Concessions on Land Premium Yet to Come, Initiate with “Neutral”

股

票

Research 研

究 Company Report: Henderson Land (00012 HK) Johnny Wong 王俊浩 Equity 公司报告：恒基地产 (00012 HK) +852 2509 5348 [email protected]

29 January 2018

Concessions on Land Premium Yet to Come, Initiate with “Neutral” 补地价优惠尚未来临，首予“中性”评级公司  HLD is a leading property developer with businesses in Hong Kong and Rating: Neutral

throughout mainland China. In addition to property development and Initial

报 property investment, HLD also has department store operations, hotel 评级：中性 (首次研究) 告 operations, ferry operations and a utility business through 4 listed companies.

HLD has a wide variety in its land bank in Hong Kong including agricultural CompanyReport land in New Territories (44.9 million sq.ft.), old buildings acquired for 6-18m TP 目标价: HK$54.08 redevelopment and land purchased through government land auctions (24.2 million sq.ft.). Share price 股价： HK$55.200

 We estimate underlying net profit to be HKD15,282 million, HKD9,929 million and HKD10,432 million in 2017-2019, respectively. Since we expect that HLD’s property development revenue recognized in 2018 will Stock performance 股价表现 decrease, the reduction will drive down the underlying net profit in that year. Underlying net margins are expected to be 57.2%, 51.0% and 44.0% in % of return 50.0 2017-2019, respectively.

40.0  Initiate with “Neutral” rating and a TP of HKD54.08, which represents a 证 32.0% discount of our 2018 NAV estimate. HLD has secured its project 30.0 券告 pipelines in the next few years through the redevelopment of old buildings and 20.0

研报 the conversion of agricultural land into residential development. The bloom in

10.0

the residential property market in Chinese tier-2 cities will be reflected

究究 0.0 gradually in HLD’s residential development business. Nevertheless, the 报

研 government has rejected the idea to offer concessions on land premium in the (10.0)

告 starter homes scheme. In our view. HLD’s current share price has already Feb-17 May-17 Jul-17 Oct-17 Jan-18

券 priced in the improvements in fundamentals. HSI index Henderson Land

EquityResearch Report  证恒基地产是香港和中国大陆业务的领先房地产开发商。除了物业发展和物业投资外，恒基

地产还通过 4 家上市公司进行百货公司，酒店，渡轮和公用事业业务。恒基地产在香港有

各类的土地储备，包括新界农地(44.9 百万平方呎)，市区重建土地和通过政府卖地的土地 Change in Share Price 1 M 3 M 1 Y

(24.2 百万平方呎)。股价变动 1 个月 3 个月 1 年 Abs. % 5.8 6.5 39.3  我们估计 2017-2019 年度的基础净利润分别为 152.82 亿港元，99.29 亿港元和 104.32 亿绝对变动 % Rel. % to HS index 港元。我们预计恒基地产 2018 年的物业发展收入入账将有所下降，因此该年度的基础净 (5.6) (10.7) (3.4) 房相对恒指变动 % 利润将回落。我们预计 2017-2019 年恒基地产的基础净利润率为 57.2%，51.0%和 44.0%。 Avg. share price(HK$) 52.8 51.6 46.8 地平均股价（港元）

Sector  首予“中性”评级，目标价为 54.08 港元，较我们 2018 年估值有 32.0％折让。恒基地产 Source: Bloomberg, Guotai Junan International.

产通过市区重建和将农地转为住宅开发，确保了未来几年的项目发展。中国二线城市的住宅行物业市场繁荣将逐步反映在公司的住宅开发业务中。不过，政府已经表明无意为首置上车盘计划提供地价优惠。我们认为公司的股价已充分反映了公司的基本面改善。

业 Property

Underlying Underlying Underlying Underlying Net EPS EPS Underlying ROE Year End Turnover Profit 每股核心每股净利 PER BPS PBR DPS Yield 核心净资产年结收入核心净利净利变动核心市盈率每股净资产市净率每股股息股息率收益率 12/31 (HKD m) (HKD m) (HKD) (△%) (x) (HKD) (x) (HKD) (%) (%) 2015A 23,641 11,009 2.752 (8.0) 19.1 62.796 0.84 1.450 2.8 4.5

2016A 25,568 14,169 3.541 28.7 14.8 65.867 0.80 1.550 3.0 5.5 HK) HK)

2017F 26,718 15,282 3.820 7.9 13.7 70.341 0.75 1.610 3.1 5.6

2018F 19,486 9,929 2.482 (35.0) 21.2 73.219 0.72 1.610 3.1 3.5 012

恒 0 2019F 23,692 10,518 2.629 5.9 20.0 76.316 0.69 1.610 3.1 3.5

基 (0

地 Shares in issue (m) 总股数 (m) 4,001.1 Major shareholder 大股东 Dr. Lee Shau Kee 72.82% 产 Market cap. (HK$ m) 市值 (HK$ m) 220,860.7 Free float (%) 自由流通比率 (%) 27.2 3 month average vol. 3 个月平均成交股数 (‘000) 3,422.1 FY18 Net gearing (%) FY18 净负债/股东资金 (%) 15.6 52 Weeks high/low (HK$) 52 周高/低 56.000 / 38.591 FY18 Est. NAV (HK$) FY18 每股估值（港元） 79.5

Source: the Company, Guotai Junan International.

HendersonLand See the last page for disclaimer Page 1 of 35 Se MajorRisk Factors AnalysisFinancial IndustryAnalysis CompanyHistory, Developments andStrategy e Net ProfitNet Analysis Margin Analysis RevenueAnalys OverallResidential Property Market in China OverviewPropertyof Markets of Selected Cities in China Overviewof Valuation LiquidityAnalysis ROAand ROE th Beijing Shanghai Guangzhou RetailProperty IndustrialProperty Office ResidentialProperty e las t pag Property e ......

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32 24 12 29 29 28 28 27 24 23 22 21 20 20 19 17 15 12 12 35 )

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se businessdevelopment acts dynamic asdriver.profit a Property China. mainland and Kong and Hong business investment both in development property and investments strategic business. investment, its property diversify to model pillars” “three a adopts HLD Source: Figure beyond. and urban redevelopment projects with over 80% ownership secured, which purchased land and 2017 June redevelopment for acquired buildings old Territories, government land a New in holding land agricultural its the and interest) equity Company Limited (00003 HK, equity 41.53% interest).HLD has widea variety 33.41% HK, (00050 Limited Company (Holdings) Ferry Kong interest), equity Hong 46.27% HK, (00071 Limited Company Investment and Hotel Miramar interest), equity 69.32% HK, (00097 operation store department today. chairman Company’s with developer property leading businesses in Hong Kong a and throughout mainland China. is Company”) “the or (“HLD” Limited Company Development Land Henderson CompanyHistory,Developments Strategy and e th (HK stock code:50) Limited e

HongKong Ferry HLD - las 1 (00050HK) : (Holdings) t Company

HLD ’ s 2017 s 2017 pag 21 has also HLD addition, In 2019. and 2018 in sale for mainly sq.ft. million GFA2.3 attributable of an providing ,

e ’s fo 33.41% Interim Results Investor Presentation Investor Results Interim r Shareholder icamr disclaimer u

ction

s . HLD has 24 urban redevelopment projects in which ownership has been fully consolidated strategic investments provide a reliable and growing income source to the Group, while property while Group, the to source income growing and reliable a provide investments strategic s , hotel operation hotel ,

and/orfamily his trust n addit In

S Dr.Lee Shau Kee tructure (00097HK) o t poet dvlpet n poet ivsmn bsnse, L as has also HLD businesses, investment property and development property to ion Investment Henderson Limited

as s at . 69.32%

, ferry operation ferry , Development Company Development

30 June Limited (00012 HK) Limited

Henderson Henderson Land 73.08%

2017

HLD was founded in 1976 by Dr. Lee Shau Kee, who is still the and

CompanyLimited CompanyLimited TheHong Kong a TowngasChina andChina Gas L aot a tre ilr” oe, hc comprises which model, pillars” “three a adopts HLD 26.92% ThePublic utility business through Henderson Investment Limited Investment Henderson through business utility (01083HK) (00003HK) is

expected to provide 1.7 million sq.ft. for sale in 2018

64.56% 41.53% in its

land bankland Hong Kong,in as evidenced by

og og n Cia Gas China and Kong Hong MiramarHotel and CompanyLimited Henderson Land Henderson (00071HK) Investment 46.27%

Page Page ( 00012 HK 00012

a through s s at 30 3 of of 35 )

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se which Heung, Pat and South valuations higher receive once governmentpassesTin the plans development in these locations. 3 Kam Long, Yuen in reserves land has HLD Besides, there. land of sq.ft. million 6.35 Hung proposed the from benefits also HLD North. Fanling and in for eligible was holding land its of sq.ft. in land of sq.ft. million 44.9 approximately held HLD largest the HLD has ownerships. all their consolidate toable application, sale compulsory for qualified not are 80% below ownerships with Projects status. ownership Note:* Company Source: the (HKD/sq.ft.,ballpark figures) Estimatedacquisition costsfor projectswith over 80%ownership - - - Newly Existingurban redevelopment GFA, milsq.ft Table under “The HCollection” project area city core in buildings annual financial report. 2016 to according projects redevelopment urban from came supply the of 40% or sq.ft. million 0.8 which among GFA expected an 2.3 mill of 2017, June 30 at reduces significantly 2010 Kong. Hong in projects redevelopment urban in participation active through developers local other from itself differentiates HLD Hongin Kong Property Development Company. Source: the Figure 20% 80%or above ownership secured Ownership fullyconsolidated e th - pro 80%ownership secured* ,

acquired urbanredevelopment projects e - cut the threshold of individual property ownerships property individual of threshold the cut 1 - las - 2 : aa trbtbe rs for area floor gross attributable rata

: BreakdownHLD of t

HLD’s Structure Business pag

e The Land (Compulsory Sale for Redevelopment) (Specification of Lower Percentage) Notice Percentage) Lower of (Specification Redevelopment) for Sale (Compulsory Land The fo r .

with an exp an with icamr disclaimer

the cost involved in urban redevelopment projects. HLD has 5 existing urban redevelopment projectsredevelopment urban existing 5 has HLD projects. redevelopment urban in involved cost the China BusinessChina land reserves Investments

Hong Kong Hong

Strategic Strategic Business projects

ion sq.ft. for sale in for in ion2018 sq.ft. sale and

ected GFA ected sq.ft. million 1.4 of HLD’sredevelopment redevelopment acquisition and subsequent old involves of strategy mainly ’s

Land Bank fromRedevelopment Land Urban ,

on the the on

i ncluding Cheung High Park in Sha Wan and AXIS in

s calculated is

in the the in

fri

n - situ land exchange due to the government’s new town projects in projects town newgovernment’s the to due exchange land situ ge New TerritoriesNew developers Hong in Kong. among

of urban areas urban of ae o te G the on based                   PropertySales PropertyInvestment PropertySales PropertyInvestment

- the 2019. HLD total2019. to a have GFA plans forin of 2017,2.0 sq.ft. sale million Ferrybusiness (HKFerry) Hoteland travel agency (Miramar business Hotel) Townand gas businessutility (HKCG) Departmentbusinessstore (Henderson Investment) Industrial Commercial Residential CarPark Office Commercial Industrial Commercial Residential CarPark Industrial Residential/Hotels and Serviced Apartments Office Commercial

New Territories. HLD disclosed that a total land Territories.New total a that disclosed HLD

of old buildings, old of

vrmn’ lts tw planning town latest overnment’s

HLD also holds 24 projects projects 24 holds also HLD

into luxurious residential buildings. HLD branded its small its branded HLD buildings. residential luxurious into

Shui Kiu New Development Area as HLD as Area Development New Kiu Shui

3,923 2010 n.a. 1.5 0.3 1.8

Projects requir

4,096 2011 n.a. 1.9 0.9 1.4

ing

4,500 with

2012

compulsory sale from 90% to 80%, which 80%, to 90% from sale compulsory in Hongin Kong n.a. 1.6 1.1 1.4

higher Hung Hom. upon redevelopment and the Company’s latest latest Company’s the and redevelopment upon

with fully acquired fully with

5,600 2013

uncertainty uncertainty 1.8 2.2 0.9 1.3

At the end of 30 30 2017, June end of the At 6,300

2014

Henderson Land Henderson 1.3 2.1 1.3 1.3

that the Company the that

area of over 800,000over of area

h 6,400

2015 ownership, yieldingownership, ol 0.9 2.4 1.4 1.1 , d

Kwu TungNorth Kwu effective in April in effective s

the Company the

approximately

6,900 2016

Page Page ( 00012 HK 00012 0.8 2.0 1.8 1.4

may n may

4 -

scale of of 7,000 1H17

ot be be ot

will

35 0.8 1.7 2.3 1.4 ) a

’ s s

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Company Source: the Completed properties forrental Completed stock for sale Propertiesheld/under GFA, mil Table Note: Company Source: the July 2017 March2017 Date Table HLD’s land development tobank 38.9million shrank sq.ft. unloaded, were projects these After 2017. July in completed was transaction the and sq.ft. million 39 about of area planned Dalian, Anshan, in located TielingShenyang and Guangzhu, projects development property 9 another Also, 2017. March in completed was transaction The Limited Guangzhou, Fangcun, in clearance and resettlement of process the in land holding projec development property of number a unloaded HLD years. price property in increase the by brought benefits economic the of part devours actually China in tax appreciation years the over Suzhou in boom market property the completedbeen while phase 5 and phase 6 are still under construction. The long period of development de was project the of segment residential commercial for sq.ft. million plots 3 instance, For phases. in tier in sq.ft. million GFAof developable tier across projects development property has HLD Chinain Property Development leverage good a HLD’s wide sources of land have enabled the Company to in construction is expectedprocess the to inonlybe 2Q17.Thecompleted project Street in Tai Kok Tsui and initiated dem 11 along buildings old of acquisition the completed HLD example. an as Mile Square • TakeEltanin development. development property Kong business. development property Kong Hong its in turnover high emphasizes HLD Company Source: the NewTerritories land (attributableland area) Total Completed properties forrental (including hotels) Unsoldunits from majorlaunched projects Propertiesunder GFA, mil Table Total e the old buildings and basically locked i locked basically and buildings old the th

e - - - Subject to adjustment. to Subject

2 4 3 las

lion lion : : :

which has an initially planned area of over 12 million sq.ft. million 12 over of area planned initially an has which

BreakdownHLD of Details HLD’sof Non BreakdownHLD of t

pag sq.ft sq.ft e . . development

fo r position . . International. Junan Guotai ,

9 Property9 Development Projects LandSite Fangchunin Nameof theProperty

icamr disclaimer - development 2

cities. 4.8

million sq.ft. in sq.ft. million

in the expansion in o the expansion phase

Given the fact that some thatsome fact Giventhe

’s ’s uies y euig h il tm atr ad custo ad pre and acquisition land after time idle the reducing by business property -

