SHK PPT (00016) saw its shares climb nearly 6% during the trading session. At the time of writing, the stock was up 4.89%, trading at HK$120.10 with a turnover of HK$750 million.
DBS released a research report stating that SHK PPT, as Hong Kong's largest property developer, possesses a significant land bank and a robust portfolio of investment properties, which constitute its core strengths. With approximately 19.7 million square feet of developable land reserves, a substantial portion of which is agricultural land, the company is expected to benefit from the accelerated development of the Northern Metropolis. The report noted that last year, the company acquired six residential sites through various methods, including government tenders and land use conversions. These acquisitions are projected to provide a total attributable gross floor area of over 3 million square feet. Benefiting from favorable land costs, the pre-tax profit margin for these related projects is estimated to exceed 30%, which will support the company's earnings recovery.
Citigroup expressed that investors anticipate Hong Kong property prices will enter an upward cycle this year, although accelerated land sales by the government could potentially lead to supply issues. The bank indicated that compared to other regions in Asia-Pacific, the valuation of Hong Kong property stocks (whether measured by NAV discount or price-to-book ratio) remains attractive. However, companies are beginning to need to demonstrate uniqueness and deliver tangible results to support further re-rating of their share prices.
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