120.60 OW OW 141.4 115.0 23% 17%
Sun Hung Kai 0016.HK 134.20 OW OW 155.0 138.0 12% 15%
Henderson Land 0012.HK 56.75 OW OW 63.0 55.0 15% 11%
Sino Land 0083.HK 16.32 N OW 14.9 16.5 -10% -9%
New World Dev 0017.HK 15.88 OW OW 19.1 19.1 0% 20%
Kerry Properties 0683.HK 41.90 OW OW 51.5 45.0 14% 23%
Hang Lung Pty 0101.HK 35.90 N N 35.0 33.0 6% -3%
Hang Lung Group 0010.HK 49.75 N N 46.5 43.0 8% -7%
Great Eagle 0041.HK 24.40 OW OW 27.8 24.9 12% 14%
Hysan 0014.HK 32.50 OW OW 38.1 38.1 0% 17%
Hongkong Land* HKLD.SI 6.85 OW N 8.8 5.5 60% 28%
Swire Pacific 0019.HK 121.60 OW OW 128.2 128.2 0% 5%
Wharf 0004.HK 54.75 OW OW 65.5 NA NA 20%
Fortune REIT FORT.SI 4.02 OW OW 4.9 4.9 0% 22%
Link REIT 0823.HK 24.00 N N 27.0 27.0 0% 13%
Champion REIT 2778.HK 4.57 N N 4.1 3.7 10% -10%
Average 9% 12%
* in US$
Source: Bloomberg, J.P. Morgan estimates
Stock catalysts
We expect the sector could be buoyed (or at least supported) by accelerating inflation
in Hong Kong and the urge for inflation hedge. More catalysts starting from 2011
would include:
1) Record earnings or past-cycle high: On the landlord front, we expect spot rents
to grow moderately towards end 2010 but could gather pace again in 1Q11.
Hence passing rents to edge up instead of flat or decline in our earlier
assumptions. These together could lead to a strong lift in earnings growth in
FY11/12 to record highs or post previous highs in the 1990s, and could be
reflected in either higher dividends or increase in equity.
2) Revaluation gains: We also anticipate further revaluation of investment
properties which push up book value further.
3) Sales launches of some companies could be better received if second
mortgage is offered: As the maximum LTV is restricted by HKMA, some
developers may bridge the gap by providing secondary mortgage especially for
investors who are not eligible to apply for mortgage insurance. Cheung Kong,
for instance, offer secondary mortgage and buyers can effectively obtain 90%
leverage. Developers’ creative payment schemes may draw more buyers from
the sideline and successful launches could bring positive surprise.
Peak valuations unlikely repeated
Contrary to 2008 when HK property developers traded at peak valuations (e.g. 1.9x
forward P/BV for SHKP), there is limited China growth angle for the Hong Kong
developers and thus the only share price catalyst is asset price inflation. Moreover,
stock investors would tend to adopt a higher risk premium on developers as we are
counting down for the peak of housing prices after a 7-year bull-run since 2003.
Finally, unlike in the mid-1990s when there were few restrictions on mortgage
lending, the HKMA put a cap on the mortgage payment to income ratio in July 1997.
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(852) 2800-8526 21 November 2010
Hence it is unlikely to see affordability overshooting to 80-100% levels even if the

participation of non-local households (mainly Mainlanders) increases significantly.
Key risks to our investment case

Ad-hoc changes in interest rate and liquidity
We expect cap rates for both commercial and residential properties to remain
unchanged in the next 12 months as we expect USD to put rate hikes on hold. Both
asset classes are vulnerable to the sudden exit of liquidity out of the region and rising
interest rates.
Credit tightening in China could spillover to Hong Kong but impact could be
contained
We expect credit tightening in China may reduce the liquidity channeled to Hong
Kong as a whole but their participation is so far contained at 5% of primary and
secondary market transactions. Besides, this could be partly offset by the home
purchase by the high-income /net worth Mainlanders, and the population of the high
income class have been increasing rapidly in recent years.
Fund raising risks

Most property developers are much more prudent than in 1997, with smaller
landbank and lower gearing. However, the low gearing is largely due to revaluation
of their investment properties; in case of property devaluations the gearing will
increase. Also, companies may want to offload their risks of replenishing landbank at
high prices and one way is to raise equity. That said, we believe companies may not
be interested to place new shares at current price levels, especially after the
correction on Friday (Nov 19).
Table 5: Valuation summary for Hong Kong developers and investors

Price NAV Dis. to FY11E PER Div. Yield P/B
Stock 19-Nov-10 Dec-11 Dec-11 Net FY10E FY11E FY10E FY11E FY10E FY11E
Rating code (HK$) (HK$) NAV (%) Gearing (X) (X) (%) (%) (X) (X)
Cheung Kong OW 0001.HK 128.5 169.8 -24% 13% 15.1 13.8 2.3 2.3 1.2 1.2
Henderson Land OW 0012.HK 60.6 78.9 -23% 24% 27.0 24.7 1.3 1.7 0.9 0.8
New World Development OW 0017.HK 17.3 29.0 -40% 14% 10.8 13.5 2.2 2.2 0.8 0.7
Sun Hung Kai Properties OW 0016.HK 142.2 180.4 -21% 11% 26.3 18.5 1.9 2.1 1.5 1.4
Sino Land N 0083.HK 17.1 21.3 -20% 15% 23.7 15.6 2.3 2.6 1.1 1.2
Great Eagle OW 0041.HK 25.7 50.6 -49% 4% 11.9 12.3 2.1 2.1 0.7 0.7
Hang Lung Group N 0010.HK 50.7 62.8 -19% -1% 18.3 17.3 1.5 1.5 1.3 1.3
Hang Lung Properties N 0101.HK 36.1 34.8 4% Net cash 22.4 21.4 2.0 2.1 1.7 1.8
Hong Kong Land (US$) OW HKLD.SI 7.2 9.9 -27% 17% 20.3 21.0 2.5 2.5 1.2 1.1
Hysan Development OW 0014.HK 34.1 50.2 -32% 8% 30.2 29.1 2.0 2.0 1.0 1.0
Kerry Properties OW 0683.HK 43.3 73.8 -41% 15% 14.9 14.6 2.3 2.8 1.2 1.1
Swire Pacific OW 0019.HK 122.3 183.2 -33% 24% 9.3 15.6 2.7 3.2 1.1 1.1
Wharf Holdings OW 0004.HK 56.3 76.1 -26% 17% 20.1 18.6 1.4 1.6 1.3 1.2
Link REIT* N 0823.HK 24.9 27.0 -8% 19% 24.9 22.7 3.9 4.4 1.4 1.3
Champion REIT* N 2778.HK 4.5 4.1 10% 31% 40.8 35.4 4.7 4.6 0.8 0.7
Fortune REIT* OW FORT.SI 4.1 5.9 -31% 22% 20.5 17.1 5.9 6.4 0.8 0.7
Developers' Average -23% 14% 21.5 17.2 2.0 2.2 1.2 1.2
Investors' Average -25% 15% 16.3 18.2 2.2 2.5 1.3 1.2
REITs' Average -5% 22% 28.7 25.5 4.3 4.6 1.2 1.1
* NPV for REITs
Source: Bloomberg, J.P. Morgan estimates
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(852) 2800-8526 21 November 2010
Figure 2: Hong Kong property developers' historical NAV discount Figure 3: Hong Kong property investors Historical NAV discount
30% 10%
+2 s.d.
20% +2 s.d. 0%
10%
-10% + 1 s.d.
0% +1
sd -20%
-10%
-30% Average=
-20% Average =
-24.5%
-16.2% -1 s.d.
-30% -40%
-1 s.d.
-40% -50% -2 s.d.
-50% -2 s.d.
-60%
-60% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Bloomberg, J.P. Morgan estimates. Source: Bloomberg, J.P. Morgan estimates.
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(852) 2800-8526 21 November 2010
Residential market outlook

Housing market sets to quiet down amid more measures
In the Financial Secretary's announcement on Friday (Nov 19), the restrictive
measures have stepped up effective Nov 22 (Monday). The main points include 1)
lowering LTV by 10% for residential transactions of HK$8 million or above, and
50% LTV for all commercial property transactions; 2) introducing special stamp duty
for residential properties that change hands within 24 months.
With the new policies, we expect buyers may either accept lower leverage or rely
more on mortgage insurance so that the LTV can be as higher as 90% (subject to
conditions). Some developers may also offer second-mortgage so that buyers need to
pay only 10% as downpayment. Hence we do not expect the LTV to have substantial
impact on homebuying demand. However, the special stamp duty could have a
profound impact on transaction volume as buyers have to hold on to the units for two
years to avoid the special stamp duty. The decline in transaction volume can easily
lead to price decline as well.
Mass –end housing may out-perform luxury end in the near-term

Luxury residential properties have significantly out-performed mass-end properties
so far, largely due to the increase of high-income households and purchase by non-
locals including high net worth Mainlanders. That said, as the transaction costs are
way higher on high-end housing with less leverage allowed, liquidity could be
funneled into the mass-end sub-segments where higher leverage is available.
Figure 4: Hong Kong nominal residential price index (luxury vs mass)*
200 200
180
160 153
140 137
120
100 104
80
60
40
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Mass resdiential Luxury residential

*Mass residential defined as properties with unit size smaller than 100 sqm;
luxury residential defined as properties with unit size equal or larger than 100 sqm
Source: Rate and Valuation Department
11
(852) 2800-8526 21 November 2010
Are we in a property bubble?

Not yet given positive carry
Theoretically, properties are the best inflation hedge in a negative real interest rate
environment, particularly in case of positive carry (rental income more than enough
to service mortgage payments). This intrinsically means that buyers can enjoy both
appreciation gains and rental income net of interest payments, and this could induce
further home buying for preservation of wealth.
Figure 5: Rental yield/mortgage rate differential vs rental yield Figure 6: Hong Kong 10 year bond yield vs inflation
% %
4% 10 16.0
Negative carry
9 14.0
2% 8
12.0
0% 7
10.0
6
-2% 5 8.0
4 6.0
-4% 3 4.0
Positive carry 2.4
-6% 2 2.0
1 0.0 -0.2
-8% 0 -2.0 90 92 94 96 98 00 02 04 06 08 10
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 -4.0
Rental yield - mortgage rate (L) Residential rental yield (R) -6.0 HK$ 10Yr bond yield HK$ 10Yr bond yield - inflation
Source: HKMA, Rate and Valuation Department Source: HKMA,
The government may continue to lower the loan-to-value ratio to curb speculation, so
higher downpayment is required. That said, given the high savings balance, Hong
Kong households can afford paying higher downpayments from de-savings.
Compared to mid-1997, the deposit base as of end Oct-10 increased 2.5x times.
Moreover, the median age of Hong Kong population is 39 and hence the population
could have accumulated wealth in other assets. In fact, the mortgage loan growth has
lagged behind the property price appreciation and hence is not driven by aggressive
lending by banks.
Figure 7: Savings balance to property value Figure 8: Residential mortgage loan growth vs. residential price
1.80 35%
1.6x 30%
1.60
30%
1.4x 28%
1.40 1.4x
1.3x 25%
25% Average outstanding mortgage to
1.2x
1.20 1.1x 22% property value = 16%
Average property value to
1.0x savings deposits ratio = 0.83X 19%
1.00 20% 19%
18% 18%
0.9x 0.8x 17%
16%
0.8x 0.8x 0.8x 15%
0.80 0.7x 0.7x 0.7x 0.7x
0.7x 15% 13%
0.7x 0.7x 0.7x
0.6x 0.6x 0.6x 0.6x 12%
0.60 0.6x 0.6x 0.5x 0.5x 11% 11%
10% 10% 10%
10% 9%
0.40
5%
0.20
0.00 0%
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10E
10E
Source: Rating and Value Department, HKMA, J.P. Morgan estimates Source: Rating and Value Department, HKMA, J.P. Morgan estimates
Land supply still lagging behind private housing demand

Moreover, land supply has been staying low throughout this cycle due to 1) the
inflexible land trigger system (limited sites are put into the land application list and
government has set a floor price on land) and 2) slow progress of farmland
conversion. The so-called scheduled land auction has a minimal impact on the
overall land supply. During 2005-1H2010 155,105 units (private and public) were
12
(852) 2800-8526 21 November 2010
completed, of which only 62,455 private units are private. Meanwhile 147,800
households were formed during 2005-1H-2010. Although the housing completion
seems to match the household formation, close to 70% of completions in 2007-8 was
public rental housing. It turns out that housing completions continue to lag behind
household growth.
Figure 9: The government's land sale record Figure 10: Household growth vs residential flat completed (public +
MM sq ft in site area private)
100,000 100,000
12
90,000
80,000
10 80,000
70,000 60,000
8
60,000
40,000
6
50,000
20,000
4 40,000
30,000 0
2
20,000
0 -20,000
10,000
81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0 -40,000
1H2010
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Auction sales Letter A/B Priv ate treaty grant
Source: CEIC. Note: 2010 is up to 3Q10 Net increase in domestic household Residential Flats Completed Total
Flat competion - net increase in household
Source: CEIC, Rate and Valuation Department
The average population growth in the past 5 years was 0.8% p.a. Assuming no
change in net migration in the next 3-5 years, we expect the growth to remain
similar. This would mean 19,000-20,000 households to be formed yearly. Although
the government pledges stable land supply of at least 20,000 units per year, this is not
sufficient to fill the shortfall of housing completions in the past few years and the
expected upcoming household growth in the next few years.
So far, the measures remain focused on driving away speculative demand. However,
these measures are not effective to curb housing price growth, in our view, if there is
no corresponding increase in land supply.
We may be entering a bubble though

We may be entering a bubble now if we consider the affordability. At a mortgage
rate of 1% and average housing price of HK$5,900psf, the housing affordability
stands at 45% which is still below the 50% mark. However, 42% estates of the major
estates (86 estates) tracked by Centaline are transacting at HK$6,000psf or below,
and most of them are in the NT. More importantly, the affordability index will
surpass 50% if prices are 10% higher from now even if interest rate stays low. Also,
if mortgage rate reverts to 5% (though chances are slim), affordability index will be
80%.
13
(852) 2800-8526 21 November 2010
Figure 11: Hong Kong housing affordability analysis

Household income (HK$) 25,000
Average price (HK$ psf) 5,914 6,506 6,801 7,097 7,689

Mortgage Rate Current price +10% +15% +20% +30%
1.0% 44% 48% 50% 52% 57%
1.5% 46% 51% 53% 56% 60%
2.5% 49% 54% 57% 59% 64%
3.0% 52% 57% 60% 62% 68%
4.0% 55% 60% 63% 66% 71%
5.0% 25,000
Source: J.P. Morgan estimates.
Property values to GDP way surpassed historical high

Looking at the residential property values to GDP, the ratio has exceeded 1997 peak
of 3.13 times and could overshoot to 3.5x by 2011 if our forecast of 20% housing
price growth is realized in 2011. This implies that economic growth cannot catch up
with the asset price growth or the liquidity is likely to channel mostly into properties
and little to other segments.
Figure 12: Property value to GDP

3.50
3.20
3.13
2.97
3.00 2.82
2.70
2.60
2.44
2.50
2.20 2.25 2.20
2.15 2.13 2.12
1.99 1.99 2.01
2.00 Property / GDP Avg = 1.84X 1.79
1.62
1.52
1.50 1.39 1.43 1.39
1.23
1.00 1.01 0.98 1.02
1.00 0.84
0.50
0.00
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10E
Source: Rate and Value Department, Hong Kong Statistics Department, J.P. Morgan estimates
Rental affordability suggests only 10% upside from here

Based on the median monthly household income of HK$25,000 and territory wide
average rental of HK$21.8psf, on average a private household needs to fork out 48%
of their income to pay the rents of a 500sqft apartment unit. Given the single-digit
household income growth, we estimate housing rents have a mere 10% upside if
rental affordability index remains at 50% levels.
14
(852) 2800-8526 21 November 2010
Figure 13: Hong Kong rental affordability

65%
60%
55%
50%
45%
40%
35%
30%
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
15
(852) 2800-8526 21 November 2010
Commercial property outlook

Commercial rents and capital values in decentralized areas may also catch up
Office rents in decentralized areas, particularly Tsim Sha Tsui and Island East, have
been stagnant so far in 2010 largely because of the new supply in Kowloon East. As
the supply territory wide is taken up and vacancy coming off, the leasing demand by
expansion of business service companies can spillover to the decentralized office
areas. We thus expect the rents in those areas to regain momentum in 2011.
Moreover, we previously expected a big cap rate differential between core and
decentralized areas, while we now expect only marginal gap of 25bps between two
categories. Similarly, in the midst of broad-based inflation and domestic
consumption growth gathering pace, retail landlords may also have stronger pricing
power and we expect stable growth in retail rents in 2011.
Table 6: JLL 3Q Grade-A Office/Prime Retail key figures
3Q10 Avg (HK$/sqft) Q/Q % chg YTD % Chg From 08 Peak Cap rate in 3Q
Overall Office Rental 49.8 7.6% 22% -23% 4.0%

Capital Value 15,028 7.0% 20% -4%
Central Office Rental 87.0 8.6% 28% -25% 4.4%
Capital Value 23,890 8.7% 26% New high
Wanchai/CWB Office Rental 41.8 9.9% 24% -22% 3.8%
Capital Value 13,074 7.5% 19% -5%
TST Office Rental 32.5 2.3% 9% -25% 3.5%
Capital Value 11,035 2.7% 7% -8%
HK East Office Rental 28.0 4.1% 9% -17% 4.5%
Kln East Office Rental 18.9 4.0% 11% -26% 4.0%
Capital Value 5,648 3.9% 10% -12%
Retail Rental 97.2 0.2% 6% -7% 5.2%
Source: Jones Lang LaSalle - Real Estate Intelligence Services.
Limited supply in Central

