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Sun Hung Kai Properties:The growing premium leader

发布时间:2016-08-04    研究机构:麦格理证券

Event.

We reiterate our Outperform rating on Sun Hung Kai (SHKP), our top pick inthe HK property sector. We expect the company to deliver: 1) the sector’shighest FY15-17E earnings CAGR of 15%; 2) market share expansion interms of HK sales; and 3) resilient rental income growth. SHKP is wellestablishedto maintain its leadership position in the current increasinglychallenging HK market. We raise our TP by 0.6% to HK$132.00 to reflect itsearlier-than-expected launches in HK. We transfer coverage of SHKP toRaymond Liu from David Ng.

Impact.

HK sales – the premium leader. We expect SHKP’s sales to growreasonably well from HK$33bn in FY16E to HK$40bn in FY18E despite a highbase. Its ample saleable resources of over HK$200bn should give thecompany flexibility to launch projects based on rapidly changing marketconditions, in our view. It launched five residential projects in 7M 2016 and isthe only developer to achieve an average take-up rate of ~80% within threemonths of launch (Fig 2) when most of its peers found the going tough.

HK rental – resilient growth and more new completions. The company’sHK rental income portfolio grew at ~10% pa to HK$15.6bn during FY11-15.

We expect the growth to be sustained in high single digits in the comingyears, due mainly to: 1) an additional 2.5m sqft of investment property to becompleted in the next few years; 2) proactive AEIs on malls; and 3) a healthyoccupancy cost of ~12% in FY15.

Earnings CAGR of 15% in FY15-17E. We estimate SHKP’s earnings CAGRof 15% was the highest among major large cap HK developers, vs. the sectoraverage of 6.0%, in FY15–17E.

FY16E dividend yield of 3.3%. We estimate the company will declare a DPSof HK$3.68 in FY16E, up 10% YoY, or a 3.3% yield. It is equivalent to a 44%payout ratio compared with 40-48% in FY11-15. We believe the share pricewill react positively to a higher-than-expected DPS.

Earnings and target price revision.

Adjusted earnings: FY16E +1.1%, FY17E +1.7%. TP increased to HK$132.00from HK$131.24 to reflect faster-than-expected launches in Hong Kong.

Price catalyst.

12-month price target: HK$132.00 based on a Sum of Parts methodology.

Catalyst: Higher-than-expected DPS and higher sales targetAction and recommendation.

SHKP trades at 12.3x FY17E PE, 0.7x PB and a 36% NAV discount. SHKP isour top pick among HK developers.

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