01972 Overview

Market Performance: The Hang Seng Index (HSI) rose by 249 points (0.9%) to close at 26,630, with a total market turnover of HKD288.42 billion. The HSCEI and HSTECH also saw gains, closing at 8,859 and 5,137 respectively.

Property Sector Highlights: SHK PPT reported a nearly 17% increase in interim underlying profit, leading to a 7.1% rise in its stock price. Other property developers like New World Dev and CK Asset also experienced stock price increases.

MSCI Index Changes: Changes to the MSCI China Index constituents were noted, with stocks like HESAI-W and SENSETIME-W seeing significant gains of 4.4% and 4.9%, while PONY-W and YOFC surged over 10%.

Tech Sector Updates: In the tech sector, BIDU-SW reported a 42% YoY decline in non-GAAP net profit but slightly exceeded market expectations, leading to a minor stock rebound. Other tech stocks like Tencent and Netease also saw modest increases, while Alibaba and Kuaishou experienced slight declines.

JPMorgan's Reaction to Stamp Duty Increase: JPMorgan expressed surprise at the increase in stamp duty rates for properties over $100 million in the 2026-27 Budget, noting it would only impact 0.3% of transactions.

Impact on Ultra-Rich Homebuyers: The additional 2.25% cost is seen as negligible for ultra-rich buyers, as a slight increase in home prices could easily offset this expense.

Policy Intent: The stamp duty hike is intended as a redistributive fiscal policy, aimed at taxing the ultra-rich to provide subsidies for lower-income groups rather than suppressing the property market.

Stock Recommendations: JPMorgan's top stock picks among developers include SHK PPT, HENDERSON LAND, and SINO LAND, while also mentioning HANG LUNG PPT and SWIRE PROPERTIES among landlords.

SWIREPROPERTIES Performance: The company is showing signs of improvement in its core business, particularly with stability in its office portfolio at Pacific Place and improved sales momentum in its retail sectors in Hong Kong and China.

New Retail Complexes: SWIREPROPERTIES is set to gradually open new retail complexes in major cities like Beijing, Shanghai, Sanya, and Xi'an, which are expected to drive medium to long-term profit and dividend growth.

Valuation Insights: DBS Group Research notes that the stock is currently trading at a 50% discount to its net asset value (NAV), with a target price of $30.38 and a "Buy" rating.

Market Activity: The stock has experienced short selling activity amounting to $326.85K, with a short selling ratio of 3.306%.

Market Overview: The Hong Kong real estate sector began 2026 positively, with several stocks nearing historical highs, prompting UBS to adopt a selective investment strategy due to rising valuations.

Preferred Stocks: UBS favored stocks with low net gearing ratios, including SINO LAND, CK ASSET, and KERRY PPT, citing lower risks of equity-related issuance amid slow industry deleveraging.

Dividend Focus: The broker also highlighted stocks with sustainable high dividends, such as SWIREPROPERTIES, SINO LAND, and KERRY PPT, while identifying potential valuation re-rating opportunities for stocks with low PB ratios.

Target Price Adjustments: UBS raised target prices for several stocks, including SINO LAND and CK ASSET, while maintaining a cautious stance on HENDERSON LAND, HYSAN DEV, and MTR CORPORATION.

Investor Sentiment: BofA Securities reports that investors are optimistic about the real estate market's recovery, leading to an average 10% increase in target prices for several real estate stocks due to strong sales in Hong Kong.

Stock Preferences: The broker favors CK ASSET and SINO LAND for their earnings sensitivity to property price growth, while SWIRE PROPERTIES and HANG LUNG PPT are preferred for their higher dividend yields amidst resilient luxury retail in mainland China.

Non-Consensus Pick: LINK REIT is highlighted as a non-consensus laggard due to its widened valuation gap with peers and short-term challenges in e-commerce, despite a high dividend yield.

Market Outlook: BofA Securities has adjusted its FY25-28 EPS forecasts for HYSAN DEV and provided detailed ratings and target prices for Hong Kong property developers and landlords in a separate table.

Performance Improvement: SWIREPROPERTIES reported significant growth in retail sales for its HKRI Taikoo Hui and Taikoo Li Sanlitun, with increases of 49.6% and 11.2% year-on-year, respectively, attributed to luxury brand store renovations.

Occupancy Rates: Despite high vacancy rates in Hong Kong's office market, the overall occupancy rate for SWIREPROPERTIES' office buildings in Hong Kong stands at 91%, with Pacific Place at 96% and Taikoo Place at 89%.

Profit Forecast: CICC has maintained its profit forecast for SWIREPROPERTIES, rating it as Outperform with a target price of $26.5, indicating a potential upside of 8%.

Dividend Yield: The target price corresponds to a dividend yield of 4.3% for 2025 and 4.5% for 2026, reflecting the company's stable financial outlook.