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<Research>G Sachs Keeps Buy on CKA/ SHKP, Sell on NWD/ HLD
Recommend 11 Positive 33 Negative 20 |
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Goldman Sachs, in its report, maintained its Buy rating on CK ASSET (01113.HK) and SHK PPT (00016.HK), with target prices of $92 and $41 respectively. It also maintained its Sell rating on NEW WORLD DEV (00017.HK) and HENDERSON LAND (00012.HK), with target prices of $5.8 and $19.5 respectively. Among Hong Kong developers, HLD and NWD are more aggressive on HK CRE cap rate assumptions while CKA and SHKP are more conservative. Assuming the current industry estimate of 5.7% is used as the benchmark for the cap rate, the value of the investment property portfolio will change by +4% to -24%, and the average impact on the industry will be -13%. Under this scenario, the valuation of investment properties of NWD and HLD will be more negatively affected, slipping by 19% and 24% respectively. If the higher cap rate is crystallized as a loss for equity, this will lead to about 26/ 11 ppts higher net gearing ratio for NWD/ HLD to 115%/ 52%. At the same time, there will be a nil/ 8% mark-to-market effect on the valuation of the CKA and SHKP portfolios, while the impact on the gearing level is negligible. AAStocks Financial News |
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