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Sun Hung Kai Properties Ltd 00016

Morningstar Rating
HKD 76.05 −0.05 (0.07%)
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Company Report

Hong Kong Developers: Housing Market Continues to Face Near-Term Interest-Rate Headwinds

The lowering of the stamp duty in Hong Kong has had a limited impact in reviving the residential market as housing prices continue to decline in the face of high interest rates and a weak economic outlook. According to the Rating and Valuation Department, the private residential price index fell to a seven-year low in November 2023, and we expect price weakness to persist through the first half of 2024. While interest rates have likely peaked, we think that housing prices will only find support in the second half of 2024. Our U.S. economist said he expects the Federal Reserve to start cutting rates in March 2024. We cut our fair value estimates for Henderson Land and Sun Hung Kai Properties to HKD 34 and HKD 115 from HKD 36 and HKD 128, respectively, after lowering our near-term assumptions on their Hong Kong development margins and sales.

Price vs Fair Value

00016 is trading at a 34% discount.
Price
HKD 76.05
Fair Value
HKD 487.00
Uncertainty
Medium
1-Star Price
HKD 844.44
5-Star Price
HKD 28.90
Economic Moat
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Capital Allocation
Gzvqrpjb

Bulls Say, Bears Say

Bulls

The company’s well-located office and retail portfolios in Hong Kong are expected to continue to perform well in years to come, underpinned by steady growth in tenant demand and ongoing supply side constraints.

Bears

Hong Kong residential property prices have softened due to the elevated interest-rate environment. If interest rates stay higher for longer, the company’s development profits will be compressed.

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News

Trading Information

Previous Close Price
HKD 76.10
Day Range
HKD 75.2576.70
52-Week Range
HKD 69.35111.80
Bid/Ask
HKD 76.00 / HKD 76.05
Market Cap
HKD 220.39 Bil
Volume/Avg
2.9 Mil / 3.6 Mil

Key Statistics

Price/Earnings (Normalized)
8.60
Price/Sales
2.91
Dividend Yield (Trailing)
6.51%
Dividend Yield (Forward)
6.51%
Total Yield
6.51%

Company Profile

Sun Hung Kai Properties is a diversified real estate developer in Hong Kong with a core focus on the residential, retail and office real estate segment. Most of its business is based in Hong Kong where it is a leading private housing developer and holds a portfolio of high-quality retail and office assets for rental income. The company also invests in other listed entities, including telecommunication company, SmarTone and data center provider, SUNeVision. The Kwok family is the controlling shareholder, with a stake of more than 40%.
Sector
Real Estate
Industry
Real Estate - Development
Stock Style Box
Large Value
Total Number of Employees
40,000

Competitors

Valuation

Metric
00016
00101
00012
Price/Earnings (Normalized)
8.608.6711.39
Price/Book Value
0.340.280.31
Price/Sales
2.913.583.84
Price/Cash Flow
8.4112.2817.22
Price/Earnings
00016
00101
00012

Financial Strength

Metric
00016
00101
00012
Quick Ratio
0.560.560.40
Current Ratio
4.551.522.24
Interest Coverage
10.1611.018.25
Quick Ratio
00016
00101
00012

Profitability

Metric
00016
00101
00012
Return on Assets (Normalized)
2.97%2.15%1.97%
Return on Equity (Normalized)
3.98%3.48%3.23%
Return on Invested Capital (Normalized)
3.55%2.63%2.66%
Return on Assets
00016
00101
00012
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