Land Bank in KongLand Hong Land Bank inLand Mainland China core InvestmentProperties core Sold of land containing a total GFA total residential a containing for land sq.ft. million of 6.4 of

was sold by HLD, by sold was

olition work in 2012. The project was pre

eeomn i Szo wr buh i 20 fr h Rvrie ak rjc. The project. Park Riverside the for 2007 in bought were Suzhou in development

Shanghai and Guangzhou (tier Guangzhou and Shanghai veloped in 6 phases with the first phase completed in 2012. The first 4 phases havephases 4 first The 2012. in completed phase first the with phases 6 in veloped n selling prices through pre through prices selling n

f the Kong.f realestate in cycle Hong 2010 40.6 21.3 10.4 157.3 150.4 2010

1.6 9.3

projects have have projects but for 6.5 0.4

- a total consideration of HKD8,600 of consideration total a has 1 cities to tier to cities 1

launch

2011 extended HLD’s payback period. However, we note that the landthe However, that period. payback note HLD’swe extended 158.1 151.2 41.9 21.1 10.2 10.2 2011 0.7 ts in 2017. in ts 5.9 1.0

properties land plots that are quite sizable, HLD quite are sizable, that plots land

for - sales. On top of the fast construction fast the of top On sales. 2012

147.9 140.3 42.8 20.9 10.1 10.4 2012 - the consideration of approximately HK$1,946 million. HK$1,946 approximately of consideration the 0.4 - 2 6.4 1.2 1 cities). HLD also has a developable GFA of GFAof developable a has also HLD cities). 1

cities in China. in cities HLD sold equity interest in investment companies investment in interest equity sold HLD

every year. The high turnover strategy - t sold sold in ook 2013 143.9 136.1 42.5 24.6 10.1 13.7 2013 0.8 6.6 1.2

about 5 years since HLD unified sinceabout HLD interests years 5

and Shenyang Guangzhou,Tieling Anshan,Dalian, Guangzhou Location

to Country Garden Holdings Company Holdings Garden Country to ph

a HLD raises its turnover in its Hong its in turnover its raises HLD

ses ses 2014 135.9 126.1 million. The 9 projects contained a contained projects 9 The million. 44.5 23.8 13.0 2014 In terms of lank bank, HLD bank, lank of terms In

9.9 0.9 7.3 2.5 starting starting from October 2015 and

property -

sale Henderson Land Henderson 126.9 116.7 2015 2015 45.0 24.4 10.1 13.4

0.9 of 7.3 2.9 allow

has development and 10 and development

t poete under properties its

develop and ed 101.1 2016

2016 44.8 24.1 13.7 91.0

HLD to enjoy 9.7 0.7 6.4 3.7

sales cycle, sales

Page Page (HKD million) ( 00012 HK 00012 gives

s -

33 Li Tak Li 33

ed over the over 8,600.0* Amount 1,946.0 5

these of of 1H17 1H17 HLD 34.1 48.2 38.9 44. 24. 13.7 s 35 6.4 2.9 9.3 1.2 )

9 2 a

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se which turns sales channels, in HLD’sraises marginprofit in the property development business in china. to HLD enabled China in developers and HLD risk its between diversify cooperation the view, our In project. Triumph of Arch Yixing the projec Park Riverside Suzhou the in HLD from interest economic of 30% and 50%, into entered property mainland those Among Holdings. CIFI and Holdings CIFI HLD and developers, properties Longfor Garden, Country including developers, property progress development know financial and recognition brand development, co its “enhanced synergy. achieve to projects their of some realestate Since markets in China Company Source: the Total Others(including clubhouses, schools andcommunity facilities) Office Commercial Residential GFA, mil Table Company Source: the Total Subtotal Yixing Xuzhou Xian Tieling Suzhou Shenyang Nanjing Hangzhou Fuzhou Dalian Chongqing Chengdu Changsha Anshan Second Subtotal Guangzhou Shanghai Primecities GFA, mil Table e

e - -

5 6 - las lion lion tiercities

: :

BreakdownHLD of BreakdownHLD of t

pag sq.ft sq.ft a e . . contractual cooperative agreement to invest an aggregate amount of RMB1,037.4 million in exchange 30%,in for RMB1,037.4million of amount aggregate investan toagreement contractual cooperative

s r , monitor development costs more effectively and speed up the sales process throug process sales the up speed and effectively more costs development monitor , . . -

operation icamr disclaimer

f projects of

ih mainland with

’s ’s Development Land Bank Development Land Bank Chinain (ByMainland Usage) Development Land Bank Chinain (ByMainland Location)

and have been have 150.4 135.1 vary 2010 15.3 14.2 20.5 17.4 10.3 15.2 1.1 9.7 5.3 8.7 2.4 6.6 17 18

0 0 4 oe cntuto css” L hs oprtd ih fw well few a with cooperated has HLD costs.” construction lower

from

China

long

cit s ttd n the in stated As

151.2 135.9 2011 rpry eeoes o ht t ol cnrbt is xeine n property in experience its contribute could it that so developers property 15.3 14.2 20.1 17.3 10.3 14.5 17.9 y city to 9.7 5.3 8.7 3.4 1.7 1.1 - 17 - term strategic termstrategic

how 0 6 4

150.4 125.2

2010 11.1 and , HLD cooperates HLD cooperates with mainland , 4.7 9.4

140.3 124.8

2012 mainland mainland 18.7 11.1 10.3 13.6 17.8 15.5 14.8 9.7 5.3 8.7 2.9 1.8 4.9 0.7 16 0 4 151.2 125.7

2011 Chairman partners since 2013. On 5 September 2016, CIFI HoldingsCIFI September 2016, On5 since 2013. partners 11.4 4.4 9.7

China 136.1 119.9 2013 140.3 116.3 17.3 15.6 11.1 10.3 13.1 17.8 16.2 14.6 2012 10.4 7.8 4.6 8.7 1.7 1.2 1.8 4.9 1.6 ’ s 4.8 8.8 4

ttmn i te 06 nul Result Annual 2016 the in statement developers could could developers

t, Changsha Grand Lakeview project and project Lakeview Grand Changsha t, 136.1 111.2 2013

10.5 4.7 9.7 126.1 110.7 2014 14.3 18.3 10.6 11.9 17.8 15.4 14.5

7.2 2.8 8.7 1.4 1.2 1.4 9.5 1.9 3.7 0.9

126.1 2014 China 12.7

100 4.2 9.2

t h sm time same the at 116.7 Henderson Land Henderson 2015 99.5 13.8 10.6 11.9 17.6 17.2 14.5 propertyin developers 6.9 1.8 8.7 1.3 1.2 9.1 3.6 2.7 13 116.7 2015 0 0 10.6 12.4 91.3

h Chinese developer Chinese h 2.4

- nw mainland known 2016 91.0 74.4 10.7 16.3 16.6 14.5 2016 2.7 0.6 8.7 5.4 9.5 0.6 1.1 9.1 3.6 6.1 2.1 91.0 11.0 68.6 1.7 9.7 0 0

Page Page (

00012 HK 00012

expedite s 6 HLD , of of 1H17 1H17 38.9 29.5 38.9 34.1 10.7 35 0.6 3.9 4.9 2.6 0.6 5.5 4.5 0.1 0.3 3.6 6.2 4.8 1.8 3.0 )

0 0 0 0 0

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se segment Hong Kong tourist in site land The completion. properties projects redevelopment investment major 4 has HLD Company Source: the AverageCommitted OccupancyRate Total Residential andhotel Industrial/Office Office Shopping arcadeor retail GFA, mil Table Company Source: the Total NewTerritories Kowloon Hong KongIsland GFA, mil Table opportunities various on in differentproperty markets. cash stream flow of with stable HLD a The portfolioprovides Centre. leasing diversified Financial office GFAhas also o HLD Arcade. Shopping III & II Phase City Metro and Centre Shatin Plaza, wellofnumber a has HLD income (including the attributable contribution from subsidiaries, associates and million HKD6,540 Company’s the of 29.3% representing 2016, in HLD to million HKD1,918 of income rental gross Two 40 Centralin where has Centre Finance (“IFC”) HLD International One the be would Kong Hong in investmentproperties notable HLD’s most of One HongKong. in apartments residential HLD has a diversifiedleasing portfolio Hongin Kong. Hongin PropertyKong Investment HLD 3. Neither 10.4billion RMB for project Triumph of Arch Yixing the and project Lakeview Grand Changsha Suzho the HLD in from interest economic of 30% and 50%, 30%, acquired Company the that announcement an issued 2. Holding CIFI million. USD66.3 for July 2015 in Holdings CIFI to was sold Palace CIFI in Henderson 51% interest 1. HLD's Company Source: the at3 Site B1) (Phases 2A, GrandLakeview (Phases 3Band 3C) TheArch of Triumph (Phase5 (BlockNos. 24 and 30) andPhase 6) RiversidePark Henderson• CIFI City AmberGarden Henderson• CIFI Centre HendersonCIFI Palace Henderson• Country Eagle JinShi BotanicaLa Chengdu ICC ProjectName Table e th

e - - - space 7 9 8 las

lion lion : : :

Breakdownof InvestmentProperties in Hong Breakdownof InvestmentProperties inKong Hong (by Location) Selected DevelopersHLD ProjectsOther in with Cooperation t

pag sq.ft sq.ft 2B and3 atSite F and Phases2 and

nor Country Garden disclosed Country Garden's interest in the project. the in interest Garden's Country disclosed Garden Country nor

, mainly scattered around non around scattered mainly ,

e . .

fo r , Guotai Junan International. Junan Guotai , . .

apartment icamr disclaimer

that - at

known shopping centers in the New territories, New theterritories, in centers knownshopping

will add a total GFA of 649,740 sq.ft. to HLD’s investment property portfolio in Hong Kong upon Kong Hong in portfolio property investment HLD’s to sq.ft. GFA649,740 total of a add will 218 Electric Road came from HLD’s Newton Hotel Hong Kong to boost investment yield a yield investment boost to Kong Hong Hotel Newton HLD’s from came Road Electric 218 TanProject entered

into a into a downturn since 2015.

2010 2010 95% 9.4 3.9 3.1 2.4 9.4 0.6 0.9 3.4 4.5 - Kong Hong in districts business core Yixing Changsha Suzhou Suzhou Shanghai Shanghai Hangzhou Dalian Xian Chengdu Location

ih planned with

2011

97%

9.2 3.8 3.1 2.3

9.2 0.4 0.9 3.4 4.5

Sun HungSun Kai Properties, The Wharf HLP a has series of iconic shopping officemalls, towers, hotels and Kong (by Usage) Nameof CIFIHoldings, Longfor Properties

2012 complet 2012 CapitaLandTownship Pte Ltd 98% 9.1 3.7 3.1 2.3 9.1 0.4 0.9 3.4 4.4 Developersin Cooperation

.77% o set ion

these include these

2013 CountryGarden 2013 96%

9.1 3.8 3.0 2.3 equity interest 9.1 0.4 0.9 3.3 4.5 CIFIHoldings CIFIHoldings CIFIHoldings CIFIHoldings CIFIHoldings CIFIHoldings

joint joint ventures) in the year. Apart from the IFC,

from 2017 to 2019. 2019. to 2017 from ,

except for the IFC office tower and FWD FWD and tower office IFC the for except

with

2014 2014 98%

8.9 3.8 2.8 2.3 8.9 0.4 0.4 3.6 4.5 KOLOUR•TsuenShatinII, and I Wan

. The IFC project alone alone . contributedThe project IFC

f approximately 3.4 million sq.ft. of sq.ft. million 3.4 approximately f

interest 50.0% 70.0% 70.0% 50.0% 35.0% 50.0% 51.0% 50.0% 50.0% 30.0% HLD's

and enables HLP enables cash in to and 2015 2015 97% 9.1 3.8 3.0 2.3 9.1 0.4 0.4 3.7 4.6 Henderson Land Henderson 2 2 2

CooperatingCompanies' CIFI:35%; Longfor:30% u Riverside Park project, project, Park u Riverside h 4 rjcs are projects 4 The SHK:40%; Wharf: 30% 2016 2016 97% 8.8 0.4 0.4 3.4 4.6 8.8 3.8 2.8 2.2

Page Page ( 00012 HK 00012

7 Interest 50.0% 30.0% 30.0% rental 50.0% 50.0% 49.0% 50.0% of of s the s 1H17 1H17 n.a. 96% and 35 8.8 0.4 0.4 3.4 4.6 8.8 3.8 2.8 2.2 )

2 2 2 3

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se was compl of properties in China were at or above 90%, except for Guangzhou Heng Bao Plaza. HLD entered into an agreement to dispose rates occupancy overall 2016, In properties. investment these with associated spaces parking car 2,800 over are locations sold. 6.4 millionHLD has sq.ft.properties of tier investment in Chinain Property Investment vicinity the in spaces office of value achievable currently the exceeded transaction the of sq.ft per HKD50,650 of value accommodation long for with projected total investment over HKD26 billion. The project is expected to be completed in 2022 and is expected to be hel accommodati billion. situated site the of tender land the won HLD Note: Company Source: the February2017 February2017 January 2017 December 2016 Date Table developmentprojand non of release The billion. HKD8.1 Kong Hong disposed has HLD did HLD However, 22 a contain will project *The Note: Company Source: the 218 ElectricRoad Pottinger45 Street Eltanin• Square Mile King18 Road Wah Nameof theProject Table e Henderson Centre shopping mall and car parking spaces in Beijing by the end of 2016 th

e - - Subject to adjustment. to Subject L’ ivsmn poete n hn aelctd n rm lctosi Biig Saga ad Guangzh and Shanghai Beijing, in locations prime in located are China in properties investment HLD’s 11 10 las - term leasing. According to Jones Lang LaSalle (“JLL”; a professional services andmanage investment services professionala (“JLL”; LaSalleLang Jones toAccording termleasing. The commercial land site site land commercial The : : t

Details of HLD’sDetails of Non Details of Major Investment Details of Major Properties to Completed be from 2019 2017 to pag eted in February 2017. (

, around

including an office tower, a shopping mall, 2 hotels and 12 shopping premises in 2016 and 2017, cashing out cashing 2017, and 2016 in premises shopping 12 and hotels 2 mall, shopping a tower, office an including

on value of HKD50,650 per sq.ft per HKD50,650 of value on in e not disclose the breakdown of GFA for each usage. each GFA for of breakdown the disclose not fo

high demand for commercial and office spaces, which enhances HLD’s rental growth potential. HLD also has also HLD potential. growthHLD’s rental enhances which spaces, officeand commercial for demand high r , Guotai Junan International. Junan Guotai , , Guotai Junan International. Junan Guotai ,

NewtonInn NewtonPlace Hotel FairviewHeight (12 shops) GoldenCentre Nameof theProperty icamr disclaimer HKD25,000 to of ects.

its non its

NorthPoint Central TaiKok Tsui NorthPoint Location

storey Grade storey

- -

core investment properties. investment core core InvestmentProperties core Sold

HKD

core investment properties raises HLD raises properties investment core on

- A office tower and 2 floors of shops, supported by a podium garden and aand two garden podium a by shops, supported of 2 floors and tower office A

40,000 40,000 per GFA),sq.ft., taking before even cost construction into account. ury od otis mxmm rs for ra f 6,0 s.t ipyn an implying sq.ft, 465,000 of area floor gross maximum a contains Road Murray YearofCompletion . The investment project involves a landmark office building an building office landmark a involves project investment The . on

Murray Road on 16 May 2017 2017 May 16 on Road Murray

2019 2018 2017 2017 -

1 cities across China across cities after1 Centre inHenderson Beijing was

HLD sold a number of its non its of number a sold HLD

100.0% 100.0% 100.0% Interest 19.1% HLD's ’ s

financial flexibility in identifying new investment new identifying in flexibility financial

NorthPoint KwunTong Mid Sheung Wan Location

Commercial for - Levels for

135,995

a record high price of HKD23.28 of price high record a 40,000 ( sq.ft.)

n.a. * about HK$3,261about million. The sale

- – core investment properties in properties investment core

- level underground car park. park. car underground level Henderson Land Henderson 329,752 (sq.ft.) Office n.a.* – –

d retail facilities retail d ment firm), the ment for

ou.

