Komo: Maintaining Sun Hung Kai Properties's (00016) “Gain” Rating Target Price of HK$135

The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it maintains Sun Hung Kai Properties's (00016) “gain” rating, with a target price of HK$135. SHKP's profit for the fiscal year ending the end of June this year increased 5% year-on-year, in line with expectations.

J.P. Morgan Chase pointed out that some investors in the market (mainly hedge funds) had hoped that the Group's farmland reclamation would bring more disposal benefits, and expected an annual profit increase of more than 10%, but the bank indicated that the relevant potential benefits still existed, and SHKP decided to only record them in the next fiscal year, so it was only a time difference.

The bank added that SHKP's profit margin for Hong Kong development properties has bottomed out, from 12% in fiscal year 2025 to 11% in fiscal year 2026; compared to half a year, it reached 15% in the second half of fiscal year, up 8% from the first half of fiscal year 2026. Management also expects the profit margin for development properties to gradually rise, but due to the land cost structure and the company's focus on mass market projects to speed up asset turnover, it is unlikely that the profit margin will return to 30% or more.

Motong expects that the profit margins of SHKP's 2027 and 2028 development properties will rise to 18% and 22% respectively. It is estimated that SHKP's profit for the 2027 fiscal year will increase 5% year-on-year, mainly driven by a recovery in Hong Kong development property margins, reduced interest expenses, IGC's new rent contribution, and agricultural land recycling benefits.