20/08/2019 11:16

{I-bank focus}HK property sector view changed to "in-line"

[ET Net News Agency, 20 August 2019] Morgan Stanley said property stocks could de-rate
again on a slowing economy, and a sharp deterioration of visitation, retail sales, and
sentiment. It changed its industry view to "in-line" from "attractive".
The research house pegged its price targets to downcycle multiples. It prefers China and
HK office exposure. Strong balance sheets and high dividend yield should support the
Even after the recent stock rebound, valuations still look attractive (45% discount to
NAV, 0.5x P/B, and a 4.3% dividend yield). However, further economic growth deterioration
and a decline in property prices are not in the price, Morgan noted.
It now used a discount to NAV of 40-60%, similar to the last downcycle, which drives its
price targets lower. Morgan prefers office over residential and retail, given a stable
rental lease structure. Companies with strong balance sheets, higher dividend yields, and
potential buybacks should outperform others.
Morgan revised its ratings and target prices for the property stocks it rates as
Name Rating Target Price (Change)
Wharf (00004) Overweight HK$21.5 (-23%)
Swire Prop (01972) Overweight HK$32 (-14%)
SHKP (00016) Overweight HK$132 (-16%)
Kerry (00683) Overweight HK$32.0 (-22%)
HLP (00101) Overweight HK$20.0 (-2%)
CK Asset (01113) Equal-weight HK$60.0 (-13%)
Hysan (00014) Equal-weight HK$37.0 (-18%)
Fortune REIT (00778) Underweight to Equal-weight HK$10.1 (-2%)
Link REIT (00823) Equal-weight HK$93.0 (0%)
Sino Land (00083) Equal-weight HK$11.5 (-23%)
Champion REIT (02778) Equal-weight to Underweight HK$5.7 (0%)
Wharf REIC (01997) Equal-weight to Underweight HK$48.0 (-19%)
Henderson Land (00012) Underweight HK$35.5 (-22%)


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