Amount(HKD

Page Page (

investme 00012 HK 00012 S

143,993* 2,248.0* trateg 135,995 329,752 1,000.0 4,368.0 8 million) 40,000 506.0* (sq.ft.) of of Total 35 )

nt ic d

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: Project Station Figure XuHuiRiverside Commercial Project HaizhuSquare Station Project Nameof theProject Table in completed approximately complex commercial a be will Shanghai comprising in property investment other The 2019. of end the by completed be to scheduled 9 approximately of GFA with high a of consisting complex commercial purpose investment for a into developed be will 2019 Project Station Square Haizhu Guangzhou inThe Shanghai. and Guangzhou in properties completed investment complexes commercial 2 have will HLD Note: Company Source: the Total Heng BaoPlaza Guangzhou Skycity GreentechTower Centro Grand2 Henderson688 Henderson Metropolitan Shanghai WorldFinancial Centre Beijing Nameof theProperties Table e th

e - -

Attributable gross floor area to HLD. Henderson Centre in Beijing was excluded. was Beijing in Centre HLD. Henderson area to floor gross Attributable 12 13 The Company.

- las Gateway 3

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Details of HLD’sDetails of InvestmentProperties in 2019 China in HLD’sDetails of Core Investment Propertiesin China The Design of the Guangzhou Haizhu Square Haizhu Guangzhou the of Design The pag of

two phases e

3 gr fo

00,000 sq.ft 00,000 r . ade A office building building office A ade

icamr disclaimer

. The project is located at the Bund extension along the Huang Pu River and is scheduled to be to scheduled is and River Pu Huang the along extension Bund the at located is project The .

0 ,0 sq.ft. 0,000

Shanghai Guangzhou Location covering

end shopping mall with a GFA of approximately 8 approximately GFAof a with mall shopping end

h cmeca cmlx s oae ao Hih Sur sba sain n is and station subway Square Haizhu atop located is complex commercial The

Interest HLD's

100 100 100 100 100 100 100 100 (%) F o approximately of GFA

Completion Commercial* 2019 1,734,463

Yearof 653,557 293,448 406,618 212,644 - 52,922 65,467 49,807 2019 2020 (sq.ft.) Source: Source: Project Station Figure

–

The Company. -

4 :

4,643,630 1,999,947 2.6 oain f h Gaghu azu Square Haizhu Guangzhou the of Location 142,353 355,882 368,658 687,981 660,829 427,980 Office* (sq.ft.)

100.0% 100.0% Interest ilo sq.ft. million HLD's

–

Theproject 6,378,093 2,212,591 Commercial 653,557 435,801 408,804 434,125 687,981 710,636 834,598 , (sq.ft.)

Total* 3 8 n a hpig al f F of GFA of mall shopping a and 0 00,000 0 (sq.ft.) 0,000 sq.ft. and 2 office 2 and sq.ft. 0,000 0,000 s

HLD is developing 2 new new 2 developing is HLD

Henderson Land Henderson park Attributable 2,600,000 no.of car 9 0

(sq.ft.) spaces Office 0,000 2,807 1,163 347 272 163 186 404 272 –

Page Page ( 00012 HK 00012

Occupancy Committed 2, 1, Average 9 700 9 towers 00,000 (sq.ft.)

100% of of Total Rate 86% 98% 97% 90% 96% 98% 96% ,000 n.a. 35 )

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se st contributes Limited Company Gas China and Kong Hong The China. in million 23.1 to increase yoy 11.0% the than slower sig is which Kong, Hong in million 1.86 to yoy 1.1% increased customers of number the 2016, In phase. expansion stations filling gas natural treatment, wastewater and supply city piped including China, mainland in business utility the while decades after stable and mature basically is Kong Hong in business gas town The China. mainland in business operates townHLD, bus gas of associate an Company Limited, andGas China Kong The Hong Investment Henderson Limited from dissociated has the toll road business ever since. Henderson pay to judged was GovernmentPeople’s Municipal Hangzhou 2015, April In China. in business road toll its replace to 2014 in million HKD934.5 suspe originally Limited Investment Henderson 2016. in operated a toll arrivals road named Hangzhou Qianjiang Third Bridge in throughChina a joint visitor venture, but the payment of toll fees in plummet the by led sales retail of downturn the during which Long Yuen densely in scattered Citistores 6 are There “Citistore”. brand the under HK) (00097 Limited Investment Henderson flow. cash and risk diversify to businesses different with companies listed 4 in invested strategically has HLD investments Strategic Source: Project Commercial Figure eadily e th e dd ic Mrh 02 Hnesn netet iie sbeunl aqie Ctsoe uies rm L for HLD from business Citistore acquired subsequently Limited Investment Henderson 2012. March since nded t las - he Company. he 5 growing growing flow dividendcash through payments HLD every to year. : t pag The Design of the Shanghai Xu Hui Riverside Hui Xu Shanghai the of Design The

e fo r

icamr disclaimer primarily

target

netet iie RB7 mlin o u bc Hnzo Qajag hr Big and Bridge Third Qianjiang Hangzhou back buy to million RMB376 Limited Investment s

local consumers. The local customer oriented strategy effectively cushioned headwind cushioned effectively strategy oriented customer local The consumers. local , sbiir of subsidiary a

L, o oeae dprmn soe uies n og Kong Hong in business store department operates now HLD, , Source: Source: Project Commercial Figure

n nw nry xlrto ad utilization, and exploration energy new and - gas projects, upstream and midstream and upstream projects, gas t - he Company. he 6 - populated residential districts such as as such residentialdistricts populated Lcto o te hnhi u u Riverside Hui Xu Shanghai the of Location :

Theproject iness in Hong Kong and utility Hong Kong and iness in Henderson Land Henderson

gas projects, water projects, gas Tsuen Wanand provide stable provide are

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00012 HK 00012 operation,

nificantly 10 of of has ) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Mira Kong into toHong Place provide synergy achieve and customers with expected this year. In July 2017, Miramar Gro revenue of hotels and serviced apartments dropping 5.3% yoy and travel operation Kong and Hong services intravel and service Inve and Hotel Miramar 1,800 will condominiums provide Limited Holdings Group Empire with venture residential a acquired Limited Company (Holdings) Ferry Kong to process sales the business, Hong Kong Ferry (Holdings) Company Limi million HKD13.8 brought only investment operations property related and development property example, for HKD150.6 2016 contributed In businesses driver. profit a as operations related and shipyard (Holdings) Ferry Kong company, Hong this of name the to contrast In Kong. Hong in investment and development property operations, HLD, of associate an Limited, Company (Holdings) Ferry Kong Hong Source: Gas China and Kong Hong the Company Limited of Shareholders Figure e th HKD billion HKD 10 15 20 25 30 35 e 0 5 The Company. las - - 7 oriented business portfolio comprising comprising portfolio business oriented 13.5 5.9 : t

pag 2006 opn Lmtd culy eis oe n rpry eeomn ad rpry netet uies hn ferry, than business investment property and development property on more relies actually Limited Company 14.2 eeu ad rft trbtbe to Attributable Profit and Revenue 9.3 e 2007 Revenue fo 12.4 4.3 r

icamr disclaimer 2008

12.4 5.3

2009 HLD, which clearly indicates the achievement of synergy between the between synergy of achievement the indicates clearly which HLD, 19.4 5.6

tet opn Lmtd “iaa Gop) a ascae f L, s gop ih diversified a with group a is HLD, of associate an Group”), (“Miramar Limited Company stment 2010 22.4 6.2

Profit Attributable to Shareholders to Attributable Profit 2011 24.9 7.7 2012 28.3 in 6.9

phases 2013

ilo ad K145 ilo o sget profits segment of million HKD124.5 and million 31.6 7.1

m 2014 ainland 29.6 7.3 2015 over 28.6 7.3 up integrated Miramar Shopping Centre, Mira Mall,Miramar Tower and The Mira for 2016 of of

China. Miramar Group was hit by the slump in tourism last year with segmentyearwithlasttourism theslump in by was MiramarGroup hitChina. 6 years.6 an accommodation value of approximately HKD4,100 per sq. ft. The project The ft. sq. per HKD4,100 approximately of value accommodation an stylish hotels and serviced apartments, property rental, food and beverage, and food rental, property apartments, serviced and hotels stylish in 15.4 4.5

segment profits in the same year. Regarding its property development property its Regarding year. same the in profits segment ted is usually responsible for construction but 1H17

to ac 21 fr eertn HC’ 10h niesr i 21, f which of 2012, in Anniversary H to 150th was attributable million HK$551 approximately HKCG’s celebrating for 2012 March * ended years the during received were Dividends Note: Source: China Gas and Kong Company Limited Figure Hong Kong and China Gas Company Limited Limited Company Gas China and Kong Hong

ie t ate ek od n uut 06 hog a joint a through 2016 August in Road Peak Castle at site million 1,000 1,200 1,400 1,600 1,800 2,000 HKD 200 400 600 800 The Company. - 0 8 : Dividends Received by HLD from the Hong Hong the from HLD by Received Dividends : is rnial eggd n er, hpadad related and shipyard ferry, in engaged principally an 1,692 2012 all -

round service. s

falling 6.0% yoy in 2016, but a recovery is 1,254 2013

epciey bt er, hpad and shipyard ferry, but respectively, 1,436 2014 two

companies. Besides, Hong Besides, companies. transferred responsibility of Henderson Land Henderson declared declared 1,580 2015 LD.

31 December 31 special dividend in in dividend special 1,738 2016

Page Page

( 00012 HK 00012 .

of of ) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Kong Source: Hong in KongHong Properties Figure Department. Valuation and Rating Kong Source: Hong Residential Figure yield to supply. the Although which of sale value. The share of primary sales, whether in quantity or the Pri 6.6 Acategory increasedThe of by2017. price size) of (largestin units months E category size) and (smallestin units the Rating rose property residential Kongprices Hong Residential of Overview AnalysisIndustry e a new low new a 100 150 200 250 300 350 400 mary mary sales accounted for 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 %, respectively %,

HKD m HKD 50 th 0 amongresidential alltypes of properties). e reflect las - - 0 11 2001 9 : PriceKong andof Rental Indices Hong t

: pag

2007 2002 and Valuation Department, the increase in price of small and medium Value of Transactions Residential of Composite Price Index Composite Properties s e in 2017 in

2003 Property YoY Total Change (RHS) Sale Primary 2008 the h ngtv ipc bogt by brought impact negative the fo Land Registry r

2004 icamr disclaimer , during the period the during ,

2009 2005 Kong inHong Market Property

US 2010 2006 Ahomes category of yield (rental

Fed 2011 2007

2008 30. 2012 has

2009 3 % % of total turnover in terms of volume, and reached a more significant level of 2013 2010 raisedrate interest Composite Rental Index Rental Composite 2014 2011 residential of volume transaction The .

Seconday Sale Seconday 2012 2015 2013 2016

2014

12.9 2017 2015 the

% s 2016 market housing secondary on measures cooling demand government's

0% - 100% 150% 200% 250% 300% 350% 50% - 5 50% 100% in the first first the in

2017

times Decemberrental since 2015, residentialon yields properties was

2. 8 % in % Residential Properties in Residential Hong Kong Figure Source: Hong Kong Kong Source: Hong Properties Residential of in Kong Hong Figure units to refers A Grade Note: Department. Valuation and Rating Kong Source: Hong 1 1 sales sales amount 0% 1% 2% 3% 4% 5% 6% 7% Grade E refers refers E Grade m 100 between area an with units to refers D Grade m 70 between area an with units to refers C Grade m 40 between area with an units to refers B Grade

100% November months of 2017of months 20% 40% 60% 80% - - 0% 10 12 2001 : Rental Yield types Different among of :

2002 of and SecondaryShare PrimarySales Sales 2002 propert 2002 2003

Land Registry - 2017, which 2017, to units with an area above 160 m 160 above area with an units to sized units outsh

2003 , w A 2004 ies

2004 as 2005

2005

with an area less than 40 m 40 than less area with an in higher than average level 2006 reach Average Average Share of Primary Sale Sale Seconday Sale Primary 2006 2017 B

. 2007 2007 had 2008 2008 ing was

2009 2009 a one previously C

2010 2010 high. record 61,591 Henderson Land Henderson

2011 2011 large units in the first

2012 2012

2 , up by up , 2013 D . 2 2

2 2013 been 2 to 69.9 m 69.9 to to 99.9 m 99.9 to .

2013 m 159.9 to 2014 43.6

2014 s According toAccording

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since 2002, ( the highest the

2015 12.6 12.7 00012 HK 00012 2015 % in terms E 2 2 . .

2016 2016 2 12 . % yoy.% % % and 2017 2017 of of fell ) 35 11

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Bureau Housing and Department Valuation and Rating Kong Source: Hong Units Figure homessubsidized Scheme. Pilot Ownership which Kong, Besides, dissipated. gradually growth yoy negative to turned have sales m housing public supply housing supply r expect We Lands Kong Source: Hong Figure Source: Centaline Ratio Figure e th 1,000 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Residential Units Residential - 10% 20% 30% 40% 50% 60% 10% 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Units e 500

5,000 0% in Hongin Kong las - - - of of 0 17 15 13 2010 0 t private private flat

:Kong Hong Monthly Issued Consent Presale :Kong Payment Hong Mortgage Income to : pag arket. Nevertheless, arket. 2003

Actual Construction of PrivateActual Residential of Construction 1997

esidential property prices prices property esidential e include 1998 2004

Property Agency Limited. Agency Property fo 2011 . 1999 r Average (1997 Average Units Residential of Private Construction Actual

Prime Rate Base Prime Rate 2005

icamr disclaimer 2000 won but, it 2001 s 2006

Department.

