[ET Net News Agency, 31 October 2018] Nomura maintained its target price for Sun Hung
Kai Properties (SHKP)(00016) unchanged at HK$131, but upgraded its rating to "buy" from
"neutral" on distressed valuation.
The research house estimated another 5% property price decline from the current level
until year end, continuing into 1Q 2019 with a cumulative price drop of 13%. Nevertheless,
it now expects a NAV discount for SHKP, which is at a distress level of 57% only last seen
in December-2015, October-2008 and August-1998, and to rebound ahead of a potential
property price trough-out.
Nomura sees three factors as catalysts: (1) results; (2) smart and opportunistic land
banking; and (3) a buyback in case of distressed valuation. (KL)