New office supply in Central will remain tight in the next two years. Majority of the
new supply in Central is expected to complete in 2011 with total net floor area of
around 1.2 million sf. However, most of the CBD supply will be self-occupied, such
as Tamar development project for government use and Ritz Carlton hotel
redevelopment to be largely taken up by China Construction. The only en-bloc
buildings available for leasing will be the development of Luk Hoi Tong Building
and Crocodile Houses, providing net floor area of 233,500 sf or about 1% of total
existing Grade A office stock in Central.
The vacancy of Central has come down from 5.5% in 3Q09 to 3.6% in 3Q10 due to
quick rental recovery. The hot IPO market has not only increased demand from
newly listed companies for setting up an office in Hong Kong but also raising
demand from IPO related businesses such as printing companies and professional
firms, including law firms and accounting firms. Some new entries to Hong Kong
16
(852) 2800-8526 21 November 2010
prefer to have an address in the CBD area to receive easier recognition by others.
Hence the Central district is a top choice for them.
Table 7: Hong Kong office supply

Project Location Developer NFA (sf) Grade A Grade B
2010 Supply
International Commerce Center Ph 3 Kowloon Station SHKP 481,000 481,000
Former HK Tobacco Co Ltd redevelopment (863-865 King's Rd) Quarry Bay Kerry Properties 375,000 375,000
7 Shing Yip Street Kwun Tong Billion Development 222,800 222,800
Po Hing Center redevelopment, 18 Wang Chiu Road Kowloon Bay Sino Land 261,680 261,680
Decentralized - sub-total 1,340,480 1,340,480
Total 1,340,480 1,340,480
2011 Supply
Ritz-Carlton Hotel Redevelopment Central Lai Sun/China Construction Bank 168,750 168,750
Luk Hoi Tong Building Redevelopment, Queen's Road Central Central Luk Hoi Tong 105,000 105,000
Crocodile Houses 1 & 2 and Ananda Tower Redevelopment Central Citigroup Prop Investors 128,500 128,500
Tamar Development Project Central HK Government 844,200 844,200
Core central sub-total 1,246,450 1,246,450 0
Tseung Kwan O Area 56 project TKO Station SHKP/MTRC 40,400 40,400
Piazza Industrial Building Redevelopment, 133 Hoi Bun Road Kwun Tong Billion Development 351,000 351,000
Decentralized - sub-total 391,400 351,000 40,400
Total 1,637,850 1,597,450 40,400
2012 Supply
Hysan Place Causeway Bay Hysan 319,500 319,500
Tai Sang Commercial Building Redevelopment Wanchai Swire 99,000 99,000
Kowloon Commerce Centre(Kwai Chung Town Lot 215 Ph2) Kwai Chung SHKP 447,720 447,720
Prime Area sub-total 866,220
Total 866,220
Source: CBRE, HKET, Colliers, JLL, J.P. Morgan estimates.
Office decentralization
Due to the limited supply in Central, we believe that cost-cautious tenants will be
gradually squeezed out to decentralized areas. Causeway Bay, Tsimshatsui and
Island East should be the attractive locations for decentralized tenants, such as
multinational corporations that prefer to have an office in convenient districts with
good amenities. As such, we expect the rental growth rate in Causeway Bay and
Tsimshatsui to follow Central growth rate closely according to the demand from
decentralization and business expansion of tenants in a growing economy. Island
East would also be a beneficiary of office decentralization trend. Overall we expect
Central office rent to exceed the 2008 peak whereas rents in other districts to raise
close to 2008 peak.
Table 8: Grade-A office rental gap compared with Central

LT average Peak 3Q10
Causeway Bay/Wanchai 19.6 62.6 45.2
Tsimshatsui 25.9 73.8 54.5
Island East 32.9 82.3 58.9
Kowloon East 60.9 91.8 68.1
Source: Jones Lang LaSalle - Real Estate Intelligence, J.P. Morgan estimates.
17
(852) 2800-8526 21 November 2010
Figure 14: Office rental gap - Central vs Causeway Bay/Wanchai Figure 15: Office rental gap - Central vs Tsimshatsui
HK$psf per month HK$psf per month
140.0 140.0
120.0 120.0
100.0 100.0
peak gap peak gap
80.0 HK$63psf 80.0 HK$74psf
60.0 60.0
40.0 40.0
20.0 20.0
- -
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Central Causew ay Bay /Wanchai Central Tsimshatsui
Source: Real Estate Intelligence Services – Jones Lang Lasalle, J.P. Morgan estimates. Source: Real Estate Intelligence Services – Jones Lang Lasalle, J.P. Morgan estimates.
Figure 16: Office rental gap - Central vs Island East Figure 17: Office rental gap - Central vs Kowloon East
HK$psf per month HK$psf per month
140.0 140.0
120.0 120.0
100.0 100.0
80.0 80.0
peak gap
peak gap
60.0 60.0 HK$92psf
HK$82psf
40.0 40.0
20.0 20.0
- -
00 01 02 03 04 05 06 07 08 09 10 06 07 08 09 10
Central Island East Central Kow loon East
Source: Real Estate Intelligence Services – Jones Lang Lasalle, J.P. Morgan estimates. Source: Real Estate Intelligence Services – Jones Lang Lasalle, J.P. Morgan estimates.
Two-factor office rental forecast model

We derive our office rental forecasts from a two-factor regression model based on
historical relationship between key factors affecting rental growth. The two factors
we apply in the model are GDP growth and change in office vacancy. Historically
overall rental growth has a high correlation of 0.8 and -0.75 with GDP growth and
change in vacancy, respectively. We have back tested the model and found it
reasonably fair in predicting the rental growth. For 2011, with the assumptions of
4.1% GDP growth and vacancy drop of 1 percentage point, our model suggests that
office rent will grow 24.5% in 2011.
Regression results:
Office rental growth = -0.12 + 4.58*GDP growth – 5.82*change in vacancy
18
(852) 2800-8526 21 November 2010
Table 9: Office rental forecast model - ANOVA

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -0.12 0.07 -1.77 0.09 -0.26 0.02 -0.26 0.02
X Variable 1 4.58 1.40 3.27 0.00 1.62 7.53 1.62 7.53
X Variable 2 -5.82 2.14 -2.72 0.01 -10.34 -1.31 -10.34 -1.31
Forecast by districts
We use the model as a guideline in forecasting our office rental assumptions in 2011
and forecast growth rate according to the characteristics of each district. In Central
where demand is expected to remain robust, we forecast growth rate will be higher
than other districts. The growth is expected to follow closely by Causeway
Bay/Wanchai and Tsimshatsui, then Hong Kong East and Kowloon East.
Table 10: Office rental forecast by districts

HK$psf per month
Central CWB/WC TST HK East Kln East
2008 Peak 116.1 53.7 43.2 33.7 25.7
3Q09 87.0 41.8 32.5 28.0 18.9
2011E 116.8 52.7 41.6 33.3 22.6
2011E % change +25-30% +25% +25% +15% +15%
Source: Jones Lang LaSalle - Real Estate Intelligence, J.P. Morgan estimates.
Mainland consumption supporting stable retail growth

Some of the major retail landlords, such as Wharf (0004.HK), recorded strong
growth in retail revenue in 1H10. We expect that the positive economic outlook will
continue to favor both mainland visitors spending and domestic consumption.
Anecdotal evidence showed that mainland visitors are not limited to high-end
consumptions. Cross-border limousine buses running between Hong Kong and
Shenzhen have pick-up and drop-off stops at Wharf's Harbour City and Times
Square, which indicates these are important shopping stops. Moreover, their
consumption types extend into daily necessities such as milk powder, shampoo and
tissue paper, partly due to inflation in China and partly due to consumer confidence
in buying quality products in Hong Kong.
Figure 18: HK GDP growth vs retail sales growth

(%)
30
20
10
-10
-20
1982 1986 1990 1994 1998 2002 2006 2010E
HK GDP Grow th Rate Retail Sales Grow th

Source: IMF, CEIC, J.P. Morgan estimates.
19
(852) 2800-8526 21 November 2010
Company earnings and NAV outlook

Earnings downgrade, NAV maintained
Earnings forecasts reduced by 7% on average
We incorporate the announcement of special stamp duty and cut our earnings
forecasts by 6.2%/6.8% for FY11/12E (for companies with financial year ending
June; FY10/11E for those with financial year ending December) on average. We take
into account the following:
1) Market sentiment may cool down for 6 months and hence upcoming project
launches are likely pushed back or put on hold, thus affecting FY11
development earnings. Companies may smooth out earnings as well if they have
high lock-in for the upcoming financial year and plans to launch FY12
completions, and could push back some completions from FY11 to FY12.
2) For companies with strong rental income stream, we have factored into higher
office rental reversion particularly in Central, Tsim Sha Tsui and Causeway Bay.
We also factor in steady passing rental growth for retail properties.
3) Some companies may see upward cost pressure on hotel and retail operations
4) Most companies which entered China in 2007 should report considerable top-
line growth from China operations. The residential development projects have
been presold and could have delivery of initial phases by FY11/12. Same for
developers with completions of mixed-use projects (e.g. SHKP's Shanghai
Pudong IFC, Wharf’s Wheelock Square in Shanghai and HLP's Shenyang Palace
66)
NAV mainly lifted by higher office capital value, offsetting residential NAV
declines
Our NAV estimates for the Hong Kong property stocks under coverage are raised by
4% on average, with considerable NAV growth seen in the landlords or companies
with more investment property exposures. In particular, we have raised Hongkong
Land's NAV estimates by 27% due to the Central office capital values, where rental
growth has been phenomenal YTD10 and cap rate has not shown signs of expansion,
contrary to our earlier expectations that cap rates would expand by now.
For developers with high exposure to Hong Kong residential properties, the NAV
growth from investment properties could be largely offset by the lower NAV on
residential development projects. We have assumed prices to remain intact and even
edge up but sales pipeline is pushed back. Besides, for companies that opt-for-
volume (e.g. Cheung Kong), we expect the units would be sold and cleared at market
or slightly below market prices.
20
(852) 2800-8526 21 November 2010
Table 11: Hong Kong property developers - summary of NAV changes

Last Price Discount
(HK$) Dec-2011 NAV To NAV
Company Ticker 19-Nov-10 New Old % Chg (New) Reason for NAV changes
Cheung Kong 0001.HK 120.60 169.8 151.3 12% -29% Based on Hutch share price at HK$94.8 vs. current market price earlier
SHKP 0016.HK 134.20 180.4 174.5 3% -26% HK office capital value increase offset by lower NAV from HK residential properties
Lower ASP and slower sales, also only 10% GFA inflation for sites to be acquired
HLD 0012.HK 56.75 78.9 87.5 -10% -28%
from relocation / land conversion
Sino Land 0083.HK 16.32 21.3 20.9 2% -24% HK office capital value increase offset by lower NAV from HK residential properties
NWD 0017.HK 15.88 29.0 29.7 -2% -45% HK office capital value increase offset by lower NAV from HK residential properties
NAV growth mainly from China investment properties due to cap rate compression in
Kerry 0683.HK 41.90 73.8 64.5 14% -43% 1st-tier cities; HK investment property value growth comes mainly from luxury
NAV growth mainly from China investment properties due to cap rate compression in
HLP 0101.HK 35.90 34.8 33.8 3% 3%
Shanghai, more than offsetting the lower value of HK residential properties for sale
HLG 0010.HK 49.75 62.8 62.8 0% -21% No change
Great Eagle 0041.HK 24.40 50.6 46.6 9% -52% Higher share price of Champion REIT
Hysan 0014.HK 32.50 50.2 50.2 0% -35% No change

NAV growth from HK Central office properties due to rent growth and absence of cap
HKL HKLD.SI 6.85 9.9 7.8 27% -31%
rate expansion
Swire Pacific 0019.HK 121.60 183.0 183.0 0% -34% No change
Wharf 0004.HK 54.75 76.1 NA NA -28% NA
Fortune REIT* FORT.SI 4.02 4.9 4.9 0% -18% NA
Link REIT* 0823.HK 24.00 27.0 27.0 0% -11% NA
Champion REIT* 2778.HK 4.57 4.1 NA NA 11% NA
High earnings lock-in by now but risks of default do exist

At present, most of the major developers with June year-end have locked in 66-80%
of the FY11E development profit, while those with December year-end have
achieved our full-year development earnings estimates. Only NWD achieved 30% of
FY11E development earnings and hence poses earnings risks. For most others they
are actually not under pressure to launch the units to achieve development sales. This
also echoes to our expectations that primary prices may hold up but developers may
simply hold back the launches until after the Chinese New Year, as March to May is
the traditional high season for property launches.
Table 12: Major Hong Kong property developers – Development profit lock-in
Ticker Year FY Dev't profit FY Dev't profit
end lock-in lock-in
Cheung Kong 0001.HK Dec 10E 100% 11E 43%
Sun Hung Kai 0016.HK Jun 11E 72% 12E 18%
Henderson Land 0012.HK Dec 10E 80% 11E 0%
Sino Land 0083.HK Jun 11E 66% 12E 0%
New World Dev 0017.HK Jun 11E 30% 12E 0%
Kerry Properties 0683.HK Dec 10E 88% 11E 0%
Hang Lung Pty 0101.HK Jun 11E 0% 12E 0%
21
(852) 2800-8526 21 November 2010
While the earnings risks are low, we do not rule out the possibility of default in the
near-term especially buyers who only paid the initial deposits and opt for the
deferred payment schemes. That said, most developers have offered high incentives
for buyers who take immediate mortgages and hence the default rate is supposed to
be lower than 2008, in our view
22
(852) 2800-8526 21 November 2010
Table 13: EPS and NAV estimate changes
Year 2010E/11E core EPS* 2011E/12E core EPS* 2012E/13E core EPS*
Company end New Old % Chg New Old % Chg New Old % Chg Key reasons for earnings changes
1) No change in FY10 as most residential properties are presold and locked in
Cheung Kong Dec 4.96 5.10 -3% 5.02 5.39 -7% 4.05 NA NA 2) Higher earnings contribution from Hutch is offset by expected lower dev't earnings
in FY11
Upgrade due to faster-than-expected presale in 2H10 which will be reflected in
Sun Hung Kai Jun 7.70 6.47 19% 7.94 7.16 11% 8.43 NA NA
FY10/11 earnings
1) FY10 earnings estimate cut to reflect additional provisions on 39 Conduit Road
Henderson Land Dec 2.25 2.41 -7% 2.45 2.65 -8% 3.80 NA NA 2) Factor in slower sales of inventories and Hill Paramount in 2011 due to competition
from nearby projects
Sino Land Jun 0.69 1.10 -37% 0.80 1.32 -40% 0.94 NA NA EPS dilution effect from share placement and slower sales of HK properties
New World Dev Jun 1.28 1.50 -14% 1.35 1.57 -14% NA NA NA Slower property sales in Hong Kong and China after tightening
Kerry Properties Dec 2.91 2.83 3% 2.96 3.22 -8% 3.50 NA NA Earnings cut for FY11 to factor in slower sales at Wong Tai Sin project
EPS dilution from share placement, expect offloading of inventories (Long Beach,
Hang Lung Pty Jun 1.31 1.68 -22% 1.57 1.78 -12% 2.19 NA NA
Harbour Side) to be deferred again
Holding of HLP drops from 52.4% to 49.59% post placement so lower earnings
Hang Lung Group Jun 2.31 2.93 -21% 2.73 3.09 -12% 3.45 NA NA
contribution from HLP; also reflect HLP earnings revisions
Great Eagle Dec 2.16 2.15 0% 2.08 2.08 0% 2.20 NA NA No change
Hysan Dec 1.13 1.13 0% 1.17 1.17 0% NA NA NA No change
Hongkong Land Dec 0.32 0.31 2% 0.33 0.32 3% 0.31 NA NA Revising up forecast on Central rental growth
Swire Pacific Dec 6.67 6.67 0% 7.83 7.83 0% 9.71 9.71 0% No change
Wharf Dec 2.61 NA NA 3.03 NA NA 3.37 NA NA Initiate coverage on 19 Nov
Fortune REIT Dec 0.24 0.24 0% 0.26 0.26 0% 0.26 0.26 0% No change
Link REIT Mar 1.08 1.08 0% 1.18 1.18 0% NA NA NA No change
Champion REIT Dec 0.21 0.21 3% 0.21 0.20 3% 0.21 0.20 5% Revising up forecast on Central rental growth
* 2010E/2011E/2012E core EPS for companies year-ending March and June, 2011E/2012E/2013E core EPS for companies year-ending December
* DPU for REITs
23
(852) 2800-8526 21 November 2010
Table 14: Summary of basis of our price-targets
New Old Dec-2011 PT Basis of Basis of

Ticker Reasons for basis of PT
rating ratings (HK$) PT (New) PT (Old)
24% disc 20% disc Based on long-term average stub disc with Hutch at HK$94.8. Less perceived as proxy to HK property
Cheung Kong 0001.HK OW OW 141.36
to stub to stub market. Inline with developers, for which we generally apply LT avg NAV dis.
14% disc 20% disc Based on long-term average discount. Despite high proportion of GAV and earnings are from investment
Sun Hung Kai 0016.HK OW OW 155.00
to NAV to NAV properties, stock is perceived as proxy to HK residential play. We also apply LT avg NAV dis.
20% is based on 0.5 std dev below long-term average discount of 15% due to expected slow inventory
20% disc 35% disc
Henderson Land 0012.HK OW OW 63.00 sales and concern on upcoming selling prices of 39 Conduit Road (earlier transactions were cancelled).
to NAV to NAV
GFA inflation cap at 10% might affect the profit margin and progress of old buildings redevelopment.
30% disc 20% disc 30% is based on long-term average discount. Highest exposure to HK residential market (32% of GAV),
Sino Land 0083.HK N OW 14.90
to NAV to NAV more vulnerable to policy measures.
34% disc 34% disc

