Henderson Land's Double Cove suffers delay in debut

Analyst strips it of HK$800m possible gains.

According to Nomura, Henderson Land announced that as of December 31, 2012, the occupation permit for Double Cove (Phase 1) had yet to be issued. As HK development profits are recognized upon completion, with the Double Cove Ph 1 slipping from FY12 to FY13, the research firm also slipped around HKD800mn of earnings from FY12F to FY13F.

Here's more from Nomura:

We are lowering our FY12F earnings by 11% to HKD6,754mn but raising FY13F by 8% to HKD9,918mn. This reflects the slippage of earnings contribution from Double Cove Ph1 due to the delay in the issuance of its occupation permit.

As the earnings slippage is simply due to a timing issue, there is no impact to our NAV estimates. At HKD55.30, Henderson Land currently trades at a 44% discount to its spot NAV and 0.69x price-to-book. These are still substantially below HLD’s historical average NAV discount of 21% and 1.21x P/B.

We continue to base our fair value estimate on a 30% discount to NAV. There is no change to our HKD69.50 price target.