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1、Deutsche Bank Markets Research Asia Hong Kong Property Property Industry Hong Kong Property Date 8 February 2018 Forecast Change Moderating dividend growth expected in upcoming results season Scope for dividend hike moderates as recurring income growth slows down _ Deutsche Bank AG/Hong Kong Deutsch
2、e Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investmen
3、t decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. Jason Ching, CFA Research Analyst (+852 ) 2203 6205 jason.ching Jeffrey Gao, CFA Research Analyst (+852 ) 2203 6256 jeffrey.gao Stephen Cheung, CFA Research Analyst (+852 ) 2203 6182 stephen-a.cheung F
4、oo Leung Research Associate (+852 ) 2203 6239 foo.leung Key Changes Company Target Price Rating HKLD.SI 6.14 to 6.30(USD) - 0066.HK 42.60 to 41.00(HKD) - 1997.HK 46.20 to 51.20(HKD) - 1113.HK 69.30 to 79.50(HKD) - 0014.HK 32.30 to 33.00(HKD) - 0683.HK 30.00 to 33.50(HKD) - 0017.HK 11.00 to 12.00(HKD
5、) - 0083.HK 14.40 to 14.20(HKD) - 0016.HK 122.30 to 130.70(HKD) - 0004.HK 30.50 to 31.70(HKD) - Source: Deutsche Bank As in previous results seasons, Hang Lung Properties kick-started the results season for Hong Kong property companies, on Jan 30. In general, we expect to see little excitement in th
6、e upcoming results season, as stronger-than-expected ASPs achieved in primary projects sold in FY17 will not be reflected until FY18. Moreover, as the dividend hike has generally outpaced growth in the corresponding recurring income over the past few years, the sector payout ratio already reached a
7、high 49% in FY16 and recurrent profit as a percentage to dividend fell to 108% (117% in FY14; 111% in FY15). Hence, we believe this will hinder the scope for further dividend hikes. Expect core profit +7.6% YoY in FY17; driven by strong development sales Driven by strong performance in the primary m
8、arket in terms of both sales volume and ASP, we expect core earnings to grow 7.6% YoY on average in FY17, among the companies under our coverage that are set to report earnings in the coming month. In particular, we expect Kerry to report the strongest set of results, with core earnings growing by 5
9、5%, boosted by bookings of The Bloomsway and Mantin Heights. On the other hand, we anticipate Hysan Dev and Wharf REIC to report the weakest results, with core net earnings growing by 0.9% and declining 1.6%, respectively. Meanwhile, we anticipate stronger earnings growth in FY18; we revise up our e
10、arnings estimate by 7% on average, by factoring in stronger-than-expected ASP achieved. Expect positive rental reversion for office/neutral to marginal negative for retail In our view, the scope for rental reversion is still one of the key aspects to watch out for in the upcoming results season. For
11、 the office market, spot Grade-A office rents rose by 2.6% YoY in FY17 to about 20% above expiring rent under a typical three-year lease. Hence, we expect office landlords to register positive rental reversion and corresponding revaluation gain in FY17. On the other hand, spot prime retail rents con
12、tinued to soften in FY17 (-0.5% YoY) to about 1% below expiring rent under a typical lease term, so that we expect to see mostly neutral to marginal negative reversion for the year. Dividend hike more likely for CKA/HLD/Wharf/MTRC in FY17 As the key earnings growth driver in the upcoming results sea
13、son is expected to be boosted by strong development sales, we anticipate limited scope for further dividend hikes, on the back of slowing recurring income growth, where recurrent profit as a percentage to dividend fell to 108% (117% in FY14; 111% in FY15); we believe this will hinder the scope for f
14、urther dividend hike. In particular, we think CK Asset, Henderson Land, Wharf and MTRC have a higher chance of a dividend hike in FY17. On the other hand, we think there is a 50% chance of Hysan, Kerry, SHKP and NWD raising their dividend payouts, while we expect dividends to stay flat for Hongkong
15、Land and Sino-Land. Lack of fundamental catalysts but we do not rule out a technical catch-up rally Fundamentally speaking, we see few near-term positive catalysts in Hong Kong property. However, given that absolute valuation is not stretched and the sector is a sizeable constituent in the Hang Seng
16、 Index, in view of its underperformance in recent months, we do not rule out a technical catch-up rally in the coming months, if overall market conditions remain favorable. Risks: unexpected changes in government policy and the economy. Valuation: Our estimated NAVs are calculated through sum-of-the-parts valuation. See p.11 for details. Key downside risks - Government tig