New World Dev 0017.HK OW OW 19.10 34% is based on long-term average discount.
to NAV to NAV
30% disc 30% disc 30% is based on average discount since 2004. Diversified properties portfolio, less vulnerable to HK
Kerry Properties 0683.HK OW OW 51.50
to NAV to NAV residential policy risk. Further NAV growth potential comes from further cap rate compression
Par to Stock has been re-rated from a 30% discount to NAV before 2006 to eventually parity to NAV as investors
Hang Lung Pty 0101.HK N N 35.00 Par to NAV
NAV expected new projects and strong rental growth.
26% disc 26% disc 26% is based on average discount since 2005. An alternative to get exposure in the China expansion
Hang Lung Group 0010.HK N N 46.50
to NAV to NAV story.
45% 45%
45% is based on long-term average discount. Global hotel portfolio accounting for over half of GAV,
Great Eagle 0041.HK OW OW 27.80 discount discount to
unlikely to drive significant growth in near-term.
to NAV NAV
24% disc 24% disc 1 standard deviation above long-term average of 38%. Potential stock re-rating and earnings growth
Hysan 0014.HK OW OW 38.10
to NAV to NAV generated from Hysan Place completion should narrow NAV discount. Upgraded on Nov 3, 2010
10% disc 27% disc 1 standard deviation above long-term average of 27%. Positive office rental outlook. Central office rent
Hongkong Land HKLD.SI OW N 8.80
to NAV to NAV should continue to lead other districts in office rental growth. Major proxy as HK property landlord.
30% disc 30% disc

Swire Pacific 0019.HK OW OW 128.20 No change
to NAV to NAV
Not
14% disc 1 standard deviation above long-term average of 29%. Beneficiary of office decentralization and stable
Wharf 0004.HK OW covere 65.50 NA
to NAV retail consumption growth. Minimal HK residential exposure (1%).
d
Par to PT implies 5.3% FY11E yield. Wider yield spread than Link REIT as Fortune has smaller market cap and
Fortune REIT FORT.SI OW OW 4.90 Par to NPV
NPV lower liquidity.
Par to PT implies 4% FY11E yield, lowest yield spread among the REITs under our coverage given its size, stock
Link REIT 0823.HK N N 27.00 Par to NPV
NPV liquidity and steady rental income growth. Rating downgrade on Nov 11, 2010
Par to PT implies 5% FY11E yield. Wider yield spread required as an office REIT vs. Link REIT. Also Champion
Champion REIT 2778.HK N N 4.10 Par to NPV
NPV REIT has a smaller market cap.
Source: J.P. Morgan estimates
24
(852) 2800-8526 21 November 2010
Table 15: Summary of key risks to price-targets

Key risks to Dec-2011 PT
depends on share price performance of Hutchison; investors may prefer direct exposure to Hutch rather than positions in CK ; housing market stays quiet for
Cheung Kong
a longer period due to restrictive measures; default of presale transactions, further restrictive measures
Interest rate hike, slow market prevails for over 6 months which would be worse than our expectations; default of presale transactions, further restrictive
Sun Hung Kai
measures. Fund raising risks.
Further cancellation of S&P contracts at 39 Conduit Road after announcement of new restrictive measures; slower-than-expected volume if pricing is too
Henderson Land
aggressive for both its HK & China projects. Bonus warrant may be exercised if share price well exceeds HK$57 and could put a cap on share price.
Default of presale transactions, further restrictive measures on housing sector. Slowdown of launches in early 2011 poses earnings risks. Upside risksBetter-
Sino Land
than-expected sales, e.g. if company offers flexible payment schemes to buyers, share buy-back
Delay in the negotiation process with Urban Renewal Authority on the sale of its minority stake in K11 mall back to NWD; Further slowdown of development
New World Dev
progress of NWCL, Kai Yuen Lane acquisition may become NAV dilutive if property comes down significantly
Interest rate hike, sustainability of economic recovery in Hong Kong and China, construction slippage of its mixed-use projects in China, sales progress of
Kerry Properties
China projects may slow down due to prolonged tightening
Lower-than-expected rental achieved on its upcoming malls, construction slippage and construction cost hikes. Inventory sales may be at lower price than
Hang Lung Pty
expectations. Upside risks announcement of new projects in China that bring bigger NAV accretion than our expectations; Chairman adding stake
Hang Lung Group Downside risks include share price decline of HLP; upside risks Better-than-expected dividend payment; Chairman increasing stake.
Great Eagle shocks from epidemics, acquisitions at a high cost and slower than expected rental growth
Hysan Slower-than-expected rental growth, delay in completion of assets enhancement activities and Hysan Place
Hongkong Land Lower-than-expected rental growth, rise in interest rate
Swire Pacific Key downside risks are: (1) weaker-than-expected office leasing demand; (2) earlier-than-expected expansion of cap rates which would reduce NAV.
Wharf Lower-than-expected rental growth, Ocean Terminal lease not getting renewal, delay in China properties completion
Fortune REIT Lower-than-expected rental reversions, and delays in completion of City One Shatin asset enhancement
Link REIT Downside risks include rise in interest rates and delay in Assets Enhancement Initiatives completion. Key upside risk is better-than-expected rental growth
Champion REIT Downside risks include rise in interest rates, upside risks are higher than expected occupancy rates and sudden resumption of 100% payout ratio
Source: J.P. Morgan.
25
(852) 2800-8526 21 November 2010
Table 16: Policy measures announced YTD10

Time Key policy changes
Feb-10 Financial Secretary announced series of restrictive measures:
1. Stamp duty for property worth >HK$20 mn raised to 4.25% from 3.75%
2. Government implemented series of measure aiming to increase land supply:
i. introduce government initiated land auction;
ii. put up a site in Yuen Long for tender,
iii. speed up tender launch process for MTRC and URA's projects
Mar-10 HKMA imposed a reference mortgage rate floor at HIBOR+70 b.p. At that time some banks are offering mortgage at HIBOR+65 b.p.
Apr-10 Government announced more restrictions on pre-sale:

i. require developers to launch price list three days before sale
ii. developers are required to have at least one sample unit at the show flat displaying the exact handover standards;
iii. for small developments, a minimum number of units to be launched in the first batch will be the higher of 30 flats or 30% of the total units available-for-sale;
iv. for larger developments the minimum number of units to be included will be the higher of 50 flats or 50% of the total units available-for-sale.
Aug-10 1. Initiate three land auctions (540 units), two held in Sept and one unspecified
2. Speed up redevelopment of former Kai Tak Airport, land conversion and new land supply; expand land application list
3. Buyers who cancel transactions will have to forfeit at least 10% of total purchase price (vs a minimum of 5% under sale & purchase agreements)
4. Confirmor transactions banned for primary presale
5. For residential units valued at HK$12 million or more, the LTV ratio is capped at 60% (vs HK$20 million previously)
6. Impose 60% LTV cap on mortgage of residential units NOT intended to be self-occupied
Oct-10 1. Introduce My Home Purchase Plan : HK Housing Society to build "no-frills" small and medium flats for lease; tenants can buy the flat they rent or another
(Policy flat with 50% of the rent payments as downpayment
Address) 2. Government pledges annual land supply will reach at least 20,000 units
3. Propose to rezone 30 hectares of non-residential land into residential use
4. Impose a cap on “GFA inflation” to 10%
5. Monitor primary sales through proposed legislation
6. temporary removal of real estate from the investment asset classes under the Capital Investment Entrant Scheme (CIES) effective on 14-Oct-10
Nov-10 1. Special Stamp Duty imposed for trading of properties within 6-24 months
2. LTV lowered further
Source: HKMA, HKMC, HKSAR Government and J.P. Morgan.
26
(852) 2800-8526 21 November 2010
Table 17: Land supply summary for 2010

Residential GFA Saleable res GFA Unit size Est. No. of Expected Price Price
Projects Developer Location Plot Ratio (X) (sqf) (sqf) (sqf) units sales date (HK$mn) (HK$psf)
Year-to-date transactions
Government tender / auction
Tseung Kwan O Area 66B SHKP Tseung Kwan O 5.50 728,178 837,405 900 930 Feb-10 3,370 4,628
Tung Chung Area 55B Nam Fung Tung Chung 5.00 1,410,071 1,621,582 900 1,802 May-10 3,420 2,425
Area 19, Sha Tau Kok Road HK Ferry Fanling 5.88 385,700 443,555 900 493 May-10 1,330 3,448
Ex-Valley Road Estate Ph 2 SHKP Homantin 5.00 869,239 999,625 1,000 1,000 Jun-10 10,900 12,540
103 Mt. Nicholson Road, The Peak Nan Fung / Wharf The Peak 1.30 324,859 363,842 2,000 182 Jul-10 10,400 32,014
Hung Hom Bay Reclamation Site D1 Cheung Kong Hung Hom 4.50 365,747 438,896 750 585 Aug-10 3,510 9,597
Ex-CAS Training Centre, 204 Argyle Street Cheung Kong Kowloon City 5.00 394,282 473,138 1,000 473 Aug-10 4,100 10,399
1 Ede Road, Kowloon Tong Kerry Properties Kowloon Tong 3.00 77,468 89,088 2,500 36 Aug-10 1,285 16,588
Luen Wo Hui SHKP Fanling 5.40 125,452 140,506 650 216 Sep-10 459 3,659
3-5 Ede Road, Kowloon Tong Chinachem Kowloon Tong 3.00 90,675 104,276 2,200 48 Oct-10 1,630 17,976
Inverness Road, Kowloon Tong Chinachem Kowloon Tong 3.00 227,527 250,280 1,500 160 Nov-10 2170 9,537
4,999,197 5,762,192 5,925 42,574 8,516
MTRC Projects
Sites C and D, Austin Station NWD / Wharf Tsim Sha Tsui 5.67 1,280,000 1,472,000 1,338 1,100 Mar-10 11,700 9,141
1,280,000 1,472,000 1,100
URA Projects
Yee Kuk Street Project Cheung Kong Sham Shui Po 7.36 264,824 317,789 828 384 Jan-10 NA NA
Yu Lok Lane / Centre Street Project China Overseas Western 7.43 171,953 206,344 764 270 Sep-10 NA NA
436,778 524,133 654
Land exchange / conversion
No. 146, Argyle Street Swire Prince Edward NA 88,555 101,838 750 136 Jan-10 161.77 1,827
Lo Wo Sha Site (STTL 502) Henderson/NWD Yuen Long 2.83 2,950,000 3,392,500 750 4,523 Mar-10 9,597 3,253
YOHO Town Ph3 (YLTL 507) SHKP Yuen Long 5.50 1,848,000 2,125,200 750 2,834 Mar-10 7,103 3,844
Tai Tong Road Project (Lot 5369 in DD 116) Henderson / NWD Yuen Long 3.50 1,175,418 1,351,731 750 1,802 May-10 2,335 1,986
Ting Kau site (Lot495 in DD 399) SHKP Tsuen Wan 0.78 78,000 89,700 1,000 90 May-10 255 3,268
Yuk Yat Street (KIL 11196) Kerry To Kwa Wan 7.70 148,968 171,313 600 286 May-10 450 3,022
Cheung Sha Wan Site (KCTL 157) Cheung Kong Cheung Sha Wan 5.21 260,368 312,442 750 417 May-10 580 2,226
Ha Yau Tin (Lot 5371 in DD 116) SHKP Yuen Long 3.49 233,000 267,950 750 357 Aug-10 564 2,422
77 Peak Road (RBL 836) Wharf The Peak 0.55 42,000 63,000 6,000 11 Aug-10 283 6,733
44-50 Chung Hom Kok Road (RBL 811) Shun Tak Stanley 0.75 23,928 35,892 6,000 6 Sep-10 134 5,611
50 Island Road (RBL 1182) Kwok's family Repulse Bay 0.75 41,318 61,976 6,000 10 Sep-10 825 19,967
6,889,554 7,973,541 10,471
Sub-total 13,605,528 15,731,866 18,150

Estimated for the remainder of 2010
Government tender / auction
Ex-Ko Shan Road Customs & Excise Service Married Quarters NA Hung Hom 7.50 153,515 176,542 650 272 Dec-10
153,515 176,542 272
URA Projects
Fuk Tsuen Street / Pine Street Project NA Tai Kok Tsui 7.50 43,271 51,925 721 72 Nov-10
799,047 958,857 1,096
Land conversion
Wo Shang Wai Site Henderson Yuen Long 0.39 890,000 1,023,500 3,000 341 4Q2010
890,000 1,023,500 341
Sub-total 1,842,562 2,158,899 1,709
Grand Total 15,448,090 17,890,765 19,858
Source: Lands Department, Urban Renewal Council, MTR Corp, HKET, HKEJ, Sing Tao Daily, J.P. Morgan
27
(852) 2800-8526 21 November 2010
Summary of NAV breakdown

Table 18: Cheung Kong Holdings – detailed net asset value estimates
Property Dec-11 Value
HK$MM HK$/sh
Property Development
Hong Kong
Luxury residential 1,254 0.5 0.3%
Mass residential 45,482 19.6 11.0%
HK Dev 46,736 20.2 11.3%
China 0.0
Residential 23,842 10.3 5.8%
Office 0 0.0 0.0%
Retail 689 0.3 0.2%
Res/Com 13,763 5.9 3.3%
China Dev (sqm) 38,294 16.5 9.3%
Other overseas Dev 8,787 3.8 2.1%
Total Property Development 93,818 40.5 22.8%
Investment Property
Hong Kong
Office 15,402 6.6 3.7%
Retail 15,234 6.6 3.7%
Industrial/others 1,782 0.8 0.4%
HK Inv pty 32,419 14.0
China 0.0
Residential 4,742 2.0 1.2%
Office 6,396 2.8 1.6%
Retail 17,020 7.3 4.1%
China Inv pty 28,159 12.2 6.8%
Singapore
Office 3,556 1.5 0.9%
Retail
Singapore inv pty 3,556 1.5 0.9%
Total Investment Property 64,134 27.7 15.6%
Hotel
Hong Kong
Existing 34,703 15.0 8.4%
HK hotel total 34,703 15.0 8.4%
China
Existing 4,443 1.9 1.1%
Total Hotel 39,146 16.9 9.5%
Agricultural Landbank 2,492 1.1 0.6%
Investments
Hutchison Whampoa Ltd (0013.HK) 201,943 87.2 49.0%

Total other investments 212,627 91.8 51.6%
Gross Asset Value 412,216 178.0 100.0%
Est Gross Interest Bearing Debt (35,433) -15.3

Less Cash & Short Term Deposits 18,413 7.9
Est Net Interest Bearing Debt (17,020) -7.3
0.0
Associated debt (1,836) -0.8
Total Net Asset Value, Cheung Kong Ltd 393,360 169.8
Source: Company data, J.P. Morgan estimates
28
(852) 2800-8526 21 November 2010
Table 19: Sun Hung Kai Properties – detailed net asset value estimates
Dec-11 % of
HK$MM value HK$/sh GAV
Hong Kong properties

Agricultural Land 7,392 2.88 1.5%
Property under development
Lux Residential 45,904 17.86 9.1%
Mass Residential 33,476 13.03 6.6%
Retail 0 0.00 0.0%
Office 168 0.07 0.0%
Ind/others 641 0.25 0
80,188 31.20 15.9%
Property investment
Office 117,745 45.81 23.4%
Retail 96,833 37.68 19.2%
Industrial 5,320 2.07 1.1%
Office (for long-term investment) 5,422 2.11 1.1%
Retail (for long-term investment) 7,071 2.75 1.4%
Ind/others (for long-term investment) 625 0.24 0.1%
Car Park 10,504 4.09 2.1%
281,948 109.71 56.0%
0.0%
Hotel 15,554 6.05 3.1%
HK Properties total 385,082 149.84 76%
China properties
Development property 42,551 16.56 8.4%
Property investment
Office 14,367 5.59 2.9%
Retail 25,372 9.87 5.0%
44,174 17.2 8.8%
Hotel 2,004 0.78 0.4%

China properties total 88,728 34.52 18%
Singapore properties
Orchard Residence 273 0.11 0.1%
ION Orchard (Retail) 3,872 1.51 0.8%
Singapore properties total 4,144 1.61 0.8%
Listed investments
Transport Intl (62 HK) 3,392 1.32 0.7%

SmarTone (315 HK) 4,041 1.57 0.8%
Sunevision (8008 HK) 1,766 0.69 0.4%
Wing Tai Properties (369 HK) 383 0.15 0.1%
Other listed shares 4,021 1.56 0.8%
Loan receivables 346 0.13 0.1%
13,949 5.4 2.8%
Other business (9x P/E blended) 11,700 4.55 2.3%
Gross Asset Value 503,604 100%
Net Debt (37,184)

Associated debt (2,808)
NAV 463,612 180.4
29
(852) 2800-8526 21 November 2010
Table 20: Henderson Land – detailed net asset value estimates

% of
Division Dec-11 total
(HK$m) (HK$/sh) GAV
Hong Kong Property Development
Lux Res 24,698 11.4 12%

Mass Res 1,134 0.5 1%
Office/industrial 43 0.0 0%
Less Forward sales proceeds received 0 0.0 0%
Total Property Development 25,875 11.9 12%
Hong Kong Investment Property
Office 35,782 16.5 17%

Commercial/Retail 37,209 17.2 18%
Industrial 2,209 1.0 1%
Residential 10,721 5.0 5%
Carparks 2,047 0.9 1%
Hotels 2,363 1.1 1%
Total Investment Property 90,331 41.7 43%
Agricultural land 6,100 2.8 3%
China development property 6,989 3.2 3%

China investment property 23,559 10.9 11%
China Property 30,548 14.1 14%
Investments
Hong Kong & China Gas (0003.HK) 54,301 25.1 26%

Hong Kong Ferry (0050.HK) 836 0.4 0%
Miramar Hotel (0071.HK) 2,343 1.1 1%
Henderson Investment (0097.HK) 1,636 0.8 1%
Sunlight REIT (0435.HK) 187 0.1 0%
Total Investments/Other 59,302 27.4 28%
Total Gross Value, Henderson Land Development Ltd 212,156 98.0 100%
Est Gross Interest Bearing Debt (52,121)

Less Cash & Short Term Deposits 19,895
Est Net Interest Bearing Debt (32,226) (14.9)
Total Net Asset Value, Henderson Land Development Ltd 179,930 83.1
Source: Company data, J.P. Morgan estimates. Henderson Land: fully diluted NAV: HK$78.9
30
(852) 2800-8526 21 November 2010
Table 21: Sino Land – detailed net asset value estimates

