[ET Net News Agency, 23 February 2018] Morgan Stanley expects HK developers to see 13%
YoY EPS and 8% YoY DPS growth on average. Improving sales volume, margin expansion and
non-core disposals should continue to support growth.
The research house prefers developers over REITs.
Among developers, Morgan expects Kerry Properties (00683) to have the highest underlying
earnings growth at +62% YoY, thanks to two large-scale HK project completions
in 2017 versus zero the year before.
Sino Land (00083) could report significant profit growth because of a China land bank
disposal. New World Development (NWD)(00017) might see earnings decline by 43% YoY as the
company might only recognize sales of Mount Pavilia and also inventory sales, versus the
completion of two projects (Skypark and Double Cove Summit) in the last interim period.
Morgan expects further margin improvement in 2018 when companies recognize projects that
pre-sold after 2H 2016. It also expects developers to continue selling non-core assets and
China development land bank to unlock NAV and improve asset turn. Among those, CK Asset
Holdings (01113) and NWD should benefit the most. (KL)