CLSA has issued a research note stating that SHK PPT (00016) delivered its fiscal 2026 results with underlying profit reaching HK$22.85 billion, marking a 4.6% year-on-year increase. This performance broadly aligned with the brokerage's projections, though it came in 2% below consensus market estimates.
The company's full-year dividend per share rose 4% to HK$3.91, maintaining a stable payout ratio of approximately 50%. Despite these solid figures, CLSA has adjusted its target price downward from HK$148 to HK$136, reflecting growing near-term uncertainties in Hong Kong's property market while retaining an "Outperform" rating.
Management maintains a constructive outlook on the city's residential sector. However, recent measures tightening cross-border capital flows and enhancing overseas tax collection efforts have dampened sentiment among mainland Chinese buyers. CLSA estimates that up to two-thirds of non-local purchasing demand could disappear, potentially representing around 20% of primary residential transactions. Additionally, any potential US interest rate hikes could further suppress investment appetite.
Nevertheless, the brokerage believes that accelerating home price stabilization in major mainland cities, driven by new housing sales reforms, could boost demand from mainland professionals seeking properties in Hong Kong. This positive factor is expected to offset the aforementioned policy and rate headwinds. CLSA maintains its forecasts for Hong Kong residential prices to rise 12% in 2026 and a further 5% in 2027.
The firm has made minor adjustments to earnings estimates due to changes in project completion timelines, keeping fiscal 2027 profit forecasts largely unchanged while trimming fiscal 2028 projections by 1%, alongside upward revisions to dividend forecasts. The revised target price is derived from a net asset value per share of HK$220.20 as of the end of fiscal 2027, with the applied discount widened from 30% to 38.1%, representing two standard deviations above the five-year average.
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