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Sun Hung Kai Properties Ltd 00016 Stock Quote

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Morningstar‘s Stock Analysis 00016

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Is it the right time to buy or sell?

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Sun Hung Kai Properties Valuation Is Attractive, Remains Preferred Pick for Hong Kong Developers

Michael Wu, CAIA Senior Equity Analyst

Analyst Note

| Michael Wu, CAIA |

Sun Hung Kai Properties remains our preferred Hong Kong developer, and valuation is undemanding at a price/fair value ratio of 0.64. Our fair value estimate of HKD 145 per share is unchanged. While near-term positive catalysts are lacking, the developer is trading on a forecast dividend yield of 5.5%, at a share price of HKD 93 per share. The dividend is supported by recurring income from its high-quality investment property portfolio and a strong balance sheet with net gearing at 17.5%. We expect the reopened domestic economy in Hong Kong to ease a decline in rent for its investment property portfolio, and we continue to expect the high occupancy level for its office and retail portfolio to be maintained. We believe a reopening of borders with mainland China and internationally to be a key catalyst for the real estate sector, which should benefit the share prices of the retail-concentrated landlords, relative to landlords with a larger share of income derived from office properties.

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Company Profile 00016

Business Description

Sun Hung Kai Properties is the largest Hong Kong real estate company by market capitalization, with substantial holdings in residential and commercial sectors. The firm was listed in 1972. The Kwok family is the controlling shareholder, with a stake of 48%. The Hong Kong operation contributes close to 80% of operating profit, split evenly between property trading and property investment. The China operation contributes 10% of operating profit and expected to increase to 15% in the next five years.

30 Harbour Road, 45th Floor, Sun Hung Kai Centre
Hong Kong, Hong Kong
T +852 28278111
Industry Real Estate - Development
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 38,500