The political situation in Hong Kong is unstable and local property stocks are affected
However, the property market in Hong Kong has rebounded recently. Local property stocks have rebounded significantly. For example, Henderson Land Development (012) has rebounded by nearly 9% in the past month. As the demand for local property is still strong and the Group has a large number of New Territories land, it will have the opportunity to benefit from the Government’s land in the New Territories. The policy, the outlook is still positive, adjusted to 50 antennas about 38 yuan can be bought.
Since the “Policy Report” announced the relaxation of the maximum price ceiling for the first 90% mortgage, local residential trading has been stimulated and the price has risen. In addition, after the US Federal Reserve announced a further interest rate cut of 0.25%, HSBC, Hang Seng (011) and BOC Hong Kong (2388) of HSBC (005) immediately announced that the prime rate (P) would be lowered by 0.125%. In the lower floors, according to the requirements and mortgage rates, the property market has become more active. In October, the number of mortgages in the building has reached a new high of nearly eight and a half years.
Expected to rebound after taking back
Therefore, although the real estate stocks are affected by the political instability in the short term, they are expected to pick up after the retreat. As one of the property developers who have a large number of agricultural land, Henderson has been optimistic about the new housing policy which can benefit the Government’s relaxation of the first floor and the notice of the Lands Resumption Ordinance.
In terms of valuation, Hengdi’s forecast price-earnings ratio is about 12 times, and the dividend yield is 4.4%, which is defensive. Morgan Stanley issued a report that it upgraded Henderson’s rating from “Reduce” to “synchronized with the market”, mainly due to its reasonable valuation (property value discounted to 59% of net asset value) and high dividend yield of 4.7%. And the annual dividend increase will reach 10% in the next three years, and the target price will rise from 35.5 yuan to 37 yuan. Hengdi closed at 38.35 yuan yesterday, down 0.39%.
Callback to around 38 yuan
Everbright Securities strategist Wu Lixian said that Henderson recorded the first half-year performance decline in the first half of the year, and the underlying profit attributable to shareholders decreased by 52% compared with last year, mainly due to the high base effect caused by the sale of special project interests last year, plus the property this year. Most of the sales were completed and delivered in the second half of the year, and it is believed that the relevant earnings will be reflected in the final results. Revenue in property leasing is relatively high, and it is believed that the rental income in the second half of the year will be affected by the social environment. The Group’s land bank in the New Territories has expanded to approximately 45.9 million square feet at the end of June. It is the developer with the largest number of New Territories land in Hong Kong. It is expected that the Hong Kong Government’s policy on land in the New Territories will be of great significance in enhancing the overall valuation of Henderson. It is suggested that if the stock price is adjusted back to around $38, the target price will be $42.
Huang Zikai: short-term pressure on long-term better
The Group’s property sales and leasing business has accounted for more than 75% of its operating profit, and its major property portfolio is located in Hong Kong, so its main property portfolio is located in Hong Kong. The profit outlook is more affected by the Hong Kong economy. Due to the Sino-US trade conflict and local social events, the local economy will be under pressure in the short term, but I believe that the long-term will eventually turn better. Based on the price-to-book ratio, the current valuation is lower than the 5-year average by one standard deviation. It can be bought at current price and held in the medium term. The medium-term target price is 45 yuan.