The CCL's YoY growth peaked at 24% in June 2017and slowedto 17% in September. We expect it to slow down further,putting pressure on stock performance. However, exposure toHK farmland and Chinese land bank should help.。    Residential market outlook: HK property prices are up 10% this year asexpectation of rate hikes did not materialize – HIBOR has remained 80bps lowerthan LIBOR. Availability of developers' mortgages and 4-5% wage growth keptaffordability in check. This coupled with higher than expected GDP growth (4% in1H17), low unemployment rate, and rising stock market (Hang Seng Index up 27%YTD) could keep property prices at the current elevated level, but the YoY trendis slowing.。    We find strong correlation between YoY growth in Centaline's Centa-CityLeading Index (CCL) and the Hang Seng Properties Index (HSP) YoY. Even in themost bullish scenario – a 5% increase in the CCL in 2H17and +10% in 2018– wesee the HSP remaining flattish. Additional risks include potential HIBORconvergence; rising private unit completions; and recent capital controls,resulting in lower land cost and selling prices. We also expect primary unit salesto decline in 2018.。    Looking for exposure to Chinese land bank and farmland conversion: Despitethe risk of stock price growth peaking, we prefer companies with high exposureto farmland conversion that is not priced in (SHKP, NWD); with higher exposureto development land bank in China that can be divested (NWD, CKP); GreaterBay Area development and steady dividend growth (SHKP); and re-rating viatransformation (CKP). We upgrade NWD to OW from EW.。    What’s changed? We mark our ASP assumptions to market (2017now +10% vs.5% previously, hence flattish from now on). This drove our NAV estimates up 2-3%. We also use a mid-cycle discount to NAV now (rather than down-cycle), sincethe interest rate hike expectation is much more muted. Higher NAV andshallower discounts to NAV have lifted our price targets 14% on average fordevelopers, 8% on average for landlords. With retail sales turning positive forthe first time in 27months, we see potential re-rating for the group. We upgradeHysan to EW (from UW).。

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