Tama: Maintaining Sun Hung Kai Properties's (00016) “In sync with the market” rating target price of HK$121

The Zhitong Finance App learned that Morgan Stanley released a research report stating that Sun Hung Kai Properties (00016)'s profit per share for the 2026 fiscal year was HK$7.89, up 5% year over year, 4% lower than the bank's forecast and 2% lower than market expectations. The annual dividend payout increased by 4% to HK$3.91. Considering that recent regulatory developments and concerns about interest rate hikes constitute short-term adverse factors, and that dividends also cause uncertainty as property sales profits fluctuate, the bank maintained its “in sync with the market” rating, with a target price of HK$121. The current valuation of Sun Hung Kai Properties is not cheap compared to its peers. In addition, the stock price is highly correlated with the CCL Central Plains City Leading Index, which seems to have peaked two months ago.

In terms of property development in Hong Kong, the bank indicated that Sun Hung Kai Properties' gross sales margin rose to 14.8% in the second half of the 2026 fiscal year. The gross margin is expected to increase further in the 2027 fiscal year, and it is expected to record a land receipt revenue of HK$2.2 billion in the first half of the 2027 fiscal year. Furthermore, by the end of June this year, the net debt ratio had declined further to 10.7%, the effective interest rate had dropped to 3%, and total financial costs had decreased by 29% year on year. The bank expects dividends to increase again in the 2027 fiscal year as gross margin of property sales improves further, but the dividend policy remains unchanged at 40%-50%.