Periodic/Sector reports
Hong Kong Property: Major Developers’ Balance Sheets And Profitability Repaired; SHKP Family Buying; Residential Prices Consolidating
MARKET WEIGHT (Maintained)
Analyst
Analyst
Highlights
- Developers' latest results sent a positive signal. Hong Kong development margins recovered in 1H26. Net gearing fell at SHKP, Wharf REIC, Kerry and Hysan, while New World and Link REIT saw higher gearing.
- SHKP's controlling shareholder is buying. Kwong Siu-hing bought 2.41m shares (about HK$258m) between 11 Sep 26 and 2 Oct 26, lifting her stake from 28.13% to 28.21%.
- Maintain MARKET WEIGHT; prices are consolidating. The RVD price index rose 7.0% in 8M26. Rents are at a historical high, but agreements nearly halved from Jun 26 to Aug 26 as Mainland rules on offshore money tightened and 1M HIBOR reached 3.02% on 28 Sep 26. We expect prices to move sideways in 2H26. Top picks: SHKP, Kerry Properties and Link REIT.
Analysis
- Developers’ latest results signal improving profitability and strengthened balance sheets. Hong Kong development margins rebounded in 1H26 at SHKP (14.8%), Sino Land (18.8%) and Kerry (15.0%). Net gearing declined at most covered names, with a 7.1ppt yoy decline at Kerry Properties, 4.4ppt decline at SHKP while Sino Land’s net cash increased to HK$55.1b. New World was the outlier, with its gearing rising 10.2 ppt to 68.3%. Link REIT’s gearing also increased to 23.9% as of Mar 26. Capital recycling helped reduce leverage, while the margin recovery points to improving Hong Kong market conditions.
Highlights
- Developers' latest results sent a positive signal. Hong Kong development margins recovered in 1H26. Net gearing fell at SHKP, Wharf REIC, Kerry and Hysan, while New World and Link REIT saw higher gearing.
- SHKP's controlling shareholder is buying. Kwong Siu-hing bought 2.41m shares (about HK$258m) between 11 Sep 26 and 2 Oct 26, lifting her stake from 28.13% to 28.21%.
- Maintain MARKET WEIGHT; prices are consolidating. The RVD price index rose 7.0% in 8M26. Rents are at a historical high, but agreements nearly halved from Jun 26 to Aug 26 as Mainland rules on offshore money tightened and 1M HIBOR reached 3.02% on 28 Sep 26. We expect prices to move sideways in 2H26. Top picks: SHKP, Kerry Properties and Link REIT.
Analysis
- Developers’ latest results signal improving profitability and strengthened balance sheets. Hong Kong development margins rebounded in 1H26 at SHKP (14.8%), Sino Land (18.8%) and Kerry (15.0%). Net gearing declined at most covered names, with a 7.1ppt yoy decline at Kerry Properties, 4.4ppt decline at SHKP while Sino Land’s net cash increased to HK$55.1b. New World was the outlier, with its gearing rising 10.2 ppt to 68.3%. Link REIT’s gearing also increased to 23.9% as of Mar 26. Capital recycling helped reduce leverage, while the margin recovery points to improving Hong Kong market conditions.
MARKET WEIGHT (Maintained)
Analyst
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