2012

for the coming 3 to 4 years

2002 (reflected by the 4.7average years of for time publicrentalwaiting housing) Annual Average Annual Issued Consent Presale of Number

h eu of setup the 2007

2003 2004 power purchasing some that expect We 2008

2013 2016) 2005

’

t on massive scalea be 2009 2006

Chief Executive Mrs. Carrie Lam Lam Carrie Mrs. Executive Chief

we have observed that the monthly transaction volume of volume transaction monthly the that observed have we 2007 2010

2014 2008

2011

the 2009 2010 2012

“Starter Homes” Homes” “Starter 2011 2015 HIBOR Base HIBOR

, 2013 from from to be flat in in flat be to

Hong Kong Hong 2012

2013 2014 2014 2016

July 2017 July 2015

2015 climbed to

2016 2016

Transport Transport

3Q17 - 1 . 2017 2017

2018

scheme and the the and scheme to November 2017 November to

9 7 . ,000, robust Even though the Transport & Housing Bureau’s projection of projection Bureau’s Housing & Transport the though Even Consent Figure Limited. Agency Property Source: Centaline Figure Source: Hong Kong Rating and Valuation Department. Valuation and Rating Kong Source: Hong Kong Hong Figure Department. Lands Kong Source: Hong unveiled unveiled 35,000 40,000 10,000 15,000 20,000 25,000 30,000 Units in the private housing market will market housing private the in 5,000 11,000 11,000 13,000 15,000 17,000 100 120 140 160 180 Residential Units Residential 5,000 5,000 7,000 9,000 20 40 60 80 0 - - - 0 16 14 18

2011 1997 :Kong Hong Monthly Presale for Applications : Centa : 2003 her economic regulation Completion of Completion PrivateUnits Residential

1998 hasbuyers home from demand the that hinting , 2004 1999 Hong in ladder housing the rebuild to strategy

2012 2000 2005

Annual Average Annual Consent Presale for of Applications Number

2001 2006 City (CCL) Index Leading Average (1997 Average Units Residential of Private Completion 2002 growth

2013 2007 2003 2004

h Gen om usdzd Home Subsidized Form Green the 2008

both primary sales and secondary and sales primary both 2005

in Hong Kong and the shortfall in

2014 2009 2006

2016) 2007 2010 2008

will

2015 2011

2009 Land Henderson

2010 2012 continue be channeled to these to channeled be 2011

2016 2013 2012

2013 2014

2014

2015 2017 to

2015

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) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: Source: Each Year) RentalHousing Public Figure Source: Figure Figure e Units

10,000 20,000 30,000 40,000 50,000 60,000 100,000 120,000 140,000 160,000 180,000 th 20,000 40,000 60,000 80,000 e Hong Kong Housing Authority Housing Kong Hong Hong Kong Housing Authority Housing Kong Hong Authority Housing Kong Hong las - - 0 21 19 -

23 0 t

: 1997/98 :Kong Hong pag

Number Number : 11.5% 89,000

2011

Average Waiting Time for e 1999/20 fo r

106,100 106,100 2001/02 icamr disclaimer 19.2% 2012 General Applications General

of 2003/04 118,700 118,700 Total G

Average Average (1997/98 Society Housing Authority Housing 11.9%

Public Rental Housing Public Rental 2013 inHong Kong 2005/06

125,400 125,400 2007/08 . . ,

5.6%

2014

Hong Kong Hong eneral eneral 2009/10

140,200 140,200

11.8% Year 0 1 2 3 4 5 2011/12 2015 - 2016/17) A

pplications Society Housing 2013/14

( 2011 Public RentalHousing 153,000 153,000 As at 1.1 1.1 2.2

9.1% 2016 yoy change yoy 2015/16 General Applications General

150,200 150,200 June 2012 2017/18e - 2017

1.8% 1.4 1.4 2.7

Supply 2019/20e

for . End

0% 5% - 10% 15% 20% 25% 2013 5% 2021/22e 1.5 1.5 2.7

2014 1.7 1.7 3.0 Each Each Year) RentalHousing Public Figure Source: Figure Source: Source:

in Hongin Kong Elderly One 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Units 5,000 10,000 15,000 20,000 25,000 30,000 35,000 2015 5,000 1.9 1.9 3.4 Hong Kong Housing Authority Housing Kong Hong Hong Hong - - 0

22 20

0 : 1997/98 :Kong Hong - person Applicants person Kong Housing Authority Housing Kong 26,500 26,500

Number Number of 6.4% 2011 2016

2.4 2.4 4.1 1999/20

25.3% ( 33,200 33,200 2001/02 General Applications General As at 2012

2017

2.6 2.6 4.7 2003/04 - 28,700 28,700 13.6%

New 2013 Average Average (1997/98 Society Housing Authority Housing June

Subsidi inHong Kong 2005/06

G 2007/08 28,000 28,000

- 2014 , . 2.4% End EachEnd Year)

eneral eneral Hong Kong Hong 2009/10 z ed ed Flats

25,500 25,500 -

2015 8.9% 2011/12 Land Henderson - A 2016/17)

pplications

Housing Society Housing 2013/14 ( 23,600 23,600 As at - 2016 yoy change yoy 7.5%

Supply 2015/16

19,800 19,800 16.1% June 2017 2017/18e

Page Page

(

2019/20e HK 00012

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. End End

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

20% 10%

14 2021/22e of of ) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se for HKD40.2 billion or Center HKD about 33,000 per sq.ft. Researc Property Centaline from retrieved value (accommodation sq.ft per HKD35,491 or billion HKD3 about for Wan Sheung in Wellington The sold Group Fung Nan instance, For market. in sq.ft. per value accommodation the and record sq.ft per HK$50,064 May Henderson Land 2017, won the government tenderland for the commercial site on Murray Road were spaces office C office spaces increased by the first in property premium land breaking Record Property Office Source: Figure replaced has rate prime the Therefore, continues. HIBOR in swell the if 2H18 in rate prime raise to expecting reportedly are however, Banks, 1 in increase further rate (prime banks among payment mortgage typical of th that rate interest k A to *Refers 2017. Election Executive Chief the for Lam Carrie Mrs. of Manifesto Source: Figure e e

ey downside risk next year will be the probable increase in prime rate in Hong Kong. Hong in rate prime in increase probable the be will year next risk downside ey 1 HIBOR rose month from December 0.74643% on 30 2016 to th the e Bloomberg, HSBC Bloomberg, las - - of 25 24

the US will hasten its pace of rate hike has already pushed up pushed already has hike rate of pace its hasten will US t price total land premium paid paid premium land total

: : pag 1

Green Form Subsidized Home Ownership Pilot Scheme. Pilot Ownership Home Subsidized Form Green 1 HIBOR and Prime Rate in Hong in HIBOR PrimeKong Rate and ProposedThe New Home Ladder s

months of 2017, months of Rating toaccording the and e 5 5 times since 2015, fo s . r

The price of grade A, grade B and grade C office spaces icamr disclaimer the the

2.6 . month HIBOR will no longer influence the mortgage payment if the prime rate stays at the current level. current the at stays rate prime the if payment mortgage the influence longer no will HIBOR month ,

the Treasury Markets Association. Markets Treasury the HIBOR t in terms of accommodation value), which broke the record the broke which value), accommodation of terms in % and and %

6.0 2. o be the driving factor be o of property price 7 %, %, % in % the was replaced by replaced was % for 1.9 0 1 2 3 4 5 6 7 8 Hong Kong prime rate been untouchedhas during However, the period. expectationthe

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the the 2009 HSBC Prime Rate (LHS) Rate Prime HSBC Murray Road commercial site triggered another wave of increase of wave another triggered site commercial Road Murray

2010 og og ad uto. edro Ln’ ln acquisition land Land’s Henderson auction. land Kong Hong 4.9

%, respectively, during the same period. Rental yield for grade A and grade B

201 2011

7 commercial/hotel l commercial/hotel ,

2012 down - 2.85% or 2.15%, assuming HSBC prime rate). In other words, any words, other In rate). prime HSBC assuming 2.15%, or 2.85%

aluation aluation 2013

0. 4

ppts ppts 2014 h) in late May.late in h) 0.92214

the Department. 1 Month HIBOR (RHS) HIBOR Month 1 s

and 0. and nextyear, view.in our

2015 and site in Kai TakKai in site and HIBOR significantly in 4Q17. As 4Q17. in significantly HIBOR edged edged up %, %,

3 2016 ppts from December 201 December from ppts reaching

Rental valueRental grade A, of andgrade B grade CK Asset offloaded its 75% holding 75% its offloaded Asset CK 2017 for

to 18.7 2018 therate interest cap the in calculation % 0.0 0.2 0.4 0.6 0.8 1.0 1.2 tal land premium paid (although the (although paid premium land tal which was which

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Junan International. Guotai Wakefield, & Source: Cushman KowloonEast HongKongEast GreaterCentral (CBD) CentralPrime Location Table Lands Kong Source: Hong S Figure Department. Valuation and Rating Kong Source: Hong Kong Hong Figure the office to renttowill continue incentivize toward relocate tenants to respectively, according construction, under currently years wil supply new ample contrast, respectively.In Square, sq.ft 18,700 leased Group HNA Land and Henderson by owned project Road Murray 2022 in completed aforementioned the until spaces office of additions at D paces ecentralization ecentralization e 100 200 300 400 500 600 700 100 200 300 400 500 600 the end of of end the

office will notspace market end in th 0 0 e - with 14 las - -

28 26 2003 2001 in Hongin Kong : t

: : Selected Information Selected Grade of A Kong Market Office Hong in pag

2004 2002 1.9 Number Number Transactionsof of Price and

e November 2005 2003

million sq.ft. ( sq.ft. million fo r

2006 2004 icamr disclaimer of

in Central in

2007 2005 the Registry Price Price Index Count

2006 RentalIndices Private Office of

2008

office space market continues 2017 118.4 132.0 2Q16 2009 2007 29.8 48.9 .

approx. 2008 2010 but , , with Central and Kowloon East Kowloon and Central with ,

2011 2009

2012 2010 leasing 118.7 132.4 3Q16 YoY change 25 29.9 47.7 Rental Index Rental .

2011

2013 2018 % of current stock) and stock) current of % n 93,600 and

Private Office 2012 2014 demand from Chinese from demand

MonthlyRentper sq.ft 2013 . 2015

120.1 134.2 4Q16 2016 2014 29.8 47.4 2017 2015

sq.ft. 2016 0% 100% 200% 300% 400% 500% - - 200% 100%

2017 s a l come online in Hong Kong East and Kowloon East Kowloon and East Kong Hong in online come l

. o epnin n 2Q17 in expansion for 122.2 136.0 1Q17 in C 29.7 47.5 According According to JLL

ushman & Wakefield’s report in report Wakefield’s& ushman

. 2.7 , Net , Effective s Kong Figure Source: Hong Kong Lands Lands Kong Source: Hong Kong Hong Figure Valuation and Rating Kong Source: Hong being

non affiliated companies remained solid. For example, Huarong example, For solid. remained companies affiliated

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 million sq.ft. ( sq.ft. million 10% HKD m HKD 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 126.0 139.2 2Q17 - 29.7 47.8 CBD area

0 1. - - 27 29

2001 9

2003 and % : :

, Rental Yield Grade of A inHong BOffices and TransactionValue of

2002

2004 the overall grade A office vacancy rate was 126.6 139.9 3Q17 2005 2003 s 29.7 48.5 approx.

. All in all, we believe that decentralization All of that . in all, we believe 10.9 2006 2004 Exchange Three and Place Pacific Two at

Value 2005 Registry

2007 %, respectively.%,

2008 Grade A 2006 22 3Q17vs 2007 - % of current stock) of officespaceof stock) current of %

3Q16 2009 0.7% 1.7% 6.7% 5.7% .

September 2010 2008

2011 Department. 2009 Private Office 2010

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2014 Grade B 2012 Under ,

2015 2013 be to scheduled in the next few next the in 0 0 2014

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in r

2004 s and RentalIndices and Private Flatted of icamr disclaimer 2006 November

the first the for SMEs remained solid remained SMEs for Price Price Index

2005 - rcso m precision Registry for

Count 2007 supervision

2006 flatted factories still persisted still factories flatted while rental value increased by increased valuerental while 2008 industrial spaces among tenants tenants among spaces industrial p

2007 s rivate flatted factories factories flatted rivate 11 2009 . among industrial buildings, we expect that the relaunch of relaunch the that expect we buildings, industrial among

2008 2017.

2010 2017 of months 2009 nfcuig n pamcuia cmais a be se i te akt Gvn our Given market. the in seen been had companies pharmaceutical and anufacturing

2011

2010 on Transaction volume of industrial properties was properties industrial Transaction of volume

2012 YoY change

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2012 re 2014 -

2013 launch . According to CBRE Research, new demand from emerging industries includingindustries emerging from demand new Research, CBRE toAccording . 2015 Industrial Building, Chief Executive Mrs. Carrie Lam expressed her supportive her expressed Lam Carrie Mrs. Executive Chief Building, Industrial 2014 ,

up shm o idsra buildings industrial of scheme n

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2015 69.3 2017 2017 in skyrocketed of the

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2003 grew factories flatted private of Prices : : Rental Yield Private of inFactories Flatted TransactionValue PrivateFactories Flatted of 2002 2004

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Value 2005 Registry

2007 525, and ValuationDepartment.

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2011 2009 warehouse 2010 % 2012 Land Henderson

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0 1 2 th 0 up to 22 January 2018 January 22to up e 2007 Hong Kong Rating and Valuation Department Valuation and Rating Kong Hong las - ies - 0 36 2001 34 t

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2004 icamr disclaimer 2010 Price Price Index 2005 0

of Hong Kong of Hong

. 2006

2011 0

2007 2012 2008 0

. 2009 2013

0 2010

2014

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2015 2012 .

