Despite the rally of the Hong Kong property stocks by 10-15% over the last month, J.P. Morgan believes there is more upside in place given their current valuation.
The research house examined the current implied yield gap of the Hong Kong property companies with meaningful property investment exposure. Only Henderson Land (00012) and Link REIT (00823) stand out as expensive, with their current implied yield gap right at historical average level.
It said the other property names are at an average implied yield gap of 230bp, higher than their historical average. Kerry (00683) with its cheap valuation, positive momentum on capital management and its substantial exposure in China should be a prime beneficiary in the current environment.
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