Dec-11 % of
HK$MM HK$MM HK$/sh GAV
Hong Kong properties

Retail 753 0.14 0.6%
Others 805 0.15 0.6%
41,068 7.73 32.1%
Property investment
Office 25,657 4.93 20.1%
Retail 28,912 5.55 22.6%
Industrial 4,716 0.91 3.7%
Office (under development) 1,178 0.23 0.9%
Retail (under development) 1,020 0.20 0.8%
Car Park 1,155 0.22 0.9%
66,748 12.82 52.2%
Hotel 1,577 0.30 1.2%
HK Properties total 109,393 21.01 85.6%
China properties
Development property 6,290 1.21 4.9%
Property investment 3,087 0.59 2.4%
China properties total 9,377 1.80 7.3%
Investment properties 1,359 0.26 1.1%
Hotel 5,729 1.10 4.5%
Singapore properties total 7,088 1.36 5.5%
Listed investment 1,859 0.36 1.5%

Loans receivables 46 0.01 0.0%
1,904 0.4 1.5%
Gross Asset Value 127,763 100%
Net Debt (8,995)

NAV 111,084
Number of shares (MM) 5,206
NAV per share 21.3
31
(852) 2800-8526 21 November 2010
Table 22: New World Development – detailed net asset value estimates
Dec-11
HK$MM HK$MM HK$ps %
Hong Kong Development Properties:
Luxury Residential 11,398 2.91 8%
Mass Residential 11,512 2.94 8%
Retail 222 0.06 0%
23,131 5.90 17%
Hong Kong Investment Properties:

Luxury Residential 11,115 0 2.84 8%
Office 22,500 0 5.74 16%
Retail 25,720 0 6.56 18%
Industrial and others 1,251 0 0.32 1%
60,585 15.46 44%
Agricultural land 4,797 1.22 3%
Hotels 17,881 4.56 13%
PRC development properties 1,288 0.33 1%
Total property 107,682 27.48 77%
New World China Land (71.27%) (917 HK) 7,927 2.02 6%

New World Department Store (75%) (825 HK) 8,435 2.15 6%
NWS Holdings (55.88%) (659 HK) 13,537 3.46 10%
29,899 7.63 21%
Telecommunication 1,570 0.40 1%
0 0.00 0%
Gross asset value 139,151 35.52 100%
Potential cash receipts from Prediwave 0 0.00
Net Debt as at end-Jun 09 (ex NWS/NWCL/NWDS) (22,281) -5.69
Off-Balance Sheet Debt (3,056) -0.78
Net asset value 113,813 29.05
32
(852) 2800-8526 21 November 2010
Table 23: Kerry Properties– detailed net asset value estimates

Dec-11 % of
HK$MM HK$/sh GAV
Hong Kong & Macau properties
Office 0 0.00 0.0%
Retail 247 0.17 0.2%
26,501 18.46 22.2%
Property investment
Office 3,779 2.63 3.2%
Retail 6,353 4.43 5.3%
Office (under development) 1,502 1.05 1.3%
Retail (under development) 976 0.68 0.8%
Car Park 305 0.21 0.3%
30,241 21.06 25.3%
Hotel 331 0.23 0.3%

HK Properties total 57,073 39.75 47.7%
China properties
Residential 7,277 5.07 6.1%
Office 256 0.18 0.2%
7,533 5.25 6.3%
Property investment
Existing 18,684 13.01 15.6%
Under development 21,240 14.79 17.8%
Outstanding land premium (500) -0.35 -0.4%
39,424 27.46 33.0%
Existing hotel 24 0.02 0.0%

China properties total 46,980 32.72 39.3%
Overseas properties total 1,816 1.27 1.5%
Total properties 105,870 73.74 88.5%
Logistics network
Logisctis and distribution 2,886 2.01 2.4%
Warehouse 8,210 5.72 6.9%
Logistics infrastructure
Chiwan Container Terminal (25%) 1,296 0.90 1.1%
Total logistics network 12,391 8.63 10.4%
Infrastructure
Westerm Harbour Crossing (15%) 511 0.36 0.4%
Total infrastructure 511 0.36 0.4%
Listed investment - Champion REIT 737 0.51 0.6%
Soho China 94 0.07 0.1%
Gross Asset Value 119,603 83.31 100.0%
Net Debt (11,011)

NAV 105,902
Number of shares (MM) 1,436
NAV per share 73.8
33
(852) 2800-8526 21 November 2010
Table 24: Hang Lung Properties– detailed net asset value estimates
Fwd NAV
Dec-11
HK$MM HK$ps %
Hong Kong Development Properties
The HarbourSide 8,224 1.85 5%
Aqua Marine 79 0.02 0%
Carmel-on-the-Hill 5 0.00 0%
Long Beach 9,724 2.19 6%
Blue Pool Road 4,645 1.05 3%
2 Garden Terrace 125 0.03 0%
Car Parks 1,106 0.25 1%
Hong Kong Development Properties 23,908 5.38 15%
Hong Kong Investment Properties

Luxury residential 11,078 2.49 7%
Retail 28,189 6.35 18%
Office 16,746 3.77 11%
Industrial 1,547 0.35 1%
Car parks 2,332 0.53 2%
59,894 13.49
China Investment Properties
Plaza 66 and Grand Gateway 20,647 4.65 13%
Other announced China developments 30,195 6.80 20%
China developments to be announced 3,982 0.90 3%
54,824 12.34 35%

Net cash as at Jun-10 15,977 3.60 10%
Total net assets 154,603 34.81 100%
Table 25: Hang Lung Group– detailed net asset value estimates
HK$m HK$/sh
Completed stcoks at cost
Luxury Residential 1,766
Office 92
Retail 404
Industrial 180
I/O 931
3,373 2.52
PRC property 6,131 4.58
Total property 9,504 7.11
Hang Lung Properties (52%-owned) 78,466 58.68

Gross asset value 87,969 65.79
Core net debt (ex HLP) (4,015) -3.00
Net Asset Value 83,954 62.8
34
(852) 2800-8526 21 November 2010
Table 26: Great Eagle– detailed net asset value estimates

Dec-11 NAV
HK$MM HK$/sh % total
Hong Kong Investment Properties
Office 2,270 3.7 7%
Retail 888 1.4 3%
Residential (Include Eaton House) 826 1.3 3%
Car Park 165 0.3 0%
4,149 6.7
Hong Kong hotel properties:
Eaton Hotel 1,467 2.4 4%
The Langham Hotel, Hong Kong 3,203 5.2 10%
Langham Place Hotel, Mongkok 3,558 5.7 11%
HK Hotel 8,228 13.2 25%
Total Hong Kong properties 12,377 19.9 38%
China properties 293 0.5 1%
US office 925 1.5 3%

Overseas hotel properties
The Langham Hotel, London 1,933 3.1 6%
The Langham, Melbourne 870 1.4 3%
The Langham, Auckland 402 0.6 1%
The Langham Hotel, Boston 568 0.9 2%
The Langham, Huntington Hotel &Spa 599 1.0 2%
Delta Chelsea Hotel, Toronto 726 1.2 2%
Overseas Hotel 5,098 8.2 15%
Total overseas properties 6,023 9.7 18%
Total properties 18,693 30.1 57%
Champion REIT (49.5%) 11,222 18.0 34%

Champion CB (MM units) 3,083 5.0 9%
Financial instruments 952 1.5
Net debt/cash (2,470) (3.97)
Total NAV 31,480 50.6
35
(852) 2800-8526 21 November 2010
Table 27: Hysan Development detailed net asset value estimates
Dec-11
HK$MM %
- Luxury Residential 9,712 9.2 17%
- Office 21,034 20.0 38%
- Retail 10,064 9.6 18%
- Car parks 465 0.4 1%
- Hennessy Centre Redevelopment 9,046 8.6 16%
50,322 47.8
Grand Gateway 4,183 4.0 8%
54,505 51.7 98%
China Mobile (0941.HK) 856 0.8 2%

Cathay Pacific (0293.HK) 323 0.3 1%
Other investment securities 0
Listed shares & inv securities 1,179 1.1 2%

Net debt as of Jun 30, 2010 (2,799) (2.7)
Net asset value 52,885 50.2 50.2
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Table 28: Hongkong Land– detailed net asset value estimates

Dec-11
Project Location Type HK$m US$m % of GAV US$/sh
Lai Sing Court Tai Hang, HK Lux Res 2,847 367 1.5% 0.16
Others Lux Res 86 11 0.0% 0.00
Hong Kong property development 2,933 378 1.5% 0.17
Hong Kong property investment
Central office Central, HK Office 133,255 17,184 68.1% 7.64
Central retail Central, HK Retail 25,079 3,234 12.8% 1.44
Mandarin Landmark Hotel 1,051 136 0.5% 0.06
HK investment properties total 159,385 20,554 81.5% 9.14
HK properties total 20,932 9.31
China property development

Chongqing Lux Res 1,958 295 1.0% 0.13
Shenyang Lux Res 430 65 0.2% 0.03
Chengdu Lux Res 983 148 0.5% 0.07
China pty dev total 2,388 360 1.2% 0.16
China Investment properties 3,161 408 1.6% 0.18

China properties total 767 0.34
Macau property
One Central Macau, China Lux Res 882 114 0.5% 0.05
One Central Macau, China Retail 1,756 226 0.9% 0.10
One Central Macau, China Hotel 488 63 0.2% 0.03
Macau property total 403 0.18
Vietnam Hanoi, Vietnam 125 16 0.1% 0.01

Makati Residential Manila, Philippines 388 50 0.2% 0.02
Residential property Singapore 1,922 248 1.0% 0.11
Commercial property Singapore 17,606 2,270 9.0% 1.01
19,527 2,518 10.0% 1.12
Overseas property total 2,584 1.15
OthersInvestments
MCL Land 4,223 541 2.2% 0.24
Longfor 387 50 0.2% 0.02
591 0.26
Gross asset value 195,643 25,278 100% 11.24
Net Debt -18,733 -2,416 -1.07
Net Asset Value 176,910 22,862 10.16
Source: Company data, J.P. Morgan estimates. Fully diluted NAV HK$9.9.
37
(852) 2800-8526 21 November 2010
Table 29 Swire Pacific– detailed net asset value estimates
38
(852) 2800-8526 21 November 2010
Table 30: Wharf Holdings– detailed net asset value estimates
Dec-11 NAV
%
NAV valuation Methodology HK$ mn HK$ per share GAV
Mass Residential Discounted cash flow 0 0.00 0%
Luxury Residential Discounted cash flow 386 0.14 0%
Residential under planning 907 0.33 0%
Office Discounted cash flow 0 0.00 0%
Retail Discounted cash flow 0 0.00 0%
1,293 0.47 1%
Luxury Residential Cap rate 16,979 6.17 7%
Office Cap rate 67,869 24.64 30%
Retail Cap rate 59,914 21.76 26%
Industrial/office Cap rate 3,297 1.20 1%
Hotel - HK$MM/room 3,040 1.10 1%
151,098 54.87 66%
China Development Properties:
Residential Discounted cash flow 25,203 9.15 11%
25,203 9.15 11%
China Investment Properties:
Luxury Residential Cap rate 540 0.20 0%
Office Cap rate 11,380 4.13 5%
Retail Cap rate 11,715 4.25 5%
Hotel Cap rate 476 0.17 0%
24,111 8.76 11%
Non-property assets
MTL 10X forward EV / EBITDA 14,912 5.41 7%
Wharf T&T 5X forward EV/EBITDA 3,036 1.10 1%
I-Cable (1097 HK) Market Capitalisation 1,514 0.55 1%
Harbour Centre (0051 HK) Market Capitalisation 5,153 1.87 2%
Investment securities Book Value 2,170 0.89 1%
26,785 9.83 12%
Gross Asset Value (GAV) 228,491 82.97 100%

Less: Net debt Book Value (11,887) (4.32)
Less: Associated debts Book Value (7,145) (2.59)
Total Net Asset Value (NAV) 209,458 76.06
Number of shares outstanding (mn) 2,754

Net asset value per share (HK$ per share) 76.06
39
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Summary of financials: Cheung Kong Holdings

Profit and Loss statement Cash flow statement
HKD in millions, year-end Dec FY09 FY10E FY11E FY12E HKD in millions, year-end Dec FY09 FY10E FY11E FY12E
Revenues 24,293 43,603 34,885 32,146 EBT 18,095 24,083 25,462 25,506
% change Y/Y 47.8 79.5 -20.0 -7.9 Depreciation & amortisation 349 384 422 465
EBIT 13,055 15,563 15,397 12,607 Change in working capital -3,972 -17,162 -20,635 -22,765
% change Y/Y 26.0 19.2 -1.1 -18.1 Taxes -713 -3,656 -3,882 -3,108
EBIT Margin (%) 53.7 35.7 44.1 39.2 Cash flow from operations 13,759 3,649 1,367 97
Net Interest -233 -189 -267 -347
Earnings before tax 18,627 24,083 25,462 25,506 Capex 0 0 0 0
% change Y/Y 9.0 29.3 5.7 0.2 Disposal/ (purchase) 769 -1,000 -1,000 -1,000
Tax 2,752 3,656 3,882 3,108 Net Interest 228 121 145 174
as % of EBT -21.1 -23.5 -25.2 -24.7 Free cash flow 21,831 7,152 5,564 4,295
Net Income (Reported) 15,453 19,749 21,513 22,193
% change Y/Y 5.6 27.8 8.9 3.2 Equity raised/ (repaid) -711 0 0 0
Ex-Hutch Net Profit 9,068 11,496 11,640 9,413 Debt raised/ (repaid) -9,874 3,000 1,414 1,485
% change Y/Y 47.4 26.8 1.3 -19.1 Other -599 0 0 0
Shares Outstanding 2,317 2,317 2,317 2,318 Dividends paid -5,924 -6,503 -7,197 -7,197
EPS (reported) 6.672 8.527 9.288 9.582 Beginning cash 7,173 11,423 15,072 5,524
% change Y/Y 5.6 27.8 8.9 3.2 Ending cash 11,423 15,072 5,524 5,524
Ex-Hutch EPS 3.91 4.96 5.03 4.06 DPS 2.7 3.0 3.0 3.0
% change Y/Y 47.4 26.8 1.3 -19.1
Balance sheet Ratio Analysis
HKD in millions, year-end Dec FY09 FY10E FY11E FY12E %, year-end Dec FY09 FY10E FY11E FY12E
Cash and cash equivalents 11,423 15,072 5,524 5,524 EBIT margin 53.7 35.7 44.1 39.2
Accounts receivable 2,799 2,799 2,799 2,799 Operating margin 52.8 35.3 43.4 38.1
Inventories 62,999 65,999 68,999 71,999 Net profit margin 63.6 45.3 61.7 69.0
Others 2,010 2,010 2,010 2,010 SG&A/sales
Current assets 79,231 85,880 79,332 82,332
Sales per share growth 47.8 79.5 -20.0 -7.9
LT investments 192,368 201,991 213,832 227,987 Sales growth 47.8 79.5 -20.0 -7.9
Net fixed assets 29,676 30,648 31,668 32,739 Net profit growth 5.6 27.8 8.9 3.2
Total assets 301,275 318,519 324,832 343,058 EPS growth 5.6 27.8 8.9 3.2
Liabilities Interest coverage (x) 17.0 28.8 20.2 12.7

ST loans 9,210 9,210 9,210 9,210 Net debt to total capital 8.2 7.5 10.9 10.8
Payables 12,078 12,078 12,078 12,078 Net debt to equity 9.3 8.6 12.5 12.3
Others 1,488 1,488 1,488 1,488 Sales/assets 8.1 13.7 10.7 9.4
Total current liabilities 22,776 22,776 22,776 22,776 Assets/equity 1.2 1.2 1.2 1.2
Long term debt 25,279 28,279 29,693 31,178 ROE 6.4 7.7 8.3 Index
Other liabilities 2,011 2,011 2,011 2,011 ROCE 6.9 8.1 8.4 8.0
Total liabilities 50,066 53,066 54,480 55,965
Shareholders' equity 247,404 261,219 266,300 283,086
BVPS 106.8 112.8 115.0 122.2
Sources: Company data, J.P. Morgan estimates
40
(852) 2800-8526 21 November 2010
Summary of financials: Sun Hung Kai Properties

HKD in millions, year-end Jun FY10 FY11E FY12E FY13E HKD in millions, year-end Jun FY10 FY11E FY12E FY13E
Revenues 33,211 49,244 47,635 81,755 EBIT 13,842 17,908 22,117 24,851
% change Y/Y -3.0 48.3 -3.3 71.6 Depreciation & amortisation 1,278 1,278 1,278 1,278
EBIT 13,842 17,908 22,117 24,851 Change in working capital 8,400 1,908 -2,046 0
% change Y/Y -1.0 29.4 23.5 12.4 Taxes -1,386 -2,926 -3,621 -3,950
EBIT Margin (%) 41.7 36.4 46.4 30.4 Cash flow from operations 23,229 19,680 19,242 22,953
Net Interest -639 -176 -174 -172
Earnings before tax 16,242 23,090 24,612 26,642 Capex -22,400 -3,000 -3,000 -3,000
% change Y/Y 6.6 42.2 6.6 8.2 Disposal/ (purchase) 3,569 0 0 0
Tax 2166 2926 3621 3950 Net Interest -832 -646 -645 -643
% change Y/Y 11.8 42.5 3.1 9.8 Equity raised/ (repaid) -77 0 0 0
Core Net Profit 13,220 19,789 20,410 21,676 Debt raised/ (repaid) 3,169 0 0 0
% change Y/Y 9.3 49.7 3.1 6.2 Other 132 0 0 0
Core EPS 5.14 7.70 7.94 8.43 DPS 2.700 2.950 3.150 3.350
% change Y/Y 9.0 49.7 3.1 6.2
HKD in millions, year-end Jun FY10 FY11E FY12E FY13E %, year-end Jun FY10 FY11E FY12E FY13E
Others 851 3,153 3,153 3,153 SG&A/sales
Current assets 110,038 118,476 127,668 134,284
Sales per share growth -3.0 48.3 -3.3 71.6
LT investments 36,381 39,105 41,935 44,877 Sales growth -3.0 48.3 -3.3 71.6

