1、Just in Kwok, CFA +852-2978-0481 | Goldman Sachs (Asia) L.L.C. Colin Yao +852-2978-1474 | Goldman Sachs (Asia) L.L.C. Rebound from rates trade l argel y behind Overall, we think the fi rst phase of share price rebound from a swing in rates expectation has largely been completed (FTSE E/N HK up 16% f
2、rom Oct 2018s low, narrowing sector NAV discount from the recent low of 53% to 44% at present, vs. post-QE -1SD of 46%). While investors may need more comfort from the primary sales volume pick-up to turn more positive on the developers, we look for stocks that display the following characteristics:
3、 Favorable unsold resources with wide gross margins to n allow price cutting and sales volume upkeep. Lock-in development profi ts add earnings visibility. n Yield plus growth on higher recurring income. n Our pref erred coverage names (al l Buy rated) include SHKP (on CL), Sino Land, Hang Lung Prop
4、 (upgrade from Neutral), Hongkong Land and Wharf REIC. We rate Henderson Land at Sel l . We also downgrade Swire Prop to Neutral from Buy. We update our earnings estimates and 12-month NAV-based target prices on our latest price/rental assumptions. 17 January 2019 | 8:11PM HKT Hong Kong Real Estate
5、Year of the Pig: Look for stocks that can FLY; HLP up to Buy As we move into the Chinese Zodiac year of the Pig, we believe af ter a one-sided downward physical pricing adjustment, we will enter into a period of bumpy pricing while volumes could remain low, with more government initiatives and highe
6、r market fragmentation, as new forces (e.g., Chinese developers) shape the market structure. Core debates in 2019 Pricing: More bumpy period amid likely low volumes, n with increased price competition resulting from higher market fragmentation and larger subsidized housing provisions by the governme
7、nt. Interest rates: Mortgage rate hike limit of c.25-50bps in n the near term, rather than 100+bps previously. Government policy af f ecting luxury-end with potential n vacancy tax, and mass-end with more subsidized for-sale fl ats at wider discounts. Supply of land: Near-term massive uplif t for go
8、vernment n rentals/for-sale to 70%, from the original target of 60%, while the longer-term supply options debate continues. Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the fi rm may have a confl ict of intere
9、st that could af f ect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certifi cation and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US af fi liates are not
10、registered/qualifi ed as research analysts with FINRA in the U.S. Valuation summary3 Investment summary and key exhibits4 Pricing: More L than V-shaped trajectory, in our view10 Interest rates: Lower for longer13 Government housing policy: More visible hand16 Supply of land: The debate continues19 F
11、avourable saleable resources: Competition from HOS and new entrants22 Lock-in of profi ts add visibility to yield plus growth25 Of fi ce property market snapshot27 Retail property market snapshot31 Appendix35 Disclosure Appendix40 17 January 2019 2 Goldman SachsHong Kong Real Est at e Table of Cont
12、ent s Valuat ion summary Exhibit 1: Hong Kong real estate coverage val uation summary RatingMVPrice12-mo TPPotentialFwd NAVPrem/5-year NAV disc. historyBVPSCur. P/BFY endUnderlying P/E (X)Div Yield (%)Abs. perfomance % ($bn)(HK$)(HK$) % Upside/ downside (HK$)(Disc)%Peak+1s.d.Avg.-1s.d.Trough Last rp