1 2013 2016 1 Sites 2014

2017 2015 1 2016 od in Sold 2018

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Land Sales Land Figure Source: Figure Note: Note: Department Lands Source: 100,000 150,000 200,000 250,000 300,000 350,000 400,000 50,000 GFA, sq. ft GFA, sq. 10% 12% 14% 16% 0% 2% 4% 6% 8% * up to 22 January 2018 January 22to up 0 Hong Kong Kong Hong - - 37 2001 35 Mxmm nutil F fo Government from GFA Industrial Maximum : : 2012 Rental Yield

2002 2003 Rating and Valuation Department Valuation and Rating 2004 2013

2005

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2010 Land Henderson 2011 2016

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Lands Kong Source: Hong in KongHong Properties Figure Department. Valuation and Rating Kong Source: Hong in Properties Figure the reshufflingexpectthat tenant transitory. of mix is espe 2Q17, since figures sales retail overall in improvement gradual a seen have we as soon relatively sq.ft.end an to come 25,000 will streets high along new a added Coral de Café example, For quarters. restaurant few past the in streets high along shops new opened space a with leased 15,000 sq.ft 2016 (March has which TaiFook, high class middle and consumers high from reshuffling been has mix Tenant a turnaround that completely. Nonetheless, multiple signs e by brought research decreased heavily, retai rent The r Property Retail e 1,000 1,200 1,400 100 200 300 400 500 600 700 th 200 400 600 800 - l properties was 2.4% in in 2.4% was properties l 0 increased end luxuries, tenant mix along high streets has been shift e etail 0 las - -

40 2001 38 . Even though robust domestic consumption spending has supported the overall retail market, the high base effect base high the market, retail overall the supported has spending consumption domestic robust though Even . t 2003

: : pag high high street

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2004 icamr disclaimer cially in street high rent

2006 in % . Price Price Index

2005 2.7 at at Langham Place, while French sports retailer Decathlon opened its first outlet store at One Grand 2017) and is expected to shut down a few more in FY18. In contrast, popular sports brand Adidas Adidas brand sports popular contrast, In FY18. in more few a down shut to expected is and 2017) Registry Count

2007 had

property market

2006 in % the first the Transactions of Private Retail with

2008

2007 opportunity, expansion an as rent street high in decline the viewing providers, F&B sq.ft. 18,500 a strong presence in high street high in presence strong a 2009

jewelry, watches and clocks, and valuable gifts sales gifts valuable and clocks, and jewelry, watches 2008 quarter 3 first the

2010 November

2009 1 - 2011 1 iios rm abroad. from visitors

2010 2017 of months

2012 will likely YoY change 2011

2013 Index Rental

including including . 2012 is expected to bottom out soon 2014 contrary,the On 2013

2015 take placetake in early 2018. s

2014 -

2016 luxur end of 2017, but the reduction in rent decelerated in 3Q17, in decelerated rent in reduction the but 2017, of

2015 the rebound in visitor arrivals

2017 Rat the to according ,

2016 ln hg street high along

0% 100% 200% 300% 400% 500% 600% - - 200% 100% 2017

y brands y u t adjustment to Due overall high street rent, which depends on tourist on depends which rent, street high overall s

for years, closed 6 Hong Kong POS in net t net in POS Kong Hong 6 closed years, for ing Source: Hong Kong Lands Lands Kong Source: Hong Kong Hong in Figure Department. Valuation and Rating Kong Source: Hong Kong Hong Figure

towards towards more affordable brands. Local jewelry vendor Chow 10,000 12,000 14,000 16,000 HKD m HKD 2,000 4,000 6,000 8,000

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% to more affordable brand affordable more to

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% yoy in in yoy %

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2008 s

2010 growth

2009 s 2011 and F&B and

2010 October 2012 Land Henderson YoY change

2013 2011 figures Overall rental yield of yield rental Overall

2014 2012 to according

erms during FY17 during erms s ).

2013 s

2015 have

targeting local targeting To wrap up, we To up, wrap 2014 more spending

2016 s

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se International. Junan Guotai Wind, Source: CBRE, Guangzhou Figure retail prime market 2017. of quarters performance sales in outlets retail Guangzhou resulted in an increase in vacancy rate to 8.1% in 1Q17. Although many international retail brands expanded their sq 47,000 adding 1Q17, in district Pazhou s A International. Junan Guotai Wind, Source: DTZ, Guangzhou in Offices Figure activities business will be more activein the run long and it would benefit sq rate of office spaces decreased to 4Q1 to 2Q16 from rate vacancy overall the TowerCentral and Center Financial International Kingold Centre, Finance CTF (eg: The supply for grade A office Guangzhou of of Property Markets Overview e . 1,000,000 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 . ie te ainl taey o eeo te Guangdong the develop to strategy national the Given m.

upply glut and weak retail sales retail weak and glut upply th 12 10 % 0 2 4 6 8 sq.m e 2010 las - - 44 42 t

0 Ttl tc ad aac Rt o Gae A Grade of Rate Vacancy and Stock Total : Vcny ae f rm Rti Sae in Space Retail Prime of Rate Vacancy : pag 2010

2011 e fo 2017 2011 r

icamr disclaimer As growth in Guangzhou's retail sales has been under pressure, has been sales retail Guangzhou's growthin As

, 2012

and the resulting rental value rental resulting the and viewing inincreasing supply weak retail retail space sales growth. and , 2012 which gradually reduced v reduced gradually which

2013 2013 Vacancy Rate (RHS) Rate Vacancy Total Stock(LHS)

s 2014

in in Guangzhou reached 2014 9.4

% % in 2015 2015

Selected Cities in China in Cities Selected are 3

6 . hurting the prime retail space market. space retail prime the hurting Q17 while monthly rent for grade A office 2016 m 2016 . However, with rising demand for high quality office spaces, office quality high for demand However, rising . with .

of new of acancy acancy . 2017

According to CBRE, g CBRE, to According 2017 retail space retail 0 2 4 6 8 10 12 14 16 18 % r ate of of ate a

record Guangzhou Figure Source: National Bureau of Statistics, Guotai Junan International. Guotai Junan Statistics, of Bureau Source: National Figure Wind, Source: DTZ, - og Kong Hong p rime 1,000 1,000 RMB/sq.m RMB

100 120 140 160 180 200 high in 2016. 800 900 100 200 300 400 500 600 700

20 40 60 80 suppl 0 0 - - 2010 43 45 r billion etail etail round Mnhy et f rd A fie in Offices A Grade of Rent Monthly : : SalesAnnualRetail in the y

to the city. the to

- 2011 aa By ra w blee ht Guangzhou's that believe we Area, Bay Macau s grade A office Gua market in pace

Guotai Junan International. Junan Guotai floor rent decreased by 4.6% in the first three first the in 4.6% by decreased rent floor A 2012 ,

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s e remain cautious t cautious remain e etc.) entered the market in 2016, raising 2016, in market the entered etc.)

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2014 2.7 Guangzhou 2015 Henderson Land Henderson

% qoq to RMB17 owards Guangzhou's owards

2016 ngzhou. the

overall vacancy overall 2017

Page Page

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se International. Junan Guotai Wind, Source: CBRE, Shanghai Figure 4.9 outletretail of expansion future, near the in rate vacancy brands luxurious projects new Those market. the to space area forBuoyant luxuriousdemand products corein area International. Junan Guotai Wind, Source: CBRE, Shanghai in Offices Figure office rate vacancy raising years, 5 past the in contracts was well there were 11 commercial buildings added in core business districts of Shanghai in 2016. According long businessdemand has opportunitiesfor place officea response quality been of robust high Shanghai andIn dreams.to office prime of rate vacancy the raised companies P2P of removal The Shanghai e

% ppts - th 10 12 14

Million Million 10.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 s known global real estate consultancy firm), 1.1 million sq added in 2017. There was a growing amount of P2P companies that ended their lease before before lease their ended that companies P2P of amount growing a was There 2017. in added 0 2 4 6 8 0.0 0.0 s e

2010 of of Shanghai remains high with 17 new projects commercial scheduled to open in 2017, adding 1.5 million sq las - - dropped 0. 48 46 2011

qoq to qoq ; sq.m t

: Vcny Rate Vacancy : pag the net absorption the of net office 113,000 to dropped spaces sq

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icamr disclaimer u t lw cesblt. lhuh h oespl i non in oversupply the Although accessibility. low to due 1 2012 % qoq to RMB304. qoq to % % % in

2013 s of international luxury international brands. of s 2 2013 Vacancy Rate(RHS) Vacancy Supply(LHS) New Q17 2014

f rm Rti Sae in Space Retail Prime of ,

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. he v he of Shanghai still persists.

d . m

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. 2.7

of of office space (of which more than 50% RMB/sq.m RMB/sq.m 10 20 30 40 50 60 70 80 % 100 150 200 250 300 350 0 . 50 2010 m

0 qoq - - 2010 47 49 .

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3 2013

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f hnhi a lf u te overall the up lift may Shanghai of wh

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per in day

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QoQ (RHS) 2016 2016 ation of of ation is

located located in Pudong) 2 Q17. s 2017 , leading to the to leading , 2017 Shanghai

their leasing their

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se International. Junan Guotai Wind, Source: CBRE, Beijing Figure nextthe few years. strategic poi 2017 of quarters r vacancy to a choose willing mature property in the core area when theyenter the first market to flagshipopen a store. In China. in destinations tourist popular most the of one is Beijing International. Junan Guotai Wind, Source: CBRE, Beijing in Offices Figure 2018 level high in supply abundant the that believe 3 space Aoffice Grade Beijing's of supply supply,officenew of terms In CBD. the of rapid the amid expansion of Chinese financialmarket s the in driver new a become have tenants domestic However, firms. multinational large by occupied tenantsDomestic Beijing Q17. Vacancy rate and rental value stay value rental and Vacancyrate Q17. e RMB/sqm/day 10 15 20 25 30 35 40 45 50 0.00 0.05 0.10 0.15 0.20 0.25

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sq.m t ate of ate

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dropped . icamr disclaimer

2012 2013

Rent (LHS) Rent are are driving the up the office space market in Beijing. prime retail property market in Beijing in market property retail prime

2013 Vacancy Rate (RHS) Rate Vacancy Supply (LHS) New 2014

70.5

2014 n % orthern orthern China, we expect that the demand for prime retail property in Beijing will stay strong in ervice 2015 of new office building office new of yoy 2015

to to s

QoQ (RHS) , 2016 e 128,000 2016 - ed at 7. at ed commence commence and TMT companies

2017 2017 f rd A Grade of

sq 1 % and RMB42 and % . m. As domestic and international retailers continue to view Beijing as a as Beijing view to continue retailers international and domestic As m. 0% 5% - - - - - 10% 25% 20% 15% 10% 5% 0 2 4 6 8 10 12 14 16 18 20 s %

will dampen will fell

0. Source: CBRE, Wind, Guotai Junan International. Junan Guotai Wind, Source: CBRE, Figure Source: CBRE, Wind, Guotai Junan International. Junan Guotai Wind, Source: CBRE, SpaceinRetail Beijing Figure 2

100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 RMB/sq.m ppts qoq to 5.2%. New supply of retail spaces in spaces retail of supply New 5.2%. to qoq ppts 50.00 6 0.00 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 . sq.m 6 growth in growth

- - per sq per 51 53 2010 Many fashion retailers and catering brands are more are brands catering and retailers fashion Many 0 : Monthly Grade of Rent ABeijing in Offices : 2011 , Vacancy Rate and New Supply of Prime Prime of Supply New and Rate Vacancy

while multinational firms are gradually moving out Beijing's Grade A office space 2011 . m New Supply (LHS) New . rent and rent

2012 per month, respectively. Looking ahead, respectively.Looking month, per Month Rent (LHS) Rent Month 2012 s

remained stable at stable remained 2013

2013 keep 2014

2014 the vacancy rate vacancy the 2015 2015 Henderson Land Henderson Vacancy Rate (RHS) Rate Vacancy

QoQ (RHS) 2016 12.3 million 12.3 2016 s

used used to be mainly 2017 2017

at a relative a at

3 Q17,overall Page Page

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se China. of Statistics of Bureau Source: National Figure yoy Such15.5% 2017. in June increase a in resulted which opportunities, new for look to Huizhou to flocked investors However, 2H16. in implemented decelerate market primary 3 neighboring towards interest investor diverted Suzhou, Chengdu, Zhengzhou, Wuxi, Jinan, Hefei, Wuhan and Shenzhen. purchase The markets in different cities mainly by the level of unsold residential properties remaining and the rate of increase in home p 3 in properties residential in purchase home on restrictions Tightening inChina Market Property Residential Overall e - - -

4.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 1.5% 1.0% 0.5% th China government imposed a number of restrictions on restrictions of number a imposed government China e las - 54 s t

: Primary(mom) Growth Price Housing pag

Jan-16 and raising down payment requirements on non 1st TierCity 1st e fo r

Apr-16 icamr disclaimer

Jul-16 d rd

a n ir City 2nd Tier

Oct-16 o .% yoy 2.7% to tier trend propertytrend benefited developers that had ample bankland in 3 tier and 2 and tier tier 1 city exceeded 3 in growth Mom

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tier cities. tier

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Oct-17 2 and tier The - Chinese government differentiated its policies towards real estate real towards policies its differentiated government Chinese first timefirst homebuyers in advanced cities including Beijing, Tianjin,

th home purchase home

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Jul-12 Jan-13 Jul-13 Shenyang rd Jan-14 hous

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se revenue leasing in the next but weyears newfew expectthe will be therun.beneficial long to HLD in projects Shanghai). in Project Riverside Hui Xu and Kong Hong in project Road (Murray investments disposing through 2017 and 2016 po property investment its managed HLD Kong. Hong from originated 2016 in income lease of 69.6% where tier these in locations Beij Shanghai, Kong, Hong including cities mature in found be can portfolio leasing major tier and Kong Hong in properties investment from income rental of stream stable a has HLP businessdevelopment accounted pre on discretion management and sentiment market property projects, of progression the on highly opera hotel leasing, HLP. of operation driver Hotel 3) property leasing, 2) development, profit main the is business development Property Source: 2016 Fig land. of leasehold disposal and materials building of wellas trading the as services, guard security and cleaning infrastructure, mainly Note: construction, Others comprise Source: yoy TotalRevenue yoy Others yoy Department storeoperation yoy Hoteloperation yoy Property leasing -- -- yoy Property development -- -- HKD million Table Revenue Analysis Analysis Financial MainlandChina HongKong MainlandChina HongKong e

ure th e

- Property leasing, leasing, Property t 15 the Company, the las - he Company, Guotai Junan International. Junan Guotai Company, he 56 28.2% : t

: HLD’s Breakdown Revenue pag

radw o HPs emn Rvne in Revenue Segment HLP’s of Breakdown

e Department store store Department

operation, 4.6% operation, fo r

icamr disclaimer Guotai Junan International. Junan Guotai

tion Property leasing, leasing, Property

- Department store store Department 1 cities ensure cities 1

21.7% operation, 3.4% operation, s Others, 6.8% Others,

and department store operation store department and

Others, 5.7% Others,

development, development,

Property Property for of 69.1% revenue and of 42.3% result. segment 69.1%

of Outher ring:2017 Interim Result Interim ring:2017 Outher Inner s

reliable income sources for HLD. Hong Kong contributed the most in lease income, lease in most the contributed Kong Hong HLD. for sources income reliable

non ring:2016 Annual Result Annual ring:2016 - oe netet rpris rfr to (refer properties investment core provision of finance, investment holding, project management, property management, agency services, management, agency services, property management, project holding, ofinvestment provision finance, development, development, Property Property 60.5% - - 12,091 23,641 15,690 2015A s 24.8% 47.3% 11.6% 3,599 1,384 5,589 1,737 3,852 1.2% 1.4% 1.4% , 4) Department store operationstore Department 4) , 879 99

is recurring in nature while revenue from property sales depend sales property from revenue while nature in recurring is 2016 Figure Source: Source: HKD m HKD 3,500 4,000 4,500 1,000 1,500 2,000 2,500 3,000 500

