HSBC said that the positive outlook on Solidere’s stock is buoyed by demand factors, the strong macroeconomic and real estate market fundamentals, a recent appreciation in land values, and the political stability.

The report expected a rise in land sale driven by increasing demand. It said that Solidere owns some of the very few large plots of land in the Beirut Central District (BCD) in its portfolio, expecting this land to become more valuable.

HSBC expected Solidere to report solid growth in earnings that would also result in steadily increasing dividends. The strong earnings would stem from both land sales and recurring revenues from rentals.

Land sales accounted for 90 percent of revenues and 93 percent of the company’s profits in 2008, and HSBC expects this trend to continue despite revenue growth from rental properties.

HSBC said that the some of the risks to the company are political instability, stagnation in the real estate market, and a lack of near-term catalysts.

HSBC said that one risk could be the delay in land sales that could result in a slowdown in the property market.

A five-year delay in land sales would result in a 13 percent decline in the company’s share target price to $27.5, while a ten-year delay in sales would imply a 37 percent decrease in the company’s target share price to $20 per share.