Long term debt 34,126 42,550 42,550 42,550 ROE 5.9 7.8 7.4 7.4
Minority interest 4,786 4,786 4,786 4,786
BVPS 95.4 103.1 112.9 121.7
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Summary of financials: Henderson Land Development

Profit and loss statement Cash flow statement
(Year-end December) FY09* FY10E FY11E FY12E (Year-end December) FY09* FY10E FY11E FY12E
Revenues 15,230 10,807 10,393 21,898 Operating Profit 3,863 2,922 3,847 7,065
% change yoy 80 -29 -4 111 Adjustment for non-cash item 1,168 -551 -656 -1,031
Development profit 3,171 1,243 1,849 4,891 Change in working capital -8,736 -4,360 -26,601 -8,922
Rental income 2,621 1,855 2,185 2,369 Taxes -1,217 -172 0 -127
Others (665) (176) (187) (195) Cash flow from operations -4,922 -2,160 -23,409 -3,015
Property sales margin (%) 37 20 36 30
EBIT 5,127 2,922 3,847 7,065 CAPEX 44 -9,430 -3,492 -1,000
% change yoy 124 -43 32 84 Disposal/ (purchase) -5 0 0 0
EBIT margin (%) 34 27 37 32 Net Interest -1,722 -1,467 -1,836 -2,378
Net interest (1,091) (762) (965) (1,263) Free cash Flow -6,605 -13,057 -28,737 -6,393
Earnings before tax 7,833 5,433 5,977 9,408
% change yoy 92 -31 10 57 Equity raised/(repaid) 0 0 24,902 0
Tax (901) (389) (519) (1,044) Debt raised/(repaid) 704 8,000 10,000 10,000
Underlying net profit 6,088 4,825 5,262 8,055 Other 150 0 0 0
Core net profit 6,261 4,825 5,262 8,055 Dividends 1,095 616 187 187
Beginning cash 15,583 10,495 6,054 12,406
Shares outstanding 2,147 2,147 2,576 2,576 Ending cash 10,495 6,054 12,406 16,200
Underlying EPS 2.84 2.25 2.45 3.75 DPS 1.30 0.80 1.00 1.00
Core EPS 2.92 2.25 2.45 3.75
(As at June) FY09* FY10E FY11E FY12E (Year-end June) FY09* FY10E FY11E FY12E
Cash and Cash Equivalents 10,571 6,054 12,406 16,200 EBIT margin (%) 33.7 27.0 37.0 32.3
Accounts receivable 7,365 4,891 4,839 4,676 Operating margin (%) 26.5 20.0 27.7 26.5
Inventories 41,541 56,085 87,928 101,011 Net profit margin (%) 40.0 44.7 50.6 36.8
Others 8,050 6,931 6,880 6,716 Development margin (%) 36.6 20.2 35.9 29.9
Current assets 67,527 73,961 112,054 128,603
Sales per share growth (%) 80.0 -29.0 -3.8 110.7
LT investments 54,199 64,253 67,796 71,993 Sales growth (%) 80.0 -29.0 -3.8 110.7
Net fixed assets 69,320 76,359 77,859 79,359 Net profit growth (%) 73.4 -20.7 9.0 53.1
Total Assets 191,046 214,573 257,709 279,954 EPS growth (%) 73.4 -20.7 9.0 53.1
Liabilities Interest Coverage (x) 2.7 1.9 2.0 2.9

ST bank loans 4,858 4,858 4,858 4,858 Net Deb to total Capital (%) 13.3 17.7 16.1 17.1
Payables 4,618 4,506 4,733 4,976 Net debt to equity (%) 19.1 27.0 24.3 26.6
Others 13,105 22,753 25,327 29,409 Sales/Assets (%) 22.0 14.2 13.3 27.6
Total current liabilities 22,581 32,117 34,918 39,243 Assets/Equity (%) 143.5 152.5 150.4 155.9
Long term debt 31,151 39,151 49,151 59,151 ROE (%) 4.6 3.4 3.1 4.5
Minority interest 4,383 2,567 2,258 1,949 ROCE (%) 3.6 2.6 2.3 3.3
Shareholder's equity 133,127 140,739 171,381 179,612
BVPS 62.01 65.55 66.52 69.71
* 18 month ending Dec-2009
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(852) 2800-8526 21 November 2010
Summary of financials: Sino Land Company Ltd.

HKD in millions, year-end FY10 FY11E FY12E FY13E HKD in millions, year-end FY10 FY11E FY12E FY13E
Revenues 7,698 5,709 8,103 10,133 Operating profit 3,734 2,671 3,006 2,960
% change Y/Y -20.6 -25.8 41.9 25.0 Depreciation & amortisation 43 48 52 58
EBIT 3,570 2,671 3,006 2,960 Change in working capital -3,474 69 -3,849 -1,183
% change Y/Y -20.4 -25.2 12.6 -1.5 Taxes -286 -339 -382 -376
EBIT Margin (%) 46.4 46.8 37.1 29.2 Others -40 1,967 2,510 4,168
Net Interest -21 -25 -25 -25 Cash flow from operations -22 4,416 1,338 5,628
Associate 905 1,967 2,510 4,168
Exceptionals 144 0 0 0 Capex -901 -300 -300 -300
Earnings before tax 4,598 4,613 5,491 7,104 Disposal/ (purchase) 13 0 0 0
% change Y/Y 10 0 19 29 Net Interest -85 -161 -161 -161
Tax 983 423 477 470 Others -2,528 -3,000 -3,000 -3,000
as % of EBT -27.5 -15.9 -15.9 -15.9 Free cash flow -3,523 955 -2,123 2,167
Minority interest -109.2 -109.2 -109.2 -109.2
Net Income (Reported) 3,506 4,081 4,905 6,525 Equity raised/ (repaid) 0 5,066 0 0
% change Y/Y -3 16 20 33 Debt raised/ (repaid) 338 -618 921 -1,224
Core Net Profit 3,362 4,081 4,905 6,525 Other 410 0 0 0
% change Y/Y -19 21 20 33 Dividends paid -549 -519 -519 -519
Shares Outstanding 4,903 5,208 5,208 5,208 Beginning cash 7,798 4,495 9,379 7,657
EPS (reported) 0.72 0.80 0.94 1.25 Ending cash 4,495 9,379 7,657 8,081
% change Y/Y -2.6 10.3 17.8 33.0 DPS 0.400 0.450 0.500 0.500
Core EPS 0.69 0.80 0.94 1.25
% change Y/Y -18.5 15.0 17.8 33.0
HKD in millions, year-end FY10 FY11E FY12E FY13E %, year-end Jun FY10 FY11E FY12E FY13E
Others 844 844 844 844 SG&A/sales
Current assets 29,603 35,545 34,091 32,237
Sales per share growth -20.6 -25.8 41.9 25.0
LT investments 22,018 13,912 15,524 12,453 Sales growth -20.6 -25.8 41.9 25.0
Net fixed assets 44,028 46,323 48,734 51,268 Net profit growth -2.6 16.4 20.2 33.0
Total assets 95,650 95,781 98,349 95,957 EPS growth -2.6 10.3 17.8 33.0

Others 933 933 933 933 Sales/assets 8.3 6.0 8.3 10.4
Other liabilities 3456 3585 3721 3864 ROCE 5.1 5.3 6.1 8.2
Minority interest 379 379 379 379
BVPS 15.1 14.9 15.1 14.8
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Summary of financials: New World Development

Revenues 24,415 30,219 28,233 29,590 EBIT 4,171 8,918 5,894 6,506
% change Y/Y -17 24 -7 5 Depreciation & amortisation 911 994 1,093 1,202
EBIT 4,171 8,918 5,894 6,506 Change in working capital -9,285 7 -1,224 -1,410
% change Y/Y -28.8 113.8 -33.9 10.4 Taxes -825 -1,297 -956 -1,029
EBIT Margin (%) 17.1 29.5 20.9 22.0 Cash flow from operations -5,247 8,277 5,167 5,211
Net Interest -262 -338 -581 -791
Earnings before tax 6033 12746 9604 10135 Capex -2,396 -5,379 -1,000 -1,000
% change Y/Y -40.7 111.3 -24.6 5.5 Disposal/ (purchase) 2,991 5,076 0 0
Tax 767 1836 956 1029 Net Interest -371 -192 -581 -791
as % of EBT -18.4 -20.6 -16.2 -15.8 Free cash flow -4,598 7,440 4,167 4,211
% change Y/Y -6.5 72.4 -17.5 5.3 Equity raised/ (repaid) 0 0 0 0
Core Net Profit 1,813 3,534 5,016 5,282 Debt raised/ (repaid) 7,248 2,709 -2,000 -2,000
% change Y/Y 13.5 94.9 41.9 5.3 Other 21 1,386 104 104
% change Y/Y -2.6 72.4 -20.0 5.3 Ending cash 13,310 22,805 23,345 23,929
Core EPS 0.48 0.93 1.28 1.35 DPS 0.30 0.38 0.38 0.38
% change Y/Y 18.2 94.9 37.6 5.3
Current assets 70,316 77,347 76,560 76,640
Net fixed assets 43,412 52,745 53,745 54,745 Net profit growth -6.5 72.4 -17.5 5.3
Total assets 176,519 197,233 197,657 199,499 EPS growth -2.6 72.4 -20.0 5.3

BVPS 19.6 22.7 23.2 24.1
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(852) 2800-8526 21 November 2010
Summary of financials: Kerry Properties

Revenues 12,938 21,673 21,226 25,261 EBIT 3,546 3,904 5,725 7,243
% change Y/Y -1.4 67.5 -2.1 19.0 Depreciation & amortisation 222 244 269 295
EBIT 3,546 3,904 5,725 7,243 Change in working capital 2,801 2,834 -83 237
% change Y/Y 9.6 10.1 46.7 26.5 Taxes -504 -544 -694 -880
Net Interest -74 -155 -176 -200
% change Y/Y 13.1 40.4 11.8 22.3 Disposal/ (purchase) 976 0 0 0
Tax 1,478 1,087 1,387 1,761 Net Interest -392 -557 -619 -687
as % of EBT -41.7 -27.9 -24.2 -24.3 Free cash flow 3,436 707 2,329 3,719
% change Y/Y -3.7 93.5 1.9 18.3 Equity raised/ (repaid) 24 0 0 0
Core Net Profit 2,073 4,070 4,230 5,003 Debt raised/ (repaid) -381 360 -308 -1,003
% change Y/Y -5.2 96.4 3.9 18.3 Other 636 0 0 0
% change Y/Y -3.8 93.5 1.9 18.3 Ending cash 6,654 6,294 6,601 7,604
Core EPS 1.451 2.835 2.946 3.485 DPS 0.700 1.000 1.200 1.200
% change Y/Y -5.3 95.4 3.9 18.3
Current assets 24,427 26,182 28,133 30,615
Net fixed assets 54,682 57,425 60,255 63,177 Net profit growth -3.7 93.5 1.9 18.3
Total assets 88,050 92,548 97,328 102,732 EPS growth -3.8 93.5 1.9 18.3

ST loans 654 654 654 654 Net debt to total capital 14.0 13.2 12.0 10.2
BVPS 35.3 38.7 42.0 45.6
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(852) 2800-8526 21 November 2010
Summary of financials: Hang Lung Properties

Revenues 12,057 9,733 12,369 15,682 EBIT 8,561 7,156 8,929 11,545
% change Y/Y 188.2 -19.3 27.1 26.8 Depreciation & amortisation 23 0 0 0
EBIT 8,561 7,156 8,929 11,545 Change in working capital 1,379 1,320 2,002 2,324
% change Y/Y 166.0 -16.4 24.8 29.3 Taxes -1,131 -1,237 -1,674 -2,168
Net Interest -12 -17 -49 -42
% change Y/Y 161.7 -17.7 24.3 29.4 Disposal/ (purchase) 0 0 0 0
Tax 1,605 1,237 1,674 2,168 Net Interest -172 0 0 0
as % of EBT -18.7 -17.3 -18.7 -18.8 Free cash flow 5,149 -1,598 4,418 6,863
% change Y/Y 169.4 -16.8 22.9 30.4 Equity raised/ (repaid) 137 10,900 0 0
Core Net Profit 6,840 5,691 6,993 9,119 Debt raised/ (repaid) 174 2,432 17 -1,040
% change Y/Y 169.4 -16.8 22.9 30.4 Other -33 0 0 0
% change Y/Y 179.3 -18.8 20.2 39.6 Ending cash 11,535 20,003 19,985 21,025
Core EPS 1.609 1.307 1.570 2.192 DPS 0.710 0.750 1.000 1.150
% change Y/Y 179.3 -18.8 20.2 39.6
Inventories 5,855 4,688 2,848 693 Net profit margin 56.7 58.5 56.5 58.1
Current assets 18,884 26,185 24,327 23,213
Sales per share growth 188.2 -19.3 27.1 26.8
LT investments 830 846 862 879 Sales growth 188.2 -19.3 27.1 26.8
Net fixed assets 96,454 105,454 110,454 115,454 Net profit growth 169.4 -16.8 22.9 30.4
Total assets 116,168 132,485 135,644 139,546 EPS growth 179.3 -18.8 20.2 39.6

ST loans 1,480 1,480 1,480 1,480 Net debt to total capital -5.4 -11.2 -10.9 -12.5
Payables 4,208 4,362 4,523 4,693 Net debt to equity -5.8 -12.3 -11.9 -13.5
Total current liabilities 5,688 5,842 6,003 6,173 Assets/equity 132 147 146 143
BVPS 21.1 20.3 22.4 23.4
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(852) 2800-8526 21 November 2010
Summary of financials: Hang Lung Group

Revenues 12,580 10,237 12,893 16,051 EBIT 8,826 7,405 9,188 11,692
% change Y/Y 167.9 -18.6 25.9 24.5 Depreciation & amortisation 24 15 15 15
EBIT 8,826 7,405 9,188 11,692 Change in working capital 1,418 732 1,377 1,037
% change Y/Y 162.1 -16.1 24.1 27.3 Taxes -1,176 -1,298 -1,737 -2,214
EBIT Margin (%) 70.2 72.3 71.3 72.8 Others 146 41 42 42
Net Interest -77 -80 -110 -100 Cash flow from operations 8,999 6,960 8,858 10,566
Earnings before tax 8838 7363 9116 11630
% change Y/Y 156.4 -16.7 23.8 27.6 Capex -3,686 0 0 0
Tax 1705 1298 1737 2214 Disposal/ (purchase) -14 2 2 2
as % of EBT -19.3 -17.5 -18.9 -18.9 Net Interest -242 67 -24 -4
Net Income (Reported) 3695 3091 3651 4615 Others 77 -194 -194 -194
% change Y/Y 154.1 -16.3 18.1 26.4 Free cash flow 5,376 6,768 8,666 10,374
Core Net Profit 3695 3091 3651 4615
% change Y/Y 154.1 -16.3 18.1 26.4 Equity raised/ (repaid) 31 0 0 0
Shares Outstanding 1339 1339 1339 1339 Debt raised/ (repaid) -771 0 0 0
EPS (reported) 2.764 2.312 2.731 3.452 Other -76 0 0 0
% change Y/Y 153.5 -16.3 18.1 26.4 Dividends paid -2,340 -2,382 -2,382 -2,382
Core EPS 2.764 2.312 2.731 3.452 Beginning cash 9,630 11,850 16,236 22,520
% change Y/Y 153.5 -16.3 18.1 26.4 Ending cash 11,850 16,236 22,520 30,512
Balance sheet DPS 0.760 0.760 0.760 0.760
HKD in millions, year-end Jun FY10 FY11E FY12E FY13E
Ratio Analysis
Cash and cash equivalents 11,852 16,236 22,520 30,512 %, year-end Jun FY10 FY11E FY12E FY13E
Accounts receivable 1,532 1,532 1,532 1,532
Inventories 5,886 4,120 2,884 2,019 EBIT margin 70.2 72.3 71.3 72.8
Others 0 0 0 0 Operating margin 69.5 71.6 70.4 72.2
Current assets 19,270 21,888 26,936 34,063 Net profit margin 29.4 30.2 28.3 28.8
LT investments 2,936 1,872 1,816 1,764

Net fixed assets 104,129 105,679 107,383 109,258 Sales per share growth 167.9 -18.6 25.9 24.5
Total assets 126,335 129,438 136,136 145,085 Sales growth 167.9 -18.6 25.9 24.5
Net profit growth 154.1 -16.3 18.1 26.4
Liabilities EPS growth 153.5 -16.3 18.1 26.4
ST loans 3,180 0 0 0
Payables 3,483 2,386 2,467 2,581 Interest coverage (x) 27.2 24.1 34.1 32.5
Others 1,191 715 781 891 Net debt to total capital 0.0 -0.1 -0.2 -0.3
Total current liabilities 7,854 3,101 3,248 3,473 Net debt to equity -1.8 -16.2 -26.8 -38.8
Long term debt 7,778 7,778 7,778 7,778 Sales/assets 11.2 8.0 9.7 11.4
Other liabilities 13538 2971 2971 2971 Assets/equity 251.5 247.5 247.8 247.9
Total liabilities 29,170 13,849 13,997 14,222 ROE 8.3 6.0 6.8 8.1
Minority interest 46,935 63,285 67,202 72,329 ROCE 14.6 12.4 14.7 17.7
BVPS 37.569 39.120 41.090 43.780
47
(852) 2800-8526 21 November 2010
Summary of financials: Great Eagle Holdings

