No Surprise in Henderson Land's 2021 Result

Henderson Land’s fiscal 2021 result was within our expectations. Underlying profit, excluding the fair value estimate change, was HKD 13.6 billion and in line with our forecast. The final dividend of HKD 1.30 per share was in line with last year and largely within our forecast. Our fair value estimate is revised higher to HKD 49 per share from HKD 43.20 per share as we factor in project completions and a roll-forward of our model. At a 35% discount to our new fair value estimate, Henderson is trading at similar discount to its Hong Kong developer peers. We continue to prefer the Hong Kong landlords as we expect their share prices to recover ahead of the developers as the borders are gradually reopened. While the residential property transactions remain resilient during the current downturn, an acceleration in transactions and residential property prices is unlikely until people actually cross the border and economic activities recover.