Morgan Stanley has released a research report indicating that SHK PPT (00016) is projected to post earnings per share of HK$7.89 for the fiscal year 2026, marking a 5% year-over-year increase. This figure comes in 4% below the firm's own forecast and 2% shy of broader market consensus estimates. The company's full-year dividend has been raised by 4% to HK$3.91 per share.
Given the near-term headwinds stemming from recent regulatory shifts and concerns over potential interest rate hikes, along with the uncertainty tied to dividend fluctuations that follow property sales profitability, the bank has decided to maintain its "Market Perform" rating on the stock. The price target remains fixed at HK$121.
The current valuation of SHK PPT does not appear inexpensive when compared with its industry peers. Additionally, the company's share price exhibits a strong correlation with the CCL index (Centa-City Leading Index), which seemingly reached its peak approximately two months ago.
On the Hong Kong development property front, Morgan Stanley points out that SHK PPT achieved a gross margin of 14.8% on sales during the second half of fiscal 2026. The outlook for fiscal 2027 suggests the gross margin is expected to climb even further, with the first half of that year anticipated to record land acquisition gains of HK$2.2 billion.
Furthermore, as of the end of June this year, the company's net debt ratio has decreased further to 10.7%, the effective interest rate has dropped to 3%, and total financing costs have fallen by 29% year-over-year. The bank anticipates that dividend payments will experience renewed growth in fiscal 2027, propelled by further improvements in property sales margins, though the dividend payout policy will remain consistent within the 40%-50% range.
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