Revenues 3,958 4,805 4,957 5,185 EBIT 1,183 1,413 1,422 1,531
% change Y/Y -17 21 3 5 Depreciation & amortisation 315 229 229 229
EBIT 1,183 1,413 1,422 1,531 Change in working capital -135 -43 -44 -143
% change Y/Y -12 19 1 8 Taxes -105 -118 -138 -152
EBIT Margin (%) 30 29 29 30 Other non-cash items -766 -652 -552 -551
Net Interest 21 26 -8 -29 Cash flow from operations 208 856 910 885
Earnings before tax 1,329 1,458 1,434 1,521 0 0 0 0
% change Y/Y 10 10 -2 6 Capex -1,025 0 0 0
Tax 53 118 138 152 Disposal/ (purchase) -635 0 0 0
as % of EBT -4 -8 -10 -10 Net Interest -74 26 -8 -29
Net Income (Reported) 1,276 1,340 1,296 1,369 Free cash flow -1,303 1,050 1,124 1,120
% change Y/Y 11 5 -3 6 0 0 0 0
Core Net Profit 1,187 1,340 1,296 1,369 Equity raised/ (repaid) 0 0 0 0
% change Y/Y 3 13 -3 6 Debt raised/ (repaid) -97 0 0 0
Shares Outstanding 622 622 622 622 Other 0 0 0 0
EPS (reported) 2.1 2.2 2.1 2.2 Dividends paid -163 -336 -336 -336
% change Y/Y 9 4 -3 6 Beginning cash 3,349 1,850 2,564 3,353
Core EPS 2 2 2 2 Ending cash 1,850 2,564 3,353 4,137
% change Y/Y 1 12 -3 6 DPS 0.5 0.5 0.5 0.5
Balance sheet
HKD in millions, year-end Dec FY09 FY10E FY11E FY12E Ratio Analysis
%, year-end Dec FY09 FY10E FY11E FY12E
Cash and cash equivalents 1,860 2,564 3,353 4,137
Accounts receivable 340 390 440 490 EBIT margin 29.9 29.4 28.7 29.5
Inventories 66 59 53 48 Operating margin 30.4 30.0 28.5 29.0
Others 590 590 590 590 Net profit margin 32.2 27.9 26.1 26.4
Current assets 2,855 3,603 4,435 5,265
LT investments 13,491 13,322 13,322 13,322 Sales per share growth -16.7 21.4 3.1 4.6
Net fixed assets 11,820 11,820 11,820 11,820 Sales growth -16.7 21.4 3.1 4.6
Total assets 28,166 28,746 29,578 30,407 Net profit growth 10.9 5.0 -3.3 5.6
EPS growth 8.9 4.1 -3.3 5.6
Liabilities
ST loans 256 1,679 1,679 1,679 Interest coverage (x) 9.0 10.8 8.6 8.2
Payables 702 702 702 702 Net debt to total capital 9.9 6.5 3.5 0.7
Others 1 1 1 1 Net debt to equity 11.9 7.7 4.1 0.8
Total current liabilities 959 2,382 2,382 2,382 Sales/assets 15.1 16.9 17.0 17.3
Long term debt 4,257 2,657 2,657 2,657 Assets/equity 126.2 124.6 123.7 122.9
Other liabilities 633 633 633 633 ROE 6.3 5.9 5.5 5.6
Total liabilities 5,849 5,671 5,671 5,671 ROCE 4.5 5.2 5.1 5.3
BVPS 36 37 38 40
48
(852) 2800-8526 21 November 2010
Summary of financials: Hysan Development

HKD in millions, year-end Dec FY09A FY10E FY11E FY12E HKD in millions, year-end Dec FY09A FY10E FY11E FY12E
Revenues 1,680 1,749 1,863 2,226 Operating profit 1,309 1,370 1,485 1,797
% change Y/Y 2.6 4.1 6.5 19.5 Depreciation & amortisation 7 6 6 6
EBIT 1,344 1,420 1,534 1,846 Change in working capital 24 -3 -2 -2
% change Y/Y 3.2 6.1 4.1 20.2 Taxes -469 -187 -195 -237
EBIT Margin (%) 80.0 81.2 82.4 82.9 Other non-cash items 36 37 37 37
Net Interest -131 -133 -194 -235 Cash flow from operations 788 1,130 1,187 1,425
Earnings before tax 1,378 1,457 1,515 1,789
% change Y/Y -9.3 5.8 3.9 18.1 Capex -242 -939 -939 -1,446
Tax 189 192 200 242 Disposal/ (purchase) 84 0 0 0
as % of EBT -14.1 -13.5 -13.0 -13.1 Net Interest -119 -94 -144 -176
Net Income (Reported) 1113 1186 1227 1451 Others 101 -3 -3 -3
% change Y/Y -7.3 6.5 3.5 18.2 Free cash flow 546 191 249 -21
Core Net Profit 1110 1186 1227 1451
% change Y/Y 4.1 6.8 3.5 18.2 Equity raised/ (repaid) 1 0 0 0
Shares Outstanding 1,046 1,051 1,051 1,051 Debt raised/ (repaid) 179 500 500 500
EPS (reported) 1.06 1.13 1.17 1.38 Other 0 0 0 0
% change Y/Y -7.8 6.1 3.5 18.2 Dividends paid -642 -712 -715 -567
Core EPS 1.06 1.13 1.17 1.38 Beginning cash 1,715 1,984 1,960 1,991
Balance sheet DPS 0.68 0.68 0.68 0.76
HKD in millions, year-end Dec FY09A FY10E FY11E FY12E
Ratio Analysis
Cash and cash equivalents 1,984 1,960 1,991 1,899 %, year-end Dec FY09A FY10E FY11E FY12E
Accounts receivable 83 83 83 83
Inventories 0 0 0 0 EBIT margin 80.0 81.2 82.4 82.9
Others 489 369 369 369 Operating margin 72.2 73.6 71.9 72.4
Current assets 2,556 2,412 2,443 2,351 Net profit margin 66.3 67.8 65.9 65.2
SG&A/sales
LT investments 3,848 3,848 3,848 3,848
Net fixed assets 37,444 39,503 40,442 41,888 Sales per share growth 2.6 4.1 6.5 19.5
Total assets 43,848 45,763 46,733 48,088 Sales growth 2.6 4.1 6.5 19.5
Net profit growth -7.3 6.5 3.5 18.2
Liabilities EPS growth -7.8 6.1 3.5 18.2
ST loans 400 - - -
Payables 486 488 490 493 Interest coverage (x) 10.3 10.7 7.9 7.9
Others 327 327 327 327 Net debt to total capital 5.4 6.3 7.4 8.7
Total current liabilities 1,213 815 817 820 Net debt to equity 5.7 6.7 8.0 9.5
Long term debt 3,491 4,290 4,790 5,290 Sales/assets 3.8 3.8 4.0 4.6
Other liabilities 4,190 4,530 4,685 4,923 Assets/equity 130.2 131.4 133.1 134.7
BVPS 32.0 33.1 33.4 34.0
49
(852) 2800-8526 21 November 2010
Summary of financials: Hongkong Land Holdings

USD in millions, year-end Dec FY09 FY10E FY11E FY12E USD in millions, year-end Dec FY09 FY10E FY11E FY12E
Revenues 1,323 1,381 1,371 1,025 EBIT 815 799 914 818
% change Y/Y 29 4 -1 -25 Depreciation & amortisation 2 2 2 2
EBIT 815 799 914 818 Change in working capital 160 269 59 64
% change Y/Y 52.0 -2.0 14.5 -10.5 Taxes -53 -109 -123 -107
Net Interest -52 -70 -94 -105 Cash flow from operations 923 960 852 777
Associate 178 166 117 133
Earnings before tax 940 946 936 847 Capex -34 -1,150 -369 -1,791
% change Y/Y 117.4 0.6 -1.0 -9.6 Disposal/ (purchase) -385 0 0 0
Tax 120 109 123 107 Net Interest -32 -70 -94 -105
as % of EBT -14.8 -13.7 -13.5 -13.1 Free cash flow 484 -249 400 -1,107
Net Income (Reported) 777 796 769 714
% change Y/Y 107.2 2.4 -3.3 -7.2 Equity raised/ (repaid) 0 0 0 0
Core Net Profit 777 745 769 714 Debt raised/ (repaid) -81 0 300 300
% change Y/Y 50.9 -4.2 3.3 -7.2 Other 0 0 0 0
Shares Outstanding 2249 2249 2249 2249 Dividends paid -298 -405 -405 -405
EPS (reported) 0.345 0.354 0.342 0.317 Beginning cash 1,117 1,225 571 867
% change Y/Y 111.4 2.4 -3.3 -7.2 Ending cash 1,225 571 867 -345
FD Core EPS 0.335 0.321 0.332 0.308 DPS 0.160 0.180 0.180 0.180
% change Y/Y 56.0 -4.1 3.3 -7.1
USD in millions, year-end Dec FY09 FY10E FY11E FY12E %, year-end Dec FY09 FY10E FY11E FY12E
Cash and cash equivalents 1,226 572 868 -344 EBIT margin 61.6 57.8 66.7 79.9
Accounts receivable 315 101 101 101 Operating margin 57.7 52.8 59.8 69.6
Inventories 787 787 787 787 Net profit margin 58.8 57.6 56.1 69.7
Current assets 2,329 1,461 1,756 545
Sales per share growth 29.4 4.4 -0.7 -25.3
LT investments 2,426 2,399 2,399 2,399 Sales growth 29.4 4.4 -0.7 -25.3
Net fixed assets 14,818 16,264 16,633 18,424 Net profit growth 107.2 2.4 -3.3 -7.2
Total assets 19,572 20,124 20,788 21,367 EPS growth 111.4 2.4 -3.3 -7.2

Payables 687 742 801 866 Net debt to equity 19.0 23.1 17.4 22.5
Total current liabilities 1,104 996 1,058 1,125 Assets/equity 153 152 147 143
BVPS 5.67 5.90 6.30 6.66
50
(852) 2800-8526 21 November 2010
Summary of financials: Swire Pacific

Income statement Cash flow statement
HK$ in millions, year end Dec FY09 FY10E FY11E FY12E HK$ in millions, year end Dec FY09 FY10E FY11E FY12E
Revenue 24,909 25,481 33,645 40,707 PBT 23,571 20,809 13,329 17,083
% change Y/Y 1.0% 2.% 32.0% 21.0% Associates profits (2,718) (4,705) (5,242) (5,920)
EBITDA 8,507 8,486 10,819 14,068 Dividends from associates 890 1,436 2,210 2,503
Depreciation and amortisation (913) (985) (1,131) (1,219) Depreciation & amortisation 913 985 1,131 1,219
EBIT 7,594 7,501 9,687 12,849 Taxation (648) (694) (888) (1,560)
Net interest (940) (1,222) (1,601) (1,686) Loss / (profit) on sale of F.A. (106) 0 0 0
Operating profit 6,654 6,279 8,087 11,164 Others (14,344) (9,825) 0 0
Jointly Controlled Companies 617 498 713 857 Gross cashflow 7,558 8,006 10,540 13,326
Associates 2,101 4,207 4,529 5,063 Net capex (4,336) (10,362) (4,689) (3,350)
Exceptionals 14,199 9,825 0 0 Interest capitalised as F.A. (238) (110) (14) (31)
PBT 23,571 20,809 13,329 17,083 Working capital 370 (1,368) 699 624
Tax (3,407) (694) (888) (1,560) Free cashflow 3,354 (3,834) 6,536 10,569
Minorities (247) (260) (659) (917) Acq of subsids/other investments (7,633) (5,000) (40) (41)
Net profit (reported) 19,917 19,855 11,782 14,607 Minority interests (111) 0 0 0
% change Y/Y 237.1% (0.3%) (40.7%) 24.0% Dividends paid (3,130) (4,815) (5,278) (6,315)
Recurring net profit 8,477 10,030 11,782 14,607 Proceeds from share issues 0 0 0 0
% change Y/Y 143.0% 18.% 17.% 24.0% Proceeds from disp of FA/subsids 6,332 2,450 0 0
Others (55) 0 88 (42)
EPS (reported) (HK$) 13.24 13.20 7.83 9.71 Net cash flow (1,243) (11,199) 1,307 4,171
% change Y/Y 239.% (0.3%) (40.7%) 24.% Others 233 0 (88) 42
EPS (recurring) (HK$) 5.63 6.67 7.83 9.71 New loans 4,363 12,500 3,000 0
% change Y/Y 144.% 18.% 17.% 24.% Loan repayment (8,477) (1,469) (1,469) (1,469)
DPS (HK$) 2.80 3.33 3.92 4.85 Bonds / Perpetual capital securities 3,300 0 (2,521) 0
Inc/dec in cash & equivalents (1,824) (168) 229 2,744
Balance Sheet Ratio Analysis

HK$ in millions, year end Dec FY09 FY10E FY11E FY12E HK$ in millions, year end Dec FY09 FY10E FY11E FY12E
Intangible fixed assets 871 885 882 871 EBITDA margin 34.2% 33.3% 32.2% 34.6%
Fixed assets 169,042 175,255 178,866 181,059 Operating margin 26.7% 24.6% 24.0% 27.4%
Long-term investments 32,903 51,439 54,471 57,887 Net margin 80.0% 77.9% 35.0% 35.9%
Other LT assets 3,155 3,145 3,135 3,125
Long-term assets 205,971 230,723 237,353 242,942
Cash & cash equivalents 2,322 2,154 2,383 5,127 Sales per share growth 1.6% 2.3% 32.0% 21.0%
Other liquid assets 453 453 541 499 Sales growth 1.0% 2.3% 32.0% 21.0%
ST bank loans (2,552) (2,552) (2,552) (2,552) Net profit growth 237.1% -0.3% -40.7% 24.0%
LT bank loans (29,624) (40,655) (39,665) (38,196) EPS growth 239.1% -0.3% -40.7% 24.0%
Perpetual capital securities (2,326) (2,326) (2,326) (2,326)
Net cash/(debt) (31,727) (42,926) (41,619) (37,448)
Inventories 1,428 1,746 2,306 2,789 Net debt to equity 20.7% 25.5% 23.7% 20.3%
Debtors 3,820 3,891 5,137 6,216 Sales/assets 0.11 0.11 0.13 0.16
Other current assets 3,272 3,272 3,272 3,272 Assets/equity 1.42 1.45 1.44 1.43
Creditors (8,865) (7,775) (10,267) (12,421) Recurring ROE 5.6% 6.0% 6.8% 8.0%
Working capital (345) 1,134 448 (144) ROCE 13.9% 11.1% 7.0% 8.5%
Tax payable (20,595) (20,595) (20,595) (20,595)
Other 45 45 45 45
Others liabilities (20,550) (20,550) (20,550) (20,550)
Net assets 153,349 168,381 175,632 184,800
Share capital 903 903 903 903
Reserves 151,600 166,372 172,964 181,215
Shareholders funds 152,503 167,275 173,867 182,118
Minority interests 846 1,106 1,765 2,682
Equity 153,349 168,381 175,632 184,800
BVPS 101.36 111.17 115.55 121.04
51
(852) 2800-8526 21 November 2010
Summary of financials: Wharf Holdings

HKD in millions, year-end FY09 FY10 FY11E FY12E HKD in millions, year-end Dec FY09 FY10E FY11E FY12E
Revenues 17,553 19,791 22,068 24,578 EBIT 8,554 9,681 11,315 12,780
% change Y/Y 10% 13% 12% 11% Depreciation & amortisation 1,301 1,400 1,400 1,400
EBIT 8,554 9,681 11,315 12,780 Change in working capital 49 2,732 -2,209 467
% change Y/Y 13% 13% 17% 13% Taxes -1,596 -1,727 -1,999 -2,231
EBIT Margin (%) 49% 49% 51% 52% Cash flow from operations 5,666 4,488 8,943 10,068
Net Interest -338 -692 -824 -937
% change Y/Y 124% -51% 10% 12% Disposal/ (purchase) -688 -24 0 0
Tax -1,963 -1,727 -1,999 -2,231 Others (incl'd exceptional items) 108 -1,896 1,525 1,569
as % of EBT -10% -18% -18% -18% Free cash flow 2,923 -3,532 6,669 8,137
% change Y/Y 180% -56% 8% 11% Equity raised/ (repaid) 292 0 0 0
Core Net Profit 6,022 7,200 8,333 9,281 Debt raised/ (repaid) 2,120 557 -914 -928
% change Y/Y 45% 20% 16% 11% Other 0 0 0 0
Dividends paid -2,471 -2,572 -2,818 -3,081
% change Y/Y 180% -56% 8% 11% Ending cash 18,145 12,865 15,670 19,804
Core EPS 2.19 2.61 3.03 3.37 DPS 0.80 0.80 0.84 0.88
% change Y/Y 45% 20% 16% 11%
HKD in millions, year-end FY09 FY10 FY11E FY12E %, year-end Dec FY09 FY10E FY11E FY12E
Cash and cash equivalents 18,412 12,733 15,677 19,618 EBIT margin 49% 49% 51% 52%
Accounts receivable 4,554 2,144 2,391 2,663 Operating margin 47% 45% 48% 48%
Inventories 107 141 158 176 Net profit margin 100% 39% 38% 38%
Others 18,784 25,556 24,092 25,189 Core net profit margin 34% 36% 38% 38%
Current assets 41,857 40,575 42,317 47,645
Sales per share growth 10% 13% 12% 11%
Investments in Associates 11,789 11,789 11,789 11,789 Sales growth 10% 13% 12% 11%
Net fixed assets 134,002 137,855 140,716 143,584 Net profit growth 180% -56% 8% 11%
Total assets 190,461 193,056 197,658 205,854 Core net profit growth 45% 20% 16% 11%

ST loans 8,328 4,914 4,928 4,714 Net debt to total capital 11% 13% 11% 8%
Payables 8,240 8,597 6,650 7,407 Net debt to equity 19% 21% 17% 13%
Others 1,681 1,491 1,710 1,897 Sales/assets 9% 10% 11% 12%
Total current liabilities 18,249 15,002 13,288 14,018 Assets/equity 165% 160% 156% 154%
Long term debt 31,516 33,652 32,725 32,011 ROE 15% 6% 7% 7%
Other liabilities 18,532 16,679 17,846 19,096 ROCE 6% 6% 7% 8%
BVPS 41.8 43.8 46.0 48.5
52
(852) 2800-8526 21 November 2010
Summary of financials: Fortune REIT