- 25,568 17,679 2016A 21.2% 12.7% 0 the Company, Company, the - - - 1,381 5,559 1,688 3,871 7,728 9,951 - 8.2% 0.2% 0.9% 0.5% 57 871 78 : HLP’s Breakdown of Results in Segment development 3,837 L’ rvne a b casfe a: ) property 1) as: classified be can revenue HLP’s

Property 2,907 2016Annual Result Guotai Junan International. Junan Guotai T Property leasing able s

- 26,718 18,957 17,175 2017E 10.0% , and 5) others. Revenue frompropertyRevenue others. and, 5) 4,233 - - 1,422 5,441 1,462 3,979 1,782

4.5% 3.0% 5.0% 2.1% 7.2% 828 - 70 2,139 2 ad elcn te wt new with them replacing and 12) ing and Guangzhou. The strategic The Guangzhou. and ing

The disposal disposal The Departmentstore operation 298 2017ResultInterim - Henderson Land Henderson 1 cities in China. in cities 1 - sale 127

- - 19,486 11,556 10,070 2018E 27.1% 39.0% 1,465 5,548 1,502 4,046 1,485 3.0% 2.2% 2.0% 2.0% 846 s 72 . In 2016, property 2016, In . will

rtfolio actively in actively rtfolio

696 Others reduce HLD’s reduce

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24 HLD’s 23,692 15,326 14,649 2019E 21.6% 32.6% 1,509 5,919 1,683 4,236

3.0% 2.2% 2.0% 6.7% of of

865 677 ) 73 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Note: Source: MegaCube E TheGlobe GlobalGateway Tower HighPoint HighOne HighOne Grand Eltanin• Square Mile Parker33 H• Bonaire JonesHive GreenLodge Conduit39 Road HillParamount TheReach Seven VictoryAvenue HighPark Grand ParkOne Wellesley Novum West DoubleCove Eden Manor Nameof Project Table Agreement”. Management and Covenant and Grant of Mutual # * O Note: Source: P Eden Manor 12 NovumE Novum West ParkOne Seven VictoryAvenue Wellesley TheGlobe HarbourPark Eltanin•Square Mile TheZutten AXIS PARKER33 Hillwood38 Road MegaCube 8* Name Kong Table

ark - HLD Project of revitalization of industrial building sold in 2017. in sold building industrial of revitalization of Project TradePlaza - e 18Tin Street, Wan Aberdeen

R I/O ’ s e of Project - - each -

t 16 t 17 interest is 50% after the allocation of the relevant residential units to each of the involved developers separately developers of involved the each tounits residential relevant of the allocation the after 50% is interest C Office; las - International. Junan Guotai Company, he International. Junan Guotai Company, he Industrial/ Office; O Office; Industrial/

ast

: Detailsof : Detailsof

pag

–

Phases 1 - e

Commercial;

fo r

icamr disclaimer

- HLD HLD 5

- Office; C Office; R - ’ ’ Residential; Data retrieved from HLD’s 2016 Annual Report Annual 2016 from HLD’s retrieved Data Residential; s s

Major InventoryHong in Sale for Kong Held - Commercial; R Commercial; Development

- Residential; Data retrieved from HLD’s 2017 Interim Report. 2017 Interim HLD’s from retrieved Data Residential; Usage C/R C/R C/R C/R C/R C/R C/R C/R C/R C/R C/R

EstimatedYear ofCompletion O O O R R R R R R R

Projects Expectedbebetweento Completed to Hong 2017 2019 in HLD’s interest(%) Before 2017 2019 2019 2019 2019 2019 2018 2018 2018 2017 2017 2017 2017 2017 2017 2017 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 as 30 June at 2017 79.76 60.00 79.03 50.00 59.00

, 2016 ,

Final Results Investor Presentation Investor Results Final Usage No. ofresidential units C/R C/R C/R C/R C/R C/R C/R C/R C/R C/R C/R O O R R C

Not applicable Not applicable Not applicable Not applicable

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 79.03% 25. 33.41% interest on a proportional basis under the “Deed “Deed the under basis proportional a on unsold HLD’s 07 380 159 465 10 13 61 23 67 28 % 2 3 2 4 4 5 2 4 4

Henderson Land Henderson

and and Saleable areaunsold 2017 Interim Report Interim 2017

Page Page

( 00012 HK 00012 TotalGFA 555,399 177,817 103,503 123,090 279,519 433,609 272,301 156,90 172,113 176,373 102,570 185,301 25 21,453 37,546 77,029 83,245 55,077 41,314 80,090 55,031 56,903 60,359 78,685 14,030 11,742 14,275 20,411 25,203 29,201 47,195 1,095 1,491 1,615 2,166 2,269 3,062 4,977 6,617 of of ) 35

0 .

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se yoy g ( billion HKD5.4 approximately be to revenue China in properties investment sq.ft.million to HLD’s investmentportfolio in China, representing an expansion of over 50% HLD’s of current major co Xu Hui Riverside Commercial Project in Shanghai will add commercial GFA of over 1.1 million sq.ft. and office GFA of over 3.5 immediate boost to HLD’s result 2017 during completed be will properties investment to earlyFigure (refer 2017 of in and properties investment 2016 number a sold 2018. and 2017 in revenue leasing property in growth reduce to expected is properties investment of sale The HKD billion, of projections Our completion. project to correlate largely will our sales derive we when attitude conservative a maintain e we our Givenyear. that released, for forecast been not has 2019 for China in projects of schedule completion upon sq.ft GFA be will concentrat Property sale # C Note: Source: Phase 4C,Grand Paradise Phase 2R5,3R2 & 2P1, La Botanica Phase 2 3,& Suzhou Henderson CIFI City PhaseF1F2 Phase 3,Nanjing Emerald Valley Phase 2 3,& Jin ShiTan Project LotB ,Sirius ICC Phase 3B, Arch ofTriumph Phase 4A, GrandParadise Phase 2 Phase 3A, PalatialCrest Phase 1 2,& Suzhou Henderson CIFI City PhaseF1F2 PhaseF1F2 Phase G3 Phase (D14 Phase 2,Nanjing Emerald Valley Nameof Project China Table Excluding basement areas and car parking spaces. parking car and areas basement Excluding e th .

rowth), in 2017, 2018 and 2017, rowth),respectively. in 2019, e attributable to HLD completed in 2017, 2018 and 2019, respectively.In China, our estimates for GFA attributable to HLD - -

18 Commercial; O Commercial; t las - he Company, Guotai Junan International. Junan Guotai Company, he R4,La Botanica – : Detailsof t

- - - pag T1T2,Riverside Park - ed 2,Riverside Park 2(4# 8#),& Riverside Park 3,Riverside Park D4),Henderson CIFI Centre 1 of 831,188 sq.ft. (including commercial, residential and office use), GFA of 199,656 sq.ft. and GFA1,001,217 and of sq.ft. GFA199,656 use), of office and residential commercial, (including sq.ft. 831,188 of 1.6 1.6

e in in 2017 and 2019, which supports property sale revenue in the two years. s fo

revenue revenue is expected to be high in 2017 and 2019. r billion HKDand icamr disclaimer are 5,155,000 sq.ft. and 5,938,000 sq.ft. in 2017 and 2018, respectively. However, since the completion the since However, respectively. 2018, and 2017 in sq.ft. 5,938,000 and sq.ft. 5,155,000 are - Office; R Office; HLD

- ’

Residential; Data retrieved from HLD’s 2017 Interim Results Presentation. Results Interim 2017 HLD’s from retrieved Data Residential; s

Major

s ( 15.3 15.3 around around

during the ramp

xpectation that HLD will not deliberately hoard up its inventory, the revenue from property from revenue inventory, the its up hoard deliberately not will HLD that xpectation

Development

billi

on 2017,on respectively. in and 2019, 2018 GFA 6.4 million sq.ft. at the moment). As such, we project HLD’s property leasing property HLD’s project we such, As moment). the at sq.ft. million GFA6.4 - 2.1% yoy growth), HKD5.5 billi HKD5.5 growth), yoy 2.1% Changsha Shanghai - Chendu Suzhou Nanjing Xuzhou Suzhou Suzhou Nanjing Xuzhou Suzhou Suzhou Suzhou Projects Expectedbebetweento Completed to 2017 2018 in Mainland up up process. note We that Haizhu Square Station Project in Gu

Dalian Xian Xian Xian City - 09 rfr o Figure to (refer 2019

EstimatedYear ofCompletion The completion of property projects in Hong Kong recognized on (2.0% yoy growth), and HKD and growth),yoy (2.0% on - - 1 n Figure and 11 12).Although we 2018 2018 2018 2018 2018 2018 2018 2018 2017 2017 2017 2017 2017 2017 2017 2017 2017

revenue from prope from revenue

In In Hong Kong, - 3, hy a nt deliver not may they 13), realized that a series series of that a new realized Usage Henderson Land Henderson C/R C/R C/R C/R C/R

rty sales are HKD are sales rty We We estimate that there O C R C R R C R R R R R

5.9 attributable toHLD

angzhou and EstimatedGFA billion ( billion Page Page

( 00012 HK 00012 1,892,000 1,436,000 1,151,000 1,260,000 mpleted 996,000 760,000 470,000 279,000 172,000 928,000 539,000 186,000 694,000 181,000 26 (sq. ft.) will be 53,000 52,000 44,000 6.7

HLD HLD 19.0 of of an ) 35 %

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se respectively. margin operating Overall up. pushed be will HLD’s business all for ove the that believe we revenue, total of 65% represents business development property from revenue the and 2019, and 2018 in increase will China in development property of margin operating the that expectation our Given i figure the but 2018, and 2017 in flat be to expected is margin operating Overall in improvement operating margin ofproperty development business in China 2017 in tier of Prices reflected. increased significantly in 2016 we and have seen ripplea effect being revenue development property the and price China ahead of completion to lock in revenue, which implies that there is a time lag between the change in residential proper is improve. expected China to propertyin marginof Operating development reporting” “Segment section the from retrieved results segment and revenue the on based iscalculated margin Operating Note: Source: Figure financial HLD’s in reporting” “Segment section statements. segment the and from revenue the retrieved on results based calculated is margin Operating Note: Source: Development Figure Margin Analysis e 30% 35% 40% 45% 10% 15% 20% 25%

0% 5% th e the Company, Company, the the Company, Company, the las - - . 60 58

In our view, the bloom in bloom view,the our In t

: : 26.1% 31.5% 2015A pag 8.0%

HLD HLD

Hong Hong Kong e fo

’ r s ’

s icamr disclaimer Guotai Junan Guotai International Junan Guotai Segment OperatingSegment Margin

emn Oeaig Margin Operating Segment 14.0% 21.7% 27.7% 2016A

International Mainland Mainland China 16.2% 36.2% 38.3% 2017E 100%

- the 50% 50% 0%

residential property market in China during 2016 during China in market property residential . .

32.8% 34.6% 2018E Others operation Hotel development Property 20.7% 40.3% 2015A

23.8% 38.9% 2019E Overall 38.2% - Property 35.5% 2016A

45.0% 2017E results retrieved from the section “Segment reporting” in HLD’s financial financial HLD’s in reporting” “Segment section statements. the from retrieved results Note: International. Junan Guotai Company, Source: the Leasing Figure on price 68% 70% 72% 74% 76% 78% 80% is Operating margin is calculated based on the revenue and segment segment and revenue the on based calculated is margin Operating Overall operation store Department leasing Property

expected to be 45.0%, 46.7% and 48.4% in 2017 in 48.4% and 46.7% 45.0%,be to expected - 59 46.7%

2018E

s :

72.3% 73.9% 77.3% 2015A of residential of properties in the

HLD Hong Hong Kong from ’ - s ad tier and 1 48.4% 2019E Segment OperatingSegment Margin

HLD 2018. 79.3% 74.8% 76.1% 2016A

s expected to be pushed up in 2019. in up pushed be to expected s - usually pre 2017 will be translated into a marked a into translated be will 2017

- rsdnil rpris n China in properties residential 2 Mainland Mainland China 76.2% 76.7% 78.0% 2017E - sells its residential its insells units in HLD’s financial statements. financial HLD’s in Henderson Land Henderson

76.2% 76.7% 78.0% 2018E tier rall operating margin operating rall - 3 and tier - Property

Overall 76.3% 76.7% 77.9% 2019E Page Page

( 00012 HK 00012 - 4 27 -

2019, cities of of

) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: Figure ROA ROE and Analysis 2018 in properties our estimates and the2019 earnings depends since decision highly on 44. 51. 57.2%, be to expected are margins netyear. Underlying that in profit net underlying the down drive will reduction respectively. HKD9,9 million, HKD15,282 be to profit net underlying estimate We Source: Figure Source: Figure Profit Net Analysis 10,000 15,000 20,000 25,000 30,000 e 5,000 4 th 10 12 % % in 2017 in % 0 2 4 6 8 e 0 the Company, Company, the the Company, Company, the Company, the las - - - 64 63 61 t

2015A : : : and Margin Underlying Net Margin Net pag 6.5 8.7 11,009 11,009 21,326 2015A HLD HLD e Since we expect that HLD will have a decrease in its property development revenue development property its in decrease a have will HLD that expect we Since fo - 2019, respectively. We would like to highlight that we that highlight to like would respectively.We 2019, Net Profit Net ’ ’ r s s icamr disclaimer Guotai Junan International Junan Guotai International Junan Guotai Guotai Junan International Junan Guotai ROA ROE and Profit Net and UnderlyingProfit Net 2016A 6.3 8.5 14,169 14,169 21,916 ROA 2016A

2017E 10.1 7.5 27,590 27,590 15,282 15,282 2017E

100 120 Underlying Net Profit Net Underlying 20 40 60 80 % 0 . . .

