HongKong Land

HongKong Land: StanChart upgrade Hongkong Land to Outperform from In-Line on its more attractive valuation. House continue to expect a recovery in Central office rents in 2H13 given low vacancy across Hong Kong in general, and lower vacancy in key benchmark buildings in particular. New office supply will remain constrained through at least 2015, with only c.1.5m sf GFA expected p.a. versus a 15-year average of more than 2m sf. Importantly, new supply in Central will be limited to redevelopments of smaller floor plate buildings. The combination of low vacancy, low new supply and StanChart’s economist’s expectation of 3.4-4.5% real GDP growth in 2013-15 bodes well for the Central rental outlook. StanChart upgrades to OUTPERFORM, TP of US$8.31.