Revenues 701 851 894 910 EBIT 461 521 596 608
EBIT 461 521 596 608 Change in working capital 49 0 16 6
% change Y/Y 10.4 13.2 14.3 2.1 Taxes -66 -68 -75 -75
EBIT Margin (%) 65.7 61.3 66.7 66.8 Cash flow from operations 472 488 573 576
Net Interest -88 -112 -111 -122
Earnings before tax 373 411 488 489 Capex -2,055 -30 -20 -7
Tax 66 80 88 88 Net Interest 0 0 0 0
as % of EBT -14.3 -15.4 -14.7 -14.5 Free cash flow -1,584 458 553 569
Net Income (Reported) 307 330 400 401
% change Y/Y 11.2 7.6 21.0 0.4 Equity raised/ (repaid) 1,811 0 0 0
Core Net Profit 306 329 397 398 Debt raised/ (repaid) 435 0 0 0
% change Y/Y 16.0 7.4 20.7 0.3 Other -88 -112 -111 -122
Shares Outstanding 1662 1670 1679 1688 Dividends paid -314 -386 -427 -437
EPS (reported) 0.247 0.198 0.239 0.238 Beginning cash 243 515 485 511
% change Y/Y -9.6 -19.8 20.4 -0.2 Ending cash 515 485 511 533
Core EPS 0.247 0.197 0.237 0.237 DPU 0.265 0.241 0.260 0.260
% change Y/Y -9.6 -20.2 20.1 -0.2
Cash and cash equivalents 515 485 511 533 EBIT margin 65.7 61.3 66.7 66.8
Current assets 563 535 563 585
Sales per share growth 10.1 21.4 5.0 1.8
LT investments 0 0 0 0 Sales growth 10.1 21.4 5.0 1.8
Total assets 12,063 12,122 12,402 12,668 EPS growth -9.6 -19.8 20.4 -0.2

ST loans 0 0 0 0 Total debt to total assets 23.1 23.0 22.5 22.0
Payables 276 275 289 294 Net debt to equity 25.6 25.8 24.8 24.0
Total current liabilities 284 282 296 301 Assets/equity 136.2 136.1 135.4 134.6
Other liabilities 133 145 159 172
BVPS 5.33 5.33 5.46 5.57
53
(852) 2800-8526 21 November 2010
Summary of financials: Link REIT

HKD in millions, year-end Mar FY09 FY10 FY11E FY12E HKD in millions, year-end Mar FY09 FY10 FY11E FY12E
Revenues 4,503 4,990 5,283 5,579 EBIT 2,671 3,208 3,413 3,669
EBIT 2,671 3,208 3,413 3,669 Change in working capital 375 60 -206 79
% change Y/Y 9.7 20.1 6.4 7.5 Taxes -183 -321 -334 -365
Net Interest -474 -577 -519 -507
Earnings before tax 2,197 2,631 2,894 3,162 Capex -849 -15 -400 -400
Tax 359 458 477 522 Net Interest -461 -577 -519 -507
% change Y/Y 13.4 18.2 11.2 9.2 Equity raised/ (repaid) 0 643 0 0
Core Net Profit 1,819 2,134 2,386 2,610 Debt raised/ (repaid) -654 -671 100 200
% change Y/Y 13.5 17.3 11.8 9.4 Other 0 0 0 0
EPS (reported) 0.850 0.998 1.096 1.197 Beginning cash 508 876 687 881
% change Y/Y 13.1 17.5 9.8 9.2 Ending cash 876 687 881 1,091
Core EPS 0.849 0.997 1.095 1.196 DPU 0.840 0.974 1.081 1.183
% change Y/Y 13.0 17.5 9.8 9.3
HKD in millions, year-end Mar FY09 FY10 FY11E FY12E %, year-end Mar FY09 FY10 FY11E FY12E
Cash and cash equivalents 1,230 876 1,409 1,603 EBIT margin 59.3 64.3 64.6 65.8
Current assets 1,372 1,076 1,524 1,725
Sales per share growth 7.2 10.8 5.9 5.6
LT investments 3,988 3,988 3,988 3,988 Sales growth 7.2 10.8 5.9 5.6

Total current liabilities 1,689 1,807 1,517 1,602 Assets/equity 167 153 152 153
BVPS 13.4 17.5 18.8 19.0
54
(852) 2800-8526 21 November 2010
Summary of financials: Champion REIT

Revenues 2,035 1,913 2,004 2,157 EBIT 1,709 1,541 1,635 1,811
% change Y/Y 26% -6% 5% 8% Depreciation & amortisation 0 0 0 0
Net property Income 1,709 1,541 1,635 1,811 Change in working capital 0 0 0 0
% change Y/Y 28% -10% 6% 11% Taxes -89 -64 -138 -160
EBIT Margin (%) 84 81 82 84 Cash flow from operations 1,907 1,307 1,087 1,132
Net Interest -755 -743 -666 -703
Earnings before tax 734 597 758 876 Capex 0 0 0 0
% change Y/Y 43% -19% 27% 16% Disposal/ (purchase) 0 0 0 0
Tax -89 -64 -138 -160 Net Interest -293 -289 -334 -435
as % of EBT -6 -5 -10 -10 Free cash flow 1,903 1,303 1,083 1,128
Core Net Profit 648 538 630 726
% change Y/Y 32% -17% 17% 15% Equity raised/ (repaid) 0 0 0 0
Profit for distribution 1,312 1,106 1,077 1,122 Debt raised/ (repaid) -88 -46 -890 -58
% change Y/Y -7% -16% -3% 4% Other 0 0 0 0
Dividends paid -541 -1,164 -1,018 -1,020
Beginning cash 1,115 2,390 2,483 1,657
Ending cash 2,390 2,483 1,657 1,708

Inventories 0 0 0 0 Core profit margin 64.5 57.8 53.7 52.0
Others 0 0 1 2
Current assets 1,935 2,606 1,801 1,873
LT investments 98 98 98 98 Sales growth 26% -6% 5% 8%

Net fixed assets 44,241 44,241 46,153 48,152 Core Net profit growth 32% -17% 17% 15%
Total assets 46,274 46,945 48,052 50,123 Profit for distribution growth -7% -16% -3% 4%

ST loans 0 0 0 0 Total debt to total capital 33.9 33.3 30.9 29.5
Others 1,013 912 901 945 Sales/assets 12.1 8.0 7.4 6.1
55
(852) 2800-8526 21 November 2010
Valuations: NAV and P/BV bands

Figure 19: SHKP—Price-to-adjusted book band Figure 20: SHKP—Current NAV discount
HK$ % discount
250 60.0%
40.0%
+2 s.d.
200 1.9x 20.0%
+ 1s.d.
1.6x 0.0%
150
1.3x -20.0% Average =
-13.4%
100 1.0x -40.0% -1s.d.
-60.0% -2 s.d.
50
0.57x -80.0%
0.68x
0.49x 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0
NAV (Discount/Prem ium ) Mean
Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09
Source: Bloomberg, company, J.P. Morgan estimates.

Figure 21: Cheung Kong—Price-to-adjusted book band Figure 22: Cheung Kong—Current NAV discount
HK$ % discount
200 20.0%
180 10.0% +2 s.d.

160 0.0%
1.50x + 1 s.d. Average =
140
-10.0% -15.3%
1.25x
120
-20.0%
100 1.00x
-1 s.d.
-30.0%
80 0.75x
-2 s.d.
60 -40.0%
40 -50.0%
20 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0
NAV (Discount/Premium) Mean
Jan-86 Jan-89 Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10

Figure 23: Henderson—Price-to-adjusted book band Figure 24: Henderson Land—Current NAV discount
HK$ % discount
2.0x 40.0%
140
+2 s.d.
20.0%
120
+ 1s.d.
1.5x
100 0.0%
80 -20.0%
1.0x Average =
-14.6%
60 -40.0% -1s.d.
40 0.5x -2 s.d.
-60.0%
20
-80.0%
0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
|90| 91| 92 |93 |94|95|96 |97 | 98| 99| 00 |01 |02 |03|04 |05 |06 | 07|08 |09 |10 |
Source: Bloomberg, company, J.P. Morgan estimates. Source: Bloomberg, company, J.P. Morgan estimates.
56
(852) 2800-8526 21 November 2010
Figure 25: Sino Land—Price-to-adjusted book band Figure 26: Sino Land—Current NAV discount
HK$ % discount
30 60.0%
40.0%
25
20.0% +2 s.d.
20 0.0% + 1 s.d.
Average =
1.0x -20.0%
15 -30.1%
0.8x -40.0% -1 s.d.
10
0.6x -60.0% -2 s.d.
5 0.4x
-80.0%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0
| 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | NAV (Discount/Premium) Mean
Figure 27: NWD—Price-to-adjusted book band Figure 28: NWD— current NAV discount
HK$ % discount
60 60.0%
40.0%
50 +2
20.0%
d
0.0%
40 +1
Average =
-20.0% -34%
30 -40.0%
-1
1.2x
-60.0%
20 -2 s.d.
0.9x
-80.0%
0.6x
10 -100.0%
0.3x 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0
| 90 | 91 | 92 | 93 | 94 | 95 |96 | 97 |98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 |07 | 08 | 09 | 10

Figure 29: HLP—Price-to-adjusted book band Figure 30: HLP current NAV discount
HK$ % discount
50
40%
30%
45 1.8x
20%
40 +2 s.d.
10%
1.4x 0%
35 + 1 s.d. Average =
-10%
30 -23.2%
-20%
25 1.0x
-30%
20 -40%
-1 s.d.
-50%
15 0.6x -60% -2 s.d.
10 -70%
5 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0
| 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 NAV (Discount/Premium) Mean
57
(852) 2800-8526 21 November 2010
Figure 31: Kerry—Price-to-adjusted book band Figure 32: Kerry current NAV discount
HK$ % discount
20.0%
80
70 1.85x 0.0% +2 s.d.
+ 1s.d.
60 -20.0%
50 1.35x -40.0%
Average =
40 -60.0%
-40.5%
-1s.d.
0.85x
30
-80.0%
-2 s.d.
20
-100.0%
0.35x
10 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0 NAV (Discount/Prem ium ) Mean

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 33: HK Land—Price-to-adjusted book band Figure 34: HK Land current NAV discount
HK$ % discount
30.0%
8
1.00x 20.0%
10.0% +2 s.d.
7
0.0%
+ 1 s.d.
6 0.80x -10.0%
-20.0%
5
-30.0% Average =
0.60x
4 -40.0% -27%
-50.0% -1 s.d.
3 0.40x -60.0%
-2 s.d.
-70.0%
2 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
1
0
| 89 | 90 |91 | 92 | 93 |94 |95 | 96 | 97 |98 | 99 | 00 |01 | 02 | 03 |04 | 05 | 06 | 07 |08 | 09 | 10

Figure 35: Hysan—Price-to-adjusted book band Figure 36: Hysan current NAV discount
HK$ % discount
20.0%
40
10.0%
35 0.95x 0.0%
+2 s.d.
-10.0%
30 + 1 s.d.
-20.0%
0.75x Average = -38%
25 -30.0%
-40.0%
20 0.55x -50.0%
-1 s.d.
-60.0%
15
-70.0% -2 s.d.
10 0.35x -80.0%
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
5
0
86 88 90 92 94 96 98 00 02 04 06 08 10
58
(852) 2800-8526 21 November 2010
Figure 37: Great Eagle—Price-to-adjusted book band Figure 38: Great Eagle current NAV discount
HK$ % discount
0.0%
45
-10.0% +2 s.d.
40
-20.0%
+ 1 s.d.
35 -30.0% Average =
0.80x -45%
30 -40.0%
-50.0%
25 0.60x
-60.0%
20 -1 s.d.
-70.0%
15 0.40x
-80.0% -2 s.d.
10 -90.0%
0.20x
5 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
0 NAV (Discount/Premium) Mean

| 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 |
Figure 39: Swire Pacific current NAV discount Figure 40: Wharf current NAV discount
HK$ % discount
60.0% 30.0%
20.0%
40.0% 10.0% +2 s.d.
+2
0.0%
20.0% Average =
+1 -10.0% + 1 s.d.
-14%
0.0% -20.0%
-30.0%
-20.0% -40.0% Average = -29%
-50.0% -1 s.d.
-40.0% -1
-60.0%
-2 s.d.
-60.0% -2 -70.0%
-80.0%
-80.0%
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10


59
(852) 2800-8526 21 November 2010
Companies Recommended in This Report (all prices in this report as of market close on 19 November 2010)
Champion REIT (2778.HK/HK$4.57/Neutral), Cheung Kong Holdings (0001.HK/HK$120.60/Overweight), Fortune Real
Estate Investment Trust (FORT.SI/HK$4.02/Overweight), Great Eagle (0041.HK/HK$24.40/Overweight), Hang Lung
Group (0010.HK/HK$49.75/Neutral), Hang Lung Properties (0101.HK/HK$35.90/Neutral), Henderson Land Development
(0012.HK/HK$56.75/Overweight), Hongkong Land (HKLD.SI/$6.85/Neutral), Hysan Development Co
(0014.HK/HK$32.50/Overweight), Kerry Properties (0683.HK/HK$41.90/Overweight), Link REIT
(0823.HK/HK$24.00/Neutral), New World Development (0017.HK/HK$15.88/Overweight), Sino Land
(0083.HK/HK$16.32/Overweight), Sun Hung Kai Properties (0016.HK/HK$134.20/Overweight), Swire Pacific
(0019.HK/HK$121.60/Overweight), The Wharf (Holdings) Limited (0004.HK/HK$54.75/Overweight)
Analyst Certification:
The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily
responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with
respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research
analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
research analyst(s) in this report.
Important Disclosures
• Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Hongkong
Land, New World Development within the past 12 months.
• Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Sun
Hung Kai Properties: Amy Luk.
• Client of the Firm: Cheung Kong Holdings is or was in the past 12 months a client of JPM; during the past 12 months, JPM
provided to the company non-investment banking securities-related service and non-securities-related services. Fortune Real Estate
Investment Trust is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company
investment banking services. Great Eagle is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided
to the company non-investment banking securities-related service. Hang Lung Group is or was in the past 12 months a client of JPM.
Hang Lung Properties is or was in the past 12 months a client of JPM. Henderson Land Development is or was in the past 12 months
a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking
securities-related service. Hongkong Land is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided
to the company investment banking services. Kerry Properties is or was in the past 12 months a client of JPM. New World
Development is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment
banking services. Sun Hung Kai Properties is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided
to the company non-investment banking securities-related service. Swire Pacific is or was in the past 12 months a client of JPM;
during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related
service and non-securities-related services. The Wharf (Holdings) Limited is or was in the past 12 months a client of JPM.
• Investment Banking (past 12 months): J.P. Morgan received, in the past 12 months, compensation for investment banking services
from Fortune Real Estate Investment Trust, Henderson Land Development, Hongkong Land, New World Development, Swire
Pacific.
• Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Fortune Real Estate Investment Trust, Henderson Land Development, Hongkong Land, New
World Development, Swire Pacific.
• Non-Investment Banking Compensation: JPMS has received compensation in the past 12 months for products or services other
than investment banking from Cheung Kong Holdings, Great Eagle, Henderson Land Development, Sun Hung Kai Properties, Swire
Pacific. An affiliate of JPMS has received compensation in the past 12 months for products or services other than investment
banking from Cheung Kong Holdings.
60
(852) 2800-8526 21 November 2010
Champion REIT (2778.HK) Price Chart
8
Date Rating Share Price Price Target
(HK$) (HK$)
7
UW HK$0.99 N HK$2.83 N HK$3.18 26-Nov-08 UW 1.45 0.85
6 16-Feb-09 UW 1.90 0.99
UW HK$0.85 UW HK$2.85
N HK$3.29 N HK$3.74 07-Aug-09 UW 3.02 2.85
5
18-Aug-09 N 2.84 2.83
Price(HK$) 4 01-Dec-09 N 3.19 3.29
22-Feb-10 N 3.37 3.18
3
17-Aug-10 N 3.86 3.74
2
0
Oct Jul Apr Jan Oct Jul
06 07 08 09 09 10
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Nov 26, 2008. This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst
may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
Cheung Kong Holdings (0001.HK) Price Chart

N HK$100 (HK$) (HK$)
240
22-Mar-07 OW 94.55 114.00
N HK$146 N HK$80 N HK$87 23-Aug-07 OW 109.50 125.00
200
07-Nov-07 N 132.80 146.00
OW HK$114
OW HK$125 N HK$123N HK$113 N HK$75N HK$115
N HK$110
OW HK$117
OW HK$115
160 27-Mar-08 N 108.40 123.00
Price(HK$) 22-Aug-08 N 101.10 113.00
120 17-Nov-08 N 65.45 80.00
27-Mar-09 N 71.40 75.00
80 26-May-09 N 91.00 87.00
12-Aug-09 N 97.20 100.00
40
14-Aug-09 N 97.90 115.00
02-Dec-09 N 98.60 110.00
0
31-Mar-10 OW 100.90 117.00
06 07 08 09 09 10 06-Aug-10 OW 96.60 115.00
This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst may or may not have covered it
over the entire period.
61
(852) 2800-8526 21 November 2010
Fortune Real Estate Investment Trust (FORT.SI) Price Chart
9
OW HK$4.9
8 (HK$) (HK$)
09-May-07 OW 4.82 6.70
7 N HK$6.7 OW HK$4 OW HK$3.6
01-Aug-07 N 5.06 6.70
6 OW HK$6.7 OW HK$2.7 OW HK$3.4 OW HK$4OW HK$4. 29-Jan-09 OW 1.96 2.70
07-May-09 OW 2.52 4.00
5
Price(HK$) 29-Jul-09 OW 3.30 4.90
4 25-Aug-09 OW 3.09 3.40
3 04-Nov-09 OW 2.78 3.60
04-May-10 OW 3.59 4.00
2
09-Nov-10 OW 4.08 4.90
1
0
06 07 08 09 09 10
Great Eagle (0041.HK) Price Chart
60 Date Rating Share Price Price Target

