[ET Net News Agency, 5 September 2019] UBS Global Research lowered its target price for
Wharf Holdings (00004) to HK$16.6 from HK$28.8 and downgraded its rating to "neutral" from
"buy".
The research house said Wharf's share price is down 34% from its year-to-date peak. UBS
believes the weak performance is mainly due to concerns over (1) a deteriorating China
development property (DP) margin due to policy restrictions and the company's expensive
land acquisitions during 2017-18, and (2) weak sell-through of Hong Kong luxury
residential projects due to social unrest.
UBS estimated the land it acquired in 2017-18 represented about 42% of its total
landbank by GFA as of 1H, and that these acquisitions may only generate mid-single-digit
margins based on the current ASP level. Thus, it forecast Wharf's China DP margin to
deteriorate rapidly to 25%/20% in 2020/21. (KL)