13、t (x)FY18EFY19EFY20EFY18EFY19EFY20E1-mo3-mo1-yrYTD Property companies SHKP0016.HKBuy*42123.70171.0038.2227.66(46)(22) (31) (38) (45) (51) 186.1 0.66Jun1211123.8 4.0 4.2 919(7)11 Wharf REIC1997.HKBuy1948.8559.0020.877.84(37)n.a.n.a.n.a.n.a.n.a.70.7 0.69Dec1615154.3 4.4 4.5 112(8)4 Hongkong Land (US$)
14、HKLD.SIBuy166.938.8027.011.73(41)(4) (18) (27) (37) (42) 15.9 0.44Dec1718173.0 3.2 3.3 415(3)10 Sino Land0083.HKBuy1114.4619.8036.926.44(45)(21) (28) (35) (42) (48) 21.1 0.68Jun820186.8 3.7 3.7 51918 Hang Lung Prop.0101.HKBuy915.6220.0028.035.45(56)(23) (33) (44) (54) (64) 30.6 0.51Dec1616164.8 4.9
15、5.2 (2)7(23)5 CK Asset 1113.HKNeutral3063.3573.9016.7113.62(44)n.a.n.a.n.a.n.a.n.a.84.5 0.75Dec61093.0 3.2 3.6 1015(13)11 Swire Prop1972.HKNeutral2127.7031.0011.941.08(33)(4) (19) (29) (38) (44) 47.0 0.59Dec1722213.0 3.2 3.4 (3)371 New World Dev. 0017.HKNeutral1411.5012.105.226.84(57)(30) (45) (52)
16、(59) (68) 21.2 0.54Jun1413134.2 4.3 4.5 717(7)11 Kerry Prop.0683.HKNeutral528.4033.4017.674.22(62)(32) (43) (51) (60) (67) 66.7 0.43Dec8874.8 5.1 5.5 012(20)6 Hysan0014.HKNeutral537.6543.0014.266.13(43)(21) (29) (35) (42) (48) 68.6 0.55Dec1513133.9 4.4 4.6 (2)(0)(14)1 Henderson Land0012.HKSell2143.0
17、042.00(2.3)70.26(39)(14) (25) (32) (39) (49) 68.7 0.63Dec913154.2 4.4 4.7 817(9)10 REITs Champion REIT2778.HKNeutral45.596.109.16.24(10)41 0 (12) (25) (34) 11.1 0.51Dec2324244.6 4.5 4.5 36(2)4 Fortune REIT0778.HKNeutral29.4410.056.510.96(14)49 6 (5) (17) (29) 16.1 0.59Dec1020205.6 5.8 5.9 49(1)6 MNA
18、CT (SG$)MAPE.SINeutral21.181.212.51.20(2)52 25 12 (1) (12) 1.4 0.86Mar2220206.3 6.3 6.1 26(6)4 Link REIT0823.HKNot Rated2180.40n.a.n.a.70.201526 15 5 (5) (13) 83.1 0.97Mar1429263.1 3.4 3.7 211141 Sector mkt weighted avg.23.0(37)(7) (17) (23) (30) (36) 0.661316153.9 3.9 4.1 613(5)7 Prices as of Jan 1
19、5, 2019 * denotes stock is on our Conviction List. Source: Datastream, Goldman Sachs Global I nvestment Research Exhibit 2: HK PropCos (ex-REITs) trade at a 45% discount to NAV on average Exhibit 3: HK property sectors rel ative performance pl ot -60% -50% -40% -30% -20% -10% Jun-12 Sep-12 Dec-12 Ma
20、r-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 share price discount to NAV Average +1 std. -1 std 2012 Sep: HKMA tightens mortgage policy 2012 Oct: BSD 2013 Feb: DSD 2015 Feb: HKMA
21、tightens mortgage policy 2016 Nov: Raised DSD to 15% (DSD II) (33)% (40)% (45)% 2017 Apr: Tighten DSD II 2017 May: HKMA tightens lending to developers + mortgage policy (46)% SHKP NWD CKA Henderson Sino Kerry HLP Swire Prop. HKLand Hysan Fortune MNACT Champion Link Wharf REIC FTSE EPRA/NAREIT HK -5%
22、 0% 5% 10% 15% 20% 25% -30%-25%-20%-15%-10%-5%0%5%10%15% 3-mo performance 12-mo performance Source: Datastream, Goldman Sachs Global I nvestment Research Source: Datastream, Goldman Sachs Global I nvestment Research 17 January 2019 3 Goldman SachsHong Kong Real Est at e Invest ment summary and key e
23、xhibit s Investment summary Hong Kongs residential market has defi ed gravity in recent years, and the key question among investors is how long this can be sustained. In the year of the Pig, we believe af ter a one-sided downward physical pricing adjustment, we will enter into a period of bumpy pric