N HK$31 UW HK$8.6 OW HK$20 (HK$) (HK$)
11-Apr-07 OW 28.15 32.00
48 N HK$29 UW HK$7.8 OW HK$17 OW HK$24 18-Sep-07 OW 27.10 29.00
19-Sep-07 N 28.95 29.00
36 OW HK$32OW HK$29 N HK$26.5 N HK$22 UW HK$9.3 OW HK$25 OW HK$24.9 07-Nov-07 N 33.15 31.00
Price(HK$) 02-Apr-08 N 20.80 26.50
17-Sep-08 N 16.22 22.00
24
17-Nov-08 UW 8.85 7.80
16-Feb-09 UW 9.54 8.60
12 24-Mar-09 UW 9.46 9.30
26-May-09 OW 14.98 17.00
12-Aug-09 OW 17.88 20.00
0
02-Dec-09 OW 20.95 25.00
06 07 08 09 09 10 25-Feb-10 OW 21.45 24.00
23-Aug-10 OW 20.45 24.90
62
(852) 2800-8526 21 November 2010
Hang Lung Group (0010.HK) Price Chart

N HK$20 (HK$) (HK$)
80 09-Feb-07 N 27.05 28.00
OW HK$42
N HK$40 N HK$21.5 N HK$42 15-Aug-07 OW 33.35 40.00
64 07-Nov-07 OW 42.15 42.00
N HK$28 OW HK$40 OW HK$40 N HK$30 N HK$32 N HK$40 N HK$43
20-Feb-08 OW 39.25 40.00
Price(HK$) 48 21-Feb-08 N 37.05 40.00
14-Aug-08 N 33.00 30.00
32 17-Nov-08 N 22.80 21.50
11-Feb-09 N 22.55 20.00
26-May-09 N 32.35 32.00
16
03-Aug-09 N 40.45 42.00
01-Dec-09 N 38.50 40.00
0
29-Jul-10 N 45.45 43.00
06 07 08 09 09 10
Hang Lung Properties (0101.HK) Price Chart

65 N HK$16 N HK$29 (HK$) (HK$)
09-Feb-07 N 22.50 20.00
OW HK$35
N HK$33 N HK$17 N HK$24.5 N HK$33 16-Aug-07 OW 25.20 28.50
52
06-Nov-07 OW 32.75 35.00
N HK$20 OW HK$28.5 OW HK$33 N HK$23.7 N HK$20.7 N HK$31 N HK$32 20-Feb-08 OW 31.95 33.00
39
Price(HK$) 21-Feb-08 N 29.10 33.00
14-Aug-08 N 23.70 23.70
26 17-Nov-08 N 15.40 17.00
11-Feb-09 N 16.38 16.00
13 11-May-09 N 22.20 20.70
26-May-09 N 24.15 24.50
03-Aug-09 N 28.30 29.00
0
28-Jan-10 N 27.40 31.00
06 07 08 09 09 10 21-Jul-10 N 32.40 32.00
29-Jul-10 N 32.60 33.00
63
(852) 2800-8526 21 November 2010
Henderson Land Development (0012.HK) Price Chart
132
OW HK$58 OW HK$54 (HK$) (HK$)
21-Mar-07 UW 43.35 41.50
110
UW HK$42 N HK$67 N HK$31 OW HK$46 OW HK$64 OW HK$58 28-Mar-07 UW 44.10 42.00
17-Sep-07 UW 61.05 59.00
88 UW HK$41.5 UW HK$59 N HK$57 N HK$35 OW HK$36 OW HK$62OW HK$69OW HK$55
07-Nov-07 N 62.80 67.00
Price(HK$) 27-Mar-08 N 55.30 57.00
66
19-Sep-08 N 38.50 35.00
17-Nov-08 N 26.90 31.00
44
20-Mar-09 OW 26.90 36.00
26-May-09 OW 42.80 46.00
22
12-Aug-09 OW 50.25 58.00
30-Oct-09 OW 55.80 62.00
0
01-Dec-09 OW 56.70 64.00
06 07 08 09 09 10 31-Mar-10 OW 57.10 69.00
17-Jun-10 OW 46.70 58.00
This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst may or may not have covered it 16-Aug-10 OW 48.45 54.00
27-Aug-10 OW 47.75 55.00
Hongkong Land (HKLD.SI) Price Chart
12
N $3.2 Date Rating Share Price Price Target
11 ($) ($)
10 07-Mar-07 N 4.18 4.80
OW $5.7 OW $3.2 N $5.3
9 08-Aug-07 N 4.10 4.70
8 N $4.8 N $4.7 OW $5 N $4.4 N $2.5OW $2.35 OW $4.6 N $5.2 N $5.5 07-Nov-07 OW 4.64 5.70
7 06-Mar-08 OW 4.30 5.00
Price($) 6 01-Aug-08 N 4.00 4.40
5 17-Nov-08 N 2.35 2.50
4 06-Mar-09 OW 1.84 2.35
3 18-May-09 OW 2.63 3.20
2 26-May-09 N 3.34 3.20
06-Aug-09 OW 3.99 4.60
1
01-Dec-09 N 4.90 5.20
0
07-Mar-10 N 4.91 5.30
06 07 08 09 09 10 01-Aug-10 N 5.36 5.50
64
(852) 2800-8526 21 November 2010
Hysan Development Co (0014.HK) Price Chart

60
N HK$22.6 (HK$) (HK$)
06-Mar-07 N 20.80 23.50
48 UW HK$21 N HK$16.3 N HK$25.2 OW HK$38 15-Aug-07 UW 19.56 17.50
07-Nov-07 UW 22.15 21.00
N HK$23.5UW HK$17.5 UW HK$18.7
N HK$23.7
N HK$12.5
N HK$11.6 N HK$24.7 N HK$26 13-Mar-08 UW 21.45 18.70
36
Price(HK$) 06-Aug-08 N 21.60 23.70
17-Nov-08 N 12.54 12.50
24
11-Mar-09 N 11.76 11.60
26-May-09 N 17.32 16.30
12 12-Aug-09 N 20.80 22.60
01-Dec-09 N 22.80 24.70
11-Mar-10 N 22.10 25.20
0
11-Aug-10 N 25.10 26.00
06 07 08 09 09 10 03-Nov-10 OW 31.75 38.10
Kerry Properties (0683.HK) Price Chart

OW HK$76 OW HK$48.5 (HK$) (HK$)
115
23-Mar-07 OW 39.20 45.00
OW HK$50
OW HK$67 N HK$15 OW HK$34 OW HK$45 09-May-07 OW 43.50 50.00
92
16-Sep-07 OW 59.20 65.00
OW HK$45 OW HK$65 OW HK$50OW HK$40 N HK$18 OW HK$43.5 17-Sep-07 OW 59.20 67.00
Price(HK$) 69 07-Nov-07 OW 71.50 76.00
20-Mar-08 OW 38.95 50.00
46 20-Aug-08 OW 35.05 40.00
17-Nov-08 N 12.30 15.00
23 19-Mar-09 N 17.60 18.00
26-May-09 OW 30.10 34.00
12-Aug-09 OW 37.70 48.50
0
16-Aug-10 OW 38.05 43.50
06 07 08 09 09 10 27-Aug-10 OW 38.65 45.00
65
(852) 2800-8526 21 November 2010
Link REIT (0823.HK) Price Chart

OW HK$19.3 (HK$) (HK$)
11-Jun-07 OW 17.54 20.00
36 N HK$18.6 10-Jun-08 OW 19.30 21.50
13-Nov-08 OW 13.88 15.70
27 OW HK$20 OW HK$21.5
OW HK$15.7 N HK$18.5OW HK$21 OW HK$20.9
N HK$27 18-Jun-09 N 17.24 18.50
Price(HK$) 18-Aug-09 N 17.28 18.60
24-Sep-09 OW 16.42 19.30
18
20-Nov-09 OW 17.56 21.00
02-Jun-10 OW 19.08 20.90
9 11-Nov-10 N 25.25 27.00
0
06 07 08 09 09 10
New World Development (0017.HK) Price Chart

OW HK$19 OW HK$22.85 (HK$) (HK$)
48 10-Oct-06 N 13.46 13.00
OW HK$13 OW HK$30 OW HK$8.5 OW HK$16.6 OW HK$19 28-Jan-07 OW 16.62 13.00
31-Jan-07 OW 17.06 19.00
36
HK$13
OW HK$20
OW HK$23
OW HK$25.3
OW HK$22 OW HK$11OW HK$9 OW HK$19.8 OW HK$15.5 19-Mar-07 OW 17.52 20.00
Price(HK$) 28-Jun-07 OW 19.82 23.00
24 11-Oct-07 OW 22.60 25.30
07-Nov-07 OW 28.10 30.00
18-Mar-08 OW 16.12 22.00
12 15-Oct-08 OW 7.85 11.00
17-Nov-08 OW 6.85 8.50
18-Mar-09 OW 6.89 9.00
0
26-May-09 OW 14.52 16.60
06 07 08 09 09 10 10-Aug-09 OW 16.08 22.85
02-Dec-09 OW 16.30 19.80
This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst may or may not have covered it 16-Aug-10 OW 13.22 15.50
07-Oct-10 OW 16.70 19.10
66
(852) 2800-8526 21 November 2010
Sino Land (0083.HK) Price Chart
55
N HK$17.5 (HK$) (HK$)
44 20-Mar-07 N 16.36 14.50

N HK$21 N HK$7.5 N HK$16 OW HK$16.5 18-Sep-07 N 20.55 19.50
07-Nov-07 N 25.95 21.00
33 N HK$14.5 N HK$19.5 N HK$15.2 N HK$12 N HK$11.7 OW HK$17 OW HK$15.5 18-Mar-08 N 16.40 15.20
Price(HK$) 18-Sep-08 N 9.99 12.00
17-Nov-08 N 6.04 7.50
22
26-May-09 N 13.94 11.70
12-Aug-09 N 15.38 16.00
11 10-Sep-09 N 15.26 17.50
02-Dec-09 OW 14.90 17.00
16-Aug-10 OW 13.28 15.50
0
03-Sep-10 OW 13.58 16.50
06 07 08 09 09 10
Sun Hung Kai Properties (0016.HK) Price Chart

270 OW HK$159 (HK$) (HK$)
16-Feb-07 UW 97.25 98.00
225 N HK$97 N HK$150 OW HK$70 OW HK$135 OW HK$13 08-Mar-07 N 87.10 97.00
13-Sep-07 N 119.40 130.00
UW HK$98 N HK$130 OW HK$153 OW HK$120 OW HK$96 OW HK$140
OW HK$126
180 30-Oct-07 N 150.50 150.00
Price(HK$) 07-Nov-07 OW 132.80 159.00
135 06-Mar-08 OW 130.10 153.00
12-Sep-08 OW 91.30 120.00
90
17-Nov-08 OW 58.80 70.00
26-May-09 OW 92.65 96.00
45
12-Aug-09 OW 114.80 135.00
12-Mar-10 OW 114.50 140.00
0
16-Aug-10 OW 110.00 126.00
06 07 08 09 09 10 21-Sep-10 OW 120.40 138.00
67
(852) 2800-8526 21 November 2010
Swire Pacific (0019.HK) Price Chart

204 OW HK$91
UW HK$84 (HK$) (HK$)
08-Mar-07 OW 90.20 106.00
170 OW HK$101 OW HK$82
OW HK$107 OW HK$12 04-Jun-07 OW 87.40 101.00
08-Nov-07 OW 105.60 122.00
136 OW HK$106 OW HK$122 OW HK$97
OW HK$68
OW HK$65
OW HK$103
N HK$98.41 OW HK$115.8
18-Jul-08 OW 78.05 97.00
Price(HK$) 18-Nov-08 OW 44.30 68.00
102
13-Mar-09 OW 47.10 65.00
26-May-09 OW 70.15 82.00
68
09-Jul-09 OW 72.90 91.00
07-Aug-09 OW 83.15 103.00
34
12-Aug-09 OW 86.35 107.00
02-Nov-09 UW 96.00 84.00
0
01-Dec-09 N 89.75 98.41
06 07 08 09 09 10 06-Aug-10 OW 98.00 115.80
15-Oct-10 OW 111.50 128.20
The Wharf (Holdings) Limited (0004.HK) Price Chart

UW HK$21.6 N HK$36.44 (HK$) (HK$)
95
20-Mar-07 N 26.30 29.30
UW HK$19 N HK$30.5 N HK$48.12 16-Aug-07 N 27.89 31.00
76
29-Nov-07 OW 39.00 49.00
N HK$29.3N HK$31
OW HK$49
N HK$39.16
UW HK$34.75 N HK$21.6N HK$37.84 N OW HK$65 26-Mar-08 N 37.95 39.16
57 28-Aug-08 UW 28.50 34.75
Price(HK$)
18-Nov-08 UW 16.30 19.00
38 15-Dec-08 UW 19.34 21.60
26-Mar-09 N 20.40 21.60
19 26-May-09 N 28.80 30.50
12-Aug-09 N 34.95 36.44
27-Aug-09 N 35.90 37.84
0
01-Dec-09 N 42.50 48.12
06 07 08 09 09 10 12-May-10 N 38.70 --
19-Nov-10 OW 54.75 65.50
Break in coverage May 12, 2010 - Nov 19, 2010. This chart shows J.P. Morgan's continuing coverage of this stock; the
current analyst may or may not have covered it over the entire period.
Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] J.P. Morgan Cazenove’s UK Small/Mid-Cap dedicated research
analysts use the same rating categories; however, each stock’s expected total return is compared to the expected total return of the FTSE
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coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying
analyst(s) coverage universe.
Coverage Universe: Lucia Kwong, CFA: Agile Property Holdings Ltd (3383.HK), Beijing Capital Land (2868.HK),
Cheung Kong Holdings (0001.HK), China Overseas Land & Investment (0688.HK), China Resources Land (1109.HK),
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(852) 2800-8526 21 November 2010
China Vanke Company (200002.SZ), Franshion Properties (China) Ltd. (0817.HK), Glorious Property (0845.HK),
Greentown China Holdings (3900.HK), Guangzhou R&F Properties (2777.HK), Henderson Land Development (0012.HK),
Shanghai Forte Land (2337.HK), Shimao Property Holdings (0813.HK), Shui On Land Ltd (0272.HK), Sino-Ocean Land
(3377.HK), Sun Hung Kai Properties (0016.HK)
J.P. Morgan Equity Research Ratings Distribution, as of September 30, 2010

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research 46% 43% 12%
Coverage
IB clients* 49% 45% 33%
JPMS Equity Research Coverage 43% 48% 8%
IB clients* 69% 60% 50%
*Percentage of investment banking clients in each rating category.
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rating category; and our Underweight rating falls into a sell rating category.
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71

JPMorgan - Hkproperty 2011 Outlook

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Asia Pacific Equity Research

HK Property 2011 Outlook

• HK residential property to be the battlefield between policy Hong Kong

dividends or increase in book value and revaluation gains. Risks to our PT 70

raising risks. Source: Bloomberg, J.P. Morgan

Hong Kong Property 2011 Outlook

Restrictive measures may be partly effective, finally

But required return is coming down sharply in a low-rate environment

Impact of latest round of restrictive policies

Residential rents may cease its uptrend

Further lowering loan-to-value (LTV) ratio – limited impact

Table 1: New restrictive policies announced on Nov 19, 2010

Table 2: New stamp duty schedule (including Special Stamp Duty)

5) Hong Kong property market may be increasingly "Chinalized" - More funds

Prefer commercial to residential as commercial rent revisions could have less

Table 3: Summary of 2011E estimates

Figure 1: Year-to-date performance of major Hong Kong developers and investors

-10% 0% 10% 20% 30% 40% 50%

*Until Nov 19, 2010

Beware of the “Winner's Curse” for developers when replenishing land

Decentralized landlords could be re-rated

Top picks: Wharf, Hongkong Land, Hysan

Hongkong Land (HKLD.SI)

Table 4: Summary of ratings and price target changes

Hence it is unlikely to see affordability overshooting to 80-100% levels even if the

Key risks to our investment case

Fund raising risks

Table 5: Valuation summary for Hong Kong developers and investors

Residential market outlook

Mass –end housing may out-perform luxury end in the near-term

Figure 4: Hong Kong nominal residential price index (luxury vs mass)*

Mass resdiential Luxury residential

Are we in a property bubble?

Source: HKMA, Rate and Valuation Department Source: HKMA,

Land supply still lagging behind private housing demand

Source: CEIC, Rate and Valuation Department

We may be entering a bubble though

Figure 11: Hong Kong housing affordability analysis

Average price (HK$ psf) 5,914 6,506 6,801 7,097 7,689

Property values to GDP way surpassed historical high

Figure 12: Property value to GDP

Rental affordability suggests only 10% upside from here

Figure 13: Hong Kong rental affordability

Source: J.P. Morgan estimates.

Commercial property outlook

Table 6: JLL 3Q Grade-A Office/Prime Retail key figures

Overall Office Rental 49.8 7.6% 22% -23% 4.0%

Limited supply in Central

Table 7: Hong Kong office supply

Table 8: Grade-A office rental gap compared with Central

Two-factor office rental forecast model

Table 9: Office rental forecast model - ANOVA

Source: J.P. Morgan estimates.

Table 10: Office rental forecast by districts

Mainland consumption supporting stable retail growth

Figure 18: HK GDP growth vs retail sales growth

HK GDP Grow th Rate Retail Sales Grow th

Company earnings and NAV outlook

Table 11: Hong Kong property developers - summary of NAV changes

Hysan 0014.HK 32.50 50.2 50.2 0% -35% No change

Wharf 0004.HK 54.75 76.1 NA NA -28% NA

Fortune REIT* FORT.SI 4.02 4.9 4.9 0% -18% NA