2018E 16,996 16,996 4.4 5.9 2018E 2015A ROE 9,929 9,929 46.6 90.2 Net Margin Net 2019E 10,518 10,518 15,643 3.9 5.2 2019E 2016A 55.4 85.7

2017E 103.3 57.2 Source: the Company, Guotai Junan International. Junan Guotai Company, Source: the Figure Source: the Company, Guotai Junan International. Junan Guotai Company, Source: the Figure Underlying Net Margin Net Underlying 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 % 0 2 4 6 - - 62 65 2018E have 87.2 51.0 2015A : : 2015A 2.752 5.330 29 3.4 4.5 HLD HLD

million and HKD10, and million not assume not ROA ROA (Underlying) ’ ’ s s 2019E

EPS andUnderlying EPS ROA ROE and 44.4 66.0 EPS 2016A 2016A 3.541 5.478 4.1 5.5

d the

any disposal of of disposal any 2017E 2017E 6.896 3.820 5.6 4.2 management’s discretion. (Underlying) 518 Underlying EPS Underlying Henderson Land Henderson recognized in 2018, the 2018, in recognized ROE ROE (Underlying)

2018E 2018E million in 2017 in million 4.248 2.6 3.5 2.482 major

3.910 2019E 2019E 2.629

2.6 3.5 Page Page

( investment 00012 HK 00012 0 28 % and % - 2019, of of

) 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se to HLD’s catalyst a price.share may be further simplified in the future. If it comes true, HLD’s agricultural land holdings may be revalued again and will pr pledge Government’s SAR Kong in pricedalready has price share current FY1 estimated our to equivalent to 2017) to 2008 between discount NAV average valuation the trimmed significantly held land whichagricultural homes, starter in involved assessment premium land the alter to intention no Lam Carrie Executive Chief Nevertheless, business. development residential HLD’s bank land enormous maintaining stillwhile residentialdevelopment, to in agricultural land of conversion the buildingsand old of redevelopment Chinese of Hongin Kong is paying off. though Even withincompetition land auction “Neut with Initiate Valuation transactionsthe non of sales billion HKD21.9 the given position financial HLD’s worsen significantly not will investment the that 19.3%. years. 3 next the in position gearing low its maintain to HLD expect We Source: Figure Liquidity Analysis 3. 5.6%, We estimate ROE to be 10.1 theexclude effectfair value, of ROA underlying would 4. change to value fair in increase 7. be to ROA estimate We e th 10 12 14 16 18 % 0 2 4 6 8 e the Company, Company, the las - 66 Although HLD will be spending about HKD26 billion HKD26 about spending be will HLD Although 5 t % andin 3.5% 2017

2015A : pag 16.0 - Net affiliated developers in recent years, HLD has secured its project pipeline pipeline project its secured has HLD years, recent in developers affiliated - core investment properties in 2016 and 2017. 2017. in and ratioproperties 2016 netcore investment gearing forecast We

14.2 e fo G r are are

earing icamr disclaimer x/ Guotai Junan International Junan Guotai ral” rating and a TP of HKD of TP a and rating ral” 2 2016A 12.7 complete

1.8

size by HLD. We set a TP of HKD of TP a set We HLD. by f netet proper investment of x/ R . The bloom in in bloom The . 20.6 atio 5

% % 2017E d - x 2017 13.3 2019, respectively. 2019, .

, ,

5.9 4. to increase housing supply, the conversion process of agricultural land into residential use residential into land agricultural of process conversion supply, the housing increase to 4 % %

- 20

and and . and and

2018E 15.6 19 underlying PE ratio and 19 underlyingratio and 0. PE the the improvement in fundamentals inimprovement the 5.2% in 2017 3. is il e HKD be will ties residential property market in Chinese tier Chinese in market property residential 9 % in 2017 in % 5

2019E 4 15.5 . 54.08 08 . HLD’s strategy to expand its land bank sources sources bank land its expandHLD’s to strategy - 2019. - , which implies a implies which , 2019.

on 10,135

Source: the Company, Guotai Junan International. Junan Guotai Company, Source: the Figure If If we exclude the effect of fair value, underlying ROE would be the acquisition of land in the Murray Road project, we believe we project, Road Murraythe in land of acquisition the

Our ROA forecast ROA Our 2 20 20 21 21 22 22 % %, %, 2.

7 ilo, HKD million, - 67 7 s x/0. 8 2015A

: TotalDebt/Equity 6 in Hong Kong intensified has due to the introduction 20.3

% andin 2.6% 2017 . A o HKD of NAV 3 74 We would like to note that, considering considering that, note to wouldlike We 2 .0 x/0. As at 30 June 2017, HLD 2017, June 30 at As % discount (or +0.5 standard +0.5 (or discount % 71 5,656 s 2016A 20.9

x 2017 are spo

- ilo ad HKD and million s 7 2 cities will be reflec be will cities 2 based on our estimates that the net the that estimates our on based ke

for 9.5 to improve to improve -

20 publicly that the government had government the that publicly

2017E the the 20.7 e sae Or agt rc is price target Our share. per 19 PB ratio. PB 19 - 2019, respectively.2019, et few next

in Henderson Land Henderson

by the end of 2017 end of by the proceeds received from received proceeds

2018E outside land auction land outside 21.5 ’ 4,033 s gearing ratio was ratio gearing s

er truh the through years I n our view our n ted gradually in gradually ted deviation

ilo. f we If million. 2019E Page Page

21.8

( 00012 HK 00012 the ,

HLD’s of the of Hong ovide

after of of

an ) 35 of

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: NAVper share(HKD) Number of shares(million) NAV Cash/(Debt)Net Gross Subtotal Hong KongFarmland LandBank ofUrban Redevelopment Project SunlightREIT (00435 HK) HendersonInvestment (00097 HK) Hong KongFerry (00050 HK) Hong Kongand China MiramarHotel (00071 HK) Other Assets Subtotal CarPark Commercial Residential/HotelServiced Suite Development propertiesunder Subtotal UrbanRedevelopment Projectsunder Planning Residential Development propertiesunder development Subtotal Commercial Residential/HotelServiced Suite CompletedDevelopment Properties Subtotal Industrial/Office Office Residential/HotelServiced Suite CompletedDevelopment Properties Subtotal CarPark Office Commercial InvestmentProperties Subtotal CarPark Industrial/Office Office Commercial Residential/HotelServiced Suite InvestmentProperties NAVSummary Table e

e Asset Value - 19 Guotai Junan International Junan Guotai las

: HLD’s FY1 t

pag

e fo r icamr disclaimer

- - China Hong Kong Gas(00003 HK) 8

NAV Breakdown

development

estimate

- - China Hong Kong

- -

China HongKong

Henderson Land Henderson

Page Page

( 00012 HK 00012 HKD million (45,712) 141,978 318,193 363,905 145,956 30 39,680 31,475 25,042 17,102 62,810 65,548 15,715 31,475 89,343 4,001 1,404 1,415 1,072 5,530 8,205 4,283 7,356 3,007 1,717 8,897 4,214 3,492 1,189 1,179 5,845 of of 79.5 691 724 838 584 ) 10 31 35

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: Figure Source: Figure Source: Figure - - - - 20% 40% 10 12 80% 60% 40% 20% e x 10 15 20 25 30 0 2 4 6 8 0% x

2008 0 5 th 2008 e Bloomberg, Bloomberg, Bloomberg, Bloomberg, Bloomberg,

las - 2008 - - 72 70 68 2009 t

2009 : : : pag

HLD’s Trailing PE ratio 2009 HLD’s HLD’s NAV discount e 2010 - ratio TrailingPE - ratio PE Forward fo 2010 1 SD 1 SD - discount NAV Guotai Junan Guotai International Junan Guotai International Junan Guotai 1 SD r

2010 icamr disclaimer

Forward PE ratio 2011 2011 2011 2012 2012

International 2012

2013 2013 2013

2014 2014

. . .

2014 2015 2015 +1 SD Average

+1 SD Average 2015 +1 SD Average 2016 2016 2016 2017 2017 2017 2018 2018 2018

Figure Source: Figure Source: Source: Figure Source: 0.2 0.4 0.6 0.8 1.2 1.4 0.2 0.4 0.6 0.8 1.2 1.4 % x 0 1 2 3 4 5 6 7 0 1 x 2008 2008 0 1 2008 Bloomberg Bloomberg Bloomberg - - - 71 69 73 2009 2009 2009 : HLD’s PB Forward ratio : HLD’syield Dividend : HLD’s Trailing PB ratio 2010 2010 2010 - ratio PB Forward 1 SD , Guotai Junan International. Junan , Guotai , Guotai Junan International. Junan , Guotai International. Junan , Guotai - ratio TrailingPB 1 SD - yield Dividend 1 SD 2011 2011 2011

2012 2012 2012 2013 2013 2013

2014 2014 2014

Henderson Land Henderson

2015 2015 2015 +1 SD Average +1 SD Average +1 SD Average 2016 2016 2016

2017 2017 Page Page

2017 ( 00012 HK 00012 2018 31 2018 2018 of of

)

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se will which RMB, of depreciation unexpected from affectadversely reporti its suffer may HLD RMB. receive that China in properties investment and Une further,HLD property development business may number of housing units that each household purchase.can If Hong Kong and China tighten propertytheir market regulations across restrictions of number a were there 8 the and 2009 since market property the in measures cooling demand strengthen be may regulations market Property development. for ready be not will land agricultural HLD’s planning, town and premium land in consent authorities the project. Without Wai example, years 20For than more value. ecological high with plots land involve that those for especially projects, some for lengthy quite be agri ofprocess the conversion up speedto likely uses. other into land agricultural its convert to fail may HLD in successful which HLD, by held project redevelopment urban for bank land acquired newly mayface HLD Major Factors Risk e th xpected depreciation xpected of mayRMB huge translation in result loss. e las t pag e

accumulatingthose ownership, redevelopment high contain projects fo interference r icamr disclaimer ,

does HLD has repeatedly failed to co to failed has repeatedly HLD

ng profit. not met the ownership requirement for compulsory sale for redevelopment. Since HLD may not be not may HLD Since redevelopment. for sale compulsory for requirement ownership the met not

in the acquisition of old buildings for redevelopment. for buildings old of acquisition the in

the the property market from from propertymarket cultural land into other uses to raise land supply,landraise to otheruses into land cultural processthe can conversion

be adversely affected. ed in Hong Kong and in China. in and Kong Hong in ed nvince the Townthe nvince go the it giveBoardto Planning s

as at 30 June 2017 June 30 at as Although we believe we Although reducing the cap on loan on cap the reducing th

round HLD has numerous property development projects of of . 0.8 million sq.ft. has 20% has sq.ft. million 0.8 .

levels of measures

The HLD has a GFAa has HLD of that

uncertainty. HKMA has launched 8 rounds of rounds 8 launched has HKMA Hong Kong Government is very is Government Kong Hong was - to - value ratio to restraining the to ratio value

released in 2017. In China,In 2017. in released Henderson Land Henderson - ahead in the Nan Sang Nan the inahead

4.8 - 80% ownership 80% million sq.ft million

Page Page

( 00012 HK 00012 32 of of . for

) 35 of

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se Source: Weighted Average Simple Average Holdings China Greentown Ltd Holdings Agile Group Sino Group China Evergrande Properties R&F Guangzhou VankeChina Ltd Co Corp Bbmg Co Holdings Garden Country Ltd Holding Kwg Property Ltd Land Resources China Properties Longfor Group Holdings China Jinmao Ltd Holdings Shimao Property Holdings Development Hopson Invest Land & China Overseas Ltd Investment Shenzhen Co Ltd Star Beijing North Ltd China Soho Yuexiu Investmen Estate Real Ltd Land Shui On YuexiuCoLtd Property mainland from revenue major with large developers HKlisted Weighted Average Simple Average Reit Champion Investment Estate Wharf Real Ltd Swire Properties Ck Ltd Holdings Asset ReitLink Reit Fortune Ltd Kerry Properties Ltd Holdings Estates Chinese Ltd Hang Lung Properties Land Co Sino Ltd Holdings Great Eagle Ltd Co Wheelock & Development New World Properties SunHung Kai Co Hysan Development Development Land Henderson Ltd Wharf Holdings HKlisted Company Table e -

Ocean Group Holding Ltd Holding Group Ocean th e

- 20 Bloomberg.

local local las - H

:Comparison Peers t

developers pag

H e

H r

icamr disclaimer

Stock Code Stock 3900 3900 HK 3383 HK 3377 HK 3333 HK 2777 HK 2202 HK 2009 HK 2007 HK 1813 HK 2778 HK 1997 HK 1972 HK 1109HK 1113 HK 960 HK960 HK817 HK813 HK754 HK688 HK604 HK588 HK410 HK405 HK272 HK123 HK823 HK778 HK683 HK127 HK101 83 83 HK 41 HK 20 HK 17 HK 16 HK 14 HK 12 HK 4 HK

Currency HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD HKD

Last Last price 136.900 13.740 14.440 29.250 23.350 39.850 16.680 14.100 31.550 25.950 24.700 31.350 12.860 44.450 55.200 31.700 53.050 27.250 74.350 69.850 37.100 13.460 21.200 14.560 41.900 61.450 6.650 4.080 5.340 8.620 3.660 3.070 4.720 5.260 2.400 1.720 5.770 9.790

Market cap Market 385,172 525,724 354,949 218,671 153,469 343,477 161,072 159,413 274,909 152,884 125,465 129,847 396,565 220,861 19,681 24,542 15,855 19,347 21,330 29,755 56,562 50,305 75,242 71,339 44,488 61,816 83,659 19,184 29,493 33,599 18,741 53,717 25,677 95,349 93,890 28,852 46,487 96,324 (mn)

23.1 18.0 14.7 12.4 12.7 10.5 18.5 10.6 14.7 14.8 15.4 12.6 10.2 13.5 12.1 38.2 23.5 16.7 13.3 21.0 67.3 17.9 14.0 27.4 10.5 14.1 19.2 14.0 11.0 11.8 16A 11.5 11.2 9.7 8.2 4.0 7.7 9.9 4.5 9.5 5.0 8.6 8.6

PE (fiscal year) (fiscal PE 54.9 14.9 13.5 14.0 22.0 17.8 20.4 13.7 17.3 12.2 15.8 10.5 16.1 19.4 14.9 10.9 12.2 13.4 12.7 10.0 10.2 10.2 13.3 10.6 15.7 12.7 12.9 14.6 11.6 17F n.a. n.a. 8.8 9.6 8.8 5.8 9.5 9.5 7.8 9.7 9.4 9.5 8.1

64.7 20.5 16.2 16.8 21.5 17.8 20.2 28.3 18.5 10.9 19.7 16.5 15.5 10.1 16.9 13.6 16.8 16.6 14.6 10.1 12.6 10.8 10.2 10.4 13.7 11.3 11.8 11.0 18F n.a. n.a. 9.7 8.2 8.3 8.4 8.2 6.4 8.1 7.8 9.8 7.7 8.3 7.8

43.3 13.5 15.5 16.4 21.8 17.3 20.4 26.5 18.0 21.3 18.4 14.5 14.6 12.4 18.1 14.5 13.9 10.0 10.9 13.5 11.5 19F n.a. n.a. 7.7 6.8 9.9 9.3 8.3 7.1 7.2 7.2 5.6 9.2 7.4 8.1 6.2 8.6 8.4 8.3 6.5 7.2 7.1

16A 0.5 0.6 1.0 0.5 0.6 0.8 0.7 0.7 0.8 0.7 1.1 1.2 0.8 0.6 0.9 0.8 0.7 0.5 0.6 0.7 0.8 0.7 0.8 0.3 3.3 1.8 1.1 1.4 1.0 8.1 1.5 3.5 0.9 4.6 1.6 1.9 2.2 1.8 1.4 0.4 1.5 0.9

