BUZZ-Capital & Counties: Earls Court in the spotlight

** UK property developer Capital & Counties reports FY results on Wednesday, with eyes on its Earls Court site for any further signs of weakness

** Stock has had a torrid time, down 35 pct since the beginning of 2016 on fears of oversupply at the upper end of the London property market

** Sales at Lillie Square, that make up a fraction of its 7,500 unit Earls Court development, have been sluggish over the last year

** Investors and analysts watching for any further cuts to NAV, sales expectations and unit sale prices

** Morgan Stanley (Xetra: 885836 - news) says CapCo could eventually cut NAV at Earls Court by another 30 pct, despite the company already cutting by 14 pct back in July

** Says stock should be trading at a 25-35 pct discount to NAV if market does not expect any growth (broker's base case)

** CapCo trades on a 13 pct discount to NAV, tighter than the 18 pct sector average, according to Credit Suisse (IOB: 0QP5.IL - news) . Chart: http://reut.rs/2mern95

** It would take until 2028 to sell its Lillie Square development unless it cuts prices, SocGen (Paris: FR0000130809 - news) said in November

** CapCo predicts a final sale price of £1,550 per square foot for Lillie Square, but SocGen analysis of Rightmove (LSE: RMV.L - news) data shows prices currently at £1,430 (investors flipping phase 1 units before completion, pressurising phase 2 prices)

** SocGen expects price cuts of 5-10 pct on most units, to an average of £1,325

** Some covering of short positions, but four hedge funds still have positions totalling 3 pct of the company, according to FCA data

** Fund manager Liontrust sold CapCo stake in July 2016 on London property fears