领展房产基金(00823) 　　DPU growth beats our estimate with lower-than-expected costs: Link REIT reported a 1H17 DPU of HK111.75 cents (+12.9% Y/Y), 2.7% above our estimate. The growth in DPU excludes the HK$586 mn gain from assets disposal during the period. Net property income grew by 11.1% Y/Y to HK$3,440 mn with NPI margin improving from 74.0% in 1H16 to 74.7% in 1H17. With lower-than-expected SG&A, the EBIT of HK$3,283 mn is in line with our expectation. 　　Taxation is 12% lower than our estimate, leading to a better-than-expected distributable income of HK$2,493 mn (2.7% above our estimate). We see a further growth potential with: (1) organic rental reversion; (2) upcoming contributions from new projects in Mongkok and Kowloon East; (3) additional NPI generated from the AEI projects under way. For the four AEI projects which were completed in 1H17, the estimated ROI is >20% on average. 　　Operations stay resilient despite weakness in overall retail market: Rental reversion rate marginally slowed down from 23.6% in 1H16 to 21.0% in 1H17. Reversion for “shops” slowed down from 29.5% in 1H16 to 21.2% in 1H17, but the drop was mitigated by a strong reversion growth in “markets & cooked food stalls” (from 1.1% in 1H16 to 17.8% in 1H17). With the weak economy and overall retail market, we think such reversion rate is already an outperformance. 　　Occupancy rate stays mostly flat at a 95.6%, very slightly down from 96.0% as of end-March 2016. Average rent edged up 5% H/H from HK$50.0 psf to HK$52.5 psf, which is attributed to both rental growth in existing portfolio (across all three categories) and disposal of assets which fetched lower rents. Car park income per space also grew steadily by 11% Y/Y to HK$2,206 per month. 　　IP valuation grew 4.2% H/H: Valuation of investment properties portfolio grew 4.2% H/H to HK$167.5 bn as at end- Sep 2016, thanks to the completion of the acquisition 700 Nathan Road. Valuation for China IP portfolio, however, continued to retreat by 2.4% H/H to HK$10.7 bn due to Rmb depreciation against HKD. BVPS was HK$58.2 (+2.5% H/ H), implying a P/B of 0.94x. Cap rates for both properties in Hong Kong and Mainland China also remain largely stable, with that for Hong Kong portfolio at 4.58% and China portfolio at 4% for office & 4.5-5.0% for retail.