PB (fiscal year) PB (fiscal 17F n.a. n.a. n.a. 0.6 1.0 0.4 0.6 0.8 0.7 0.6 0.8 0.7 1.0 1.1 0.7 0.6 0.7 0.7 0.5 0.6 0.7 0.8 0.7 0.8 0.7 2.2 1.4 0.9 1.1 0.9 3.4 1.2 2.7 0.8 3.5 1.3 1.7 1.8 1.4 1.1 1.4 0.8

Henderson Land Henderson

18F n.a. n.a. n.a. 0.6 1.0 0.4 0.5 0.8 0.7 0.6 0.8 0.7 0.9 1.0 0.7 0.6 0.7 0.7 0.5 0.6 0.6 0.8 0.7 0.8 0.7 1.9 1.2 0.9 1.0 0.8 2.8 1.1 2.3 0.7 2.8 1.2 1.5 1.6 1.3 1.0 1.2 0.7

19F n.a. n.a. n.a. 0.6 1.0 0.3 0.5 0.7 0.7 0.6 0.8 0.7 0.9 1.0 0.7 0.6 0.7 0.7 0.5 0.5 0.6 0.7 0.6 0.8 0.7 1.6 1.1 0.7 1.0 0.8 2.3 0.9 2.0 0.7 2.2 1.0 1.3 1.4 1.1 0.9 1.1 0.7

ROE(%) Page Page

13.3 12.4 20.5 13.1 42.1 16.5 20.7 23.5 14.1 15.5 15.3 12.6 15.5 10.4 11.5 11.6 17F n.a. n.a. n.a. ( 1.3 5.3 4.3 5.7 6.5 6.0 2.7 4.5 3.6 7.4 6.6 4.3 5.9 3.1 5.5 4.2 8.6 3.6 5.4 4.6 7.0 8.6 7.3 00012 HK 00012

D/Y(%) of of 13.3 17F n.a. n.a. 3.0 4.0 1.4 4.3 4.3 2.5 5.5 3.0 1.6 2.1 3.8 2.5 2.9 4.2 3.8 2.1 2.8 5.7 6.7 2.6 4.4 3.3 3.5 4.2 3.4 2.8 2.3 4.2 5.3 3.7 3.6 4.1 2.8 2.2 4.6 3.6 3.1 3.0 2.7 )

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se International Junan Guotai Company, Source: the Cash and bank balances in balances BS bank and Cash 3over months FI other and banks with Deposits use for Cash restricted overdrafts Bank equivalents cash and Ending cash Effect of equivalents cash and in cash Net increase equivalents cash and Beginning cash used in Net cash Others non paid to Dividends equity shareholders paid to Dividends paid costs borrowing other Interest and net notes, ofguaranteed Repayment bank loans from Net Proceeds non from Advance activities investing used in Net cash Others acquisition at of maturity 3 months over deposits in Increase ventures from joint Dividends received associates from Dividends received of subsidiaries disposal from Net inflow cash ventures joint from to)/repayment (Advances associates from to)/repayment (Advances PPE ofIPother and disposal from Proceeds Capex activities operating from generated Net cash Others working inChange Tax paid Net of ventures joint losses less ofprofits Share ofassociates losses less ofprofits Share properties investment of fair value in Increase Net finance before taxation Profit Yearend DPS (HKD) (HKD) EPS Underlying (HKD) EPS YoY (%) holders profit to equity Underlying - - to: Attributable after tax Profit Tax before tax Profit of JV of Share results of associates of Share results net income, Finance value fair in after changes profit Operating properties investment of fair value inChange value fair in before changes profit Operating expenses Administrative expenses and marketing Selling net andincome Other revenue Gross Cost Direct Total revenue - - - Yearend Minority interests Minority holdersEquity Others Property leasing Property sales Financial Statements Financial andRatios e

gain on disposal of subsidiaries of disposal on gain th [

Profit

Table_CompanyRatingDefinition] e

foreign exchange rate changes rate exchange foreign Dec Dec las

income

( ( t

HKD HKD

pag

financing activities financing

- controlling interests, net interests, controlling capital

m) m) e

- controlling interests controlling

icamr disclaimer

Cash Flow CashStatement Flow

Income Statement

(12,669) (1,890) (7,007) (1,268) (4,053) (4,247) (7,310) (1,464) (2,078) (1,298) (2,380) (4,010) (3,201) 23,641 15,690 23,338 21,326 21,874 23,338 15,880 10,972 11,779 11,009 201 2015A 2,362 5,589 8,465 8,560 8,704 1,486 1,165 1,838 1.450 2.752 5.330 4,053 4,247 7,310 8,570 (928) (739) (190) (342) (680) (683) (800) (729) (778) (492) (842)

12.1

(64) (31) (52) 948 106 321 313 548 974 5 (6)

A 0

(14,702)

(7,432) (2,695) (1,851) (2,151) (1,282) (5,066) (1,691) (2,225) (6,503) (3,414) (1,219) (1,959) (3,889) (3,891) (7,013) (2,255) (1,903) (1,212) 25,568 17,679 10,866 24,441 14,169 21,916 22,186 24,441 17,543 10,530 22,966 12,839 2016A 201 2,330 5,559 7,436 1,846 1,378 1,991 4,301 1,450 6,330 1.550 3.541 5.478 3,889 3,891 7,013 2,779 5,002 8,465 (246) (164) (882) (628)

28.7 523 141 256 923 270 270 6A 0

(26,821) (10,135) (14,688) (5,505) (3,828) (4,083) (1,259) (1,282) (6,442) (1,236) (5,642) (4,877) (1,518) (3,190) (3,250) (5,492) (3,903) (2,804) (1,050) (1,979) (1,327) 26,718 18,957 12,030 21,736 12,403 12,839 18,261 31,036 15,282 27,590 28,233 31,036 22,691 10,135 12,555 201 2017F 2,320 5,441 8,496 2,000 1,585 2,223 8,525 2,781 1.610 3.820 6.896 5,492 3,903 3,831 (436)

698 696 209 469 642 7.9 7 F 0 0 0 0

(10,388) (1,298) (2,326) (3,764) (2,093) (4,340) (4,163) (5,656) (2,278) (1,102) (2,048) (5,505) (3,828) (3,213) (2,063) (1,282) (1,282) (6,442) (8,115) 19,486 18,523 12,403 19,917 16,996 17,639 19,917 12,516 11,556 201 2018F (35.0) 2,383 5,548 9,190 5,097 2,000 2,614 1,664 2,426 1.610 2.482 4.248 9,929 4,340 4,163 5,656 6,859 9,098 (139) (809)

643 618 744 204 484 8 15 31 60 F 0 0 0 0 0

(12,217) (2,336) (1,158) (2,120) (1,073) (5,505) (3,828) (3,525) (1,282) (1,282) (6,442) (1,363) (2,046) (2,314) (3,910) (2,217) (2,161) (4,495) (4,033) 23,692 15,326 10,518 15,643 16,079 18,415 12,916 20,401 18,415 11,476 11,068 2019F 201 2,447 5,919 1.610 2.629 3.910 2,161 4,495 4,033 8,882 1,878 9,190 5,607 2,000 3,015 1,747 2,650 2,389

437 600 735 233 558 5.9 9 97 39 60 F 0 0 0 0 0

Totalnon liabilities tax Deferred instruments financial Derivative subsidiary fellow ato due Amount notes Guaranteed Bank loans Total liabilities current sale for held assets Liabilities from Tax payable subsidiary fellow ato due Amount notes Guaranteed overdrafts and Bank loans Tradepayables other and Totalassets Total assets current held sale for Asset balances bank and Cash stakeholders held by Cash Trade receivables other and Inventories ofproperties acquisition for Deposits Totalnon assets tax Deferred assets Other financial instruments financial Derivative ventures Interest in joint associates Interest in right operating Intangible Other PPE properties Investment Yearend (%) ROE (Underlying) ROA (%) (Underlying) ROE (%) ROA (%) TotalDebt/Equity (%) ratio Net gearing (%) payout ratio Dividend (%) net profit margin Underlying Net (%) margin (%) margin operating Underlying (%) Gross margin Yearend (HKD) BPS Totalequity Non equity Shareholders' Other reserves reserves capital and Share capital Total liabilities

- controlling interests controlling

- - Dec Dec current liabilities current assets current

(

HKD

Ratio Analysis Balance Sheet

336,269 109,259 227,010 128,597 256,269 251,247 198,902 47,696 13,705 24,798 32,304 10,216 19,098 81,556 35,619 51,953 62.796 52,345 80,000 11,779 201 201 1,177 2,192 2,733 8,371 4,820 8,322 1,692 5,022 6,243 1,773 20.3 16.0 27.2 46.6 90.2 36.3 46.4 790 527 300 4.5 3.4 8.7 6.5 5 5 A A 0 8 0 0 Henderson Land Henderson

355,498 237,522 131,850 269,301 263,534 117,976 211,189

43,736 28,086 42,461 14,392 21,223 22,966 10,651 75,242 10,854 38,728 53,936 65.867 52,345 86,197 201 201 7,846 1,054 5,760 3,220 1,289 4,608 1,419 5,767 6,582 20.9 12.7 28.3 55.4 85.7 41.2 42.5 316 377 358 906 5.5 4.1 8.5 6.3 6A 6A 32 0 0

375,377 155,000 286,970 281,434 229,089 110,265 265,111 45,819 30,584 42,588 20,389 20,741 21,736 12,797 68,980 41,192 56,655 70.341 52,345 88,406 11,017 201 201 103.3 6,253 1,029 7,614 1,107 1,914 4,838 5,536 10.1 20.7 13.3 23.3 57.2 47.0 45.0 339 350 487 345 416 5.6 4.2 7.5 7 7

F F 0 0 0 0

Page Page

( 390,707 279,374 163,477 298,763 292,950 240,605 111,333 00012 HK 00012 48,177 33,578 43,767 22,493 19,072 18,523 15,097 71,137 12,625 43,996 57,945 73.219 52,345 91,944 201 201 6,359 6,786 1,162 1,039 1,979 4,596 5,813 1,116 21.5 15.6 37.9 51.0 87.2 35.2 46.7 339 464 294 573 3.5 2.6 5.9 4.4 8 8 34 F F 0 0 0 0

305,340 252,995 406,936 291,721 170,351 311,444 115,215 of of 76.316 52,345 95,492 50,188 39,208 45,304 22,470 18,899 20,401 16,984 71,736 13,736 47,086 59,253 201 201 6,104 6,398 1,178 3,065 1,220 2,714 1,727 4,367 ) 35 21.8 15.5 41.2 44.4 66.0 37.5 48.4

339 442 324 528 3.5 2.6 5.2 3.9 9 9 F F

0 0 0 0

Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018 Se e

Website:www.gtja.com.hk Tel.:(852) 2509 27/F.,Low Block, GrandMillennium Plaza, 181 Queen’s Road Central, Hong Kong. © subjectGuotai Junanand groupits companies any to registration or licensingrequirement within such jurisdiction. would use or availability publication, distribution, such where jurisdiction any in ThisResearch Report is not directed at,or intended for distribution tooruse by,any person orentity who isa citizenor andwhere necessary consult their own financial advisers prior to an econo and political futurer itsandobjectives investmentunderstandanduncertaintycomprehendshouldInvestorsthe contain. situation,so may mutable the of assumptions the from derived forecasts and estimates forwardsomecontain Research mayReport This herein. data information andthe accuracyand completenessof guarantee the not Thoughbest effort has been madeto ensure theaccuracy of the information and data containedin this ordifferbe contrary opinions to or investmentdecisions by made the asset managementand investment banking groups of Guota expressed opinions Any companies. of group Junan Guotai of executives professionalw other inand dealersor persons, orallysales expressed strategies investment or opinions to contrary be or differ may report this in expressed opinions Any services investment banking, underwriterorproprietarily).invest investment including reports, research Limited Kong) (Hong d Report Research This DISCLAIMER (6) (5) (4) (3) (2) (1) DISCLOSURE OF INTERESTS [ th Underperform Neutral Outperform Rating Horizon: Time to6 18 months TheBenchmark: Sector [Table_ Rating Horizon: Time to6 18 months TheBenchmark: Company Table_DISCLOSUREOFINTERESTS

e Sell Reduce Neutral Accumulate Buy 2018 las Report. There isnoofficer of the issuer mentionedin thisResearch Report associated with Guotai Junanandgroup its compan Junan Guotai Report. ResearchGuotai Junanand its group companies this in mentioned issuer the with relationships banking investmentReport within had not have companies group its and Junan Guotai issuer mentionedin thisResearch Report companies group its and Junan Guotai HK), (83156 (CNY) INVESTMENT (02886 HK), GFI MSCI A I (03156 HK), CAM SCSMALLCAP (03157 HK), LINK HOLDINGS (08237 HK), GFI MSCI APPT( I ZHENRO for Except The Analystsand their associates dohavenot any financial interests relationin to the issuer mentionedin thisResearch Re The Analystsand their associates donot

pag RatingDefinition Industry

Guotai Junan e RatingDefinition

- icamr disclaimer 18 Fax:(852) 2509 9118 RatingDefinition]

the precedingthe 12 months. and its group companies have not employed an individual serving as an officeranas individualserving employedan nothave groupcompanies its and HongKongHang Seng Index HongKongHang Seng Index 跑输大市中性跑赢大市卖出减持中性收集买入 "uti ua". uti ua ad t gop opne my o uies ht relates that business do may companies group its and Junan Guotai Junan"). ("Guotai

Securities (HongKong) Limited. AllRights Reserved. oes not constitute an invitation or offer to acquire, purchase or subscribe for securiti for subscribe or purchase acquire, to offer or invitation an constitute not oes

06158 HK), GREENLAND BROAD (01253 HK), GUOTAI JUNAN INTERNATIONAL (01788 HK), BINHAI HK), INTERNATIONAL (01788 JUNAN GUOTAI HK), (01253 BROAD GREENLAND HK), 06158

Definition Or RelativePerformance or RelativePerformance or RelativePerformance ort RelativePerformance ort RelativePerformance ort RelativePerformance < ort RelativePerformance ort RelativePerformance Definition ]

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fundamental fundamental fundamental fundamental fundamental fundamental fundamental - fundamental 7793

arenot making serveas anofficer of the issuer mentionedin thisResearch Report. .

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- a marketin thesecurities in respect of the issuer mentioned thisin Research - 5%

15% - - - 5% 5% 5% 5% ;

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of the issuer mentioned in this Researchthisin issuer mentionedthe of .

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Henderson Land Henderson es by Guotai Junan Securities Junan Guotai by es

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in this report may report this in Page Page

( 00012 HK 00012 ritten form by form ritten elated risks,elated port. 35 i Junan. of of ies. - looking looking

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Company Report Henderson Land 恒基地产 (00012 HK) 29 January 2018