24、ing while volumes could remain low. We see Pricing, Interest rates, Government policy and Supply of land as core debates for the property market in 2019, and pref er stocks with the following characteristics: Favorable unsold resources with wide gross margins to allow price cutting and sales volume
25、upkeep: SHKP and CKA. n Lock-in development profi ts add earnings visibility: SHKP and Sino Land. n Yield plus growth on higher recurring income: HLP , CKA, NWD, HKLand, Swire Prop and Hysan. n Exhibit 4: Summary of key metrics for our HK PropCos coverage Source: Company data, Goldman Sachs Global I
26、 nvestment Research 17 January 2019 4 Goldman SachsHong Kong Real Est at e We revise EPS and NAV estimates for our coverage mainly due to the following updated assumptions: n HK residential price growth: From a 15% decline in 2019E/20E to 10%. o HK of fi ce spot rental growth: 2% p.a. in 2019E/20E,
27、versus 3%-4% p.a. previously; accordingly, we widen our o target NAV disc by 5pp for Swire Prop and HKLand. HK retail spot rental growth: 2% p.a. in 2019E/20E, versus 4% p.a. previously; accordingly, we widen our target o NAV disc by 5pp for Wharf REIC and Hysan. Rolling over companies with FY endin
28、g June to FY20E based target valuation (SHKP , Sino Land and NWD) from o FY19E. For more details regarding EPS, NAV and TP changes, ref er to Exhibit 5. o Key rating changes: n Hang Lung Properties up to Buy from Neutral. o Swire Properties down to Neutral from Buy. o Additional comments for selecte
29、d companies: n HLPs FY18E EPS down 8% to factor in slower HK residential inventory sales. o Sino Lands FY21E EPS +7% and NAV +9% on faster-than-expected sales at Grand Central. o Kerry Props FY18E-20E EPS down 1%-6% and NAV down c.7% on lower sales prices comps in HK and China. o NWDs FY19E-21E EPS
30、down 4%-5% to factor in slower run-rates for its services/infrastructure businesses. o Target NAV discount changes: n Expanding by 5pp for Swire Prop, HKLand, Wharf REIC and Hysan on slower rental growth path. o Narrowing by 5pp for Sino Land on much higher net cash position post successful launch o
31、f Grand Central. o 17 January 2019 5 Goldman SachsHong Kong Real Est at e Exhibit 5: Our top pick continues to be Sun Hung Kai Prop; we upgrade Hang Lung Prop to Buy, and downgrade Swire Prop to Neutral Coverage summary Underlying EPS estimates (HK$) RatingFY+1FY+2FY+3Fwd NAV per share est. (HK$) Ta
32、rget NAV discount12-mo TP (HK$)Last close OldNewChgChgChgOldNewChgOld New Old New ChgJan 15+/- % Sun Hung Kai Prop*Buy (on CL)Buy (on CL)2.0%-0.5%-0.4%223.66227.661.8%-25%-25%168.00171.001.8%123.7038.2% HKLandBuyBuy-2.6%-2.9%-3.3%11.8211.73-0.7%-20%-25%9.508.80-7.4%6.9327.0% Hang Lung PropNeutralBuy
33、-7.9%3.0%4.9%35.8435.45-1.1%-45%-45%19.7120.001.5%15.6228.0% Sino Land*BuyBuy-2.4%0.2%6.7%24.2726.448.9%-30%-25%17.0019.8016.5%14.4636.9% Wharf REICBuyBuy0.0%-0.9%-2.4%79.6077.84-2.2%-20%-25%64.0059.00-7.8%48.8520.8% Champion REITNeutralNeutral-0.6%1.6%2.6%6.406.24-2.6%n.a.n.a.6.286.10-2.9%5.599.1%
34、Swire PropBuyNeutral-1.1%-1.5%-2.0%41.5141.08-1.0%-20%-25%33.2031.00-6.6%27.7011.9% CK AssetNeutralNeutral-0.4%-0.1%1.6%114.77113.62-1.0%-35%-35%74.6073.90-0.9%63.3516.7% Kerry PropNeutralNeutral-1.3%-6.4%-5.2%79.7874.22-7.0%-55%-55%35.9033.40-7.0%28.4017.6% Hysan DevNeutralNeutral-2.3%-2.0%-3.1%67.
35、5166.13-2.1%-30%-35%47.0043.00-8.5%37.6514.2% Fortune REITNeutralNeutral0.0%-0.4%-1.2%10.9610.960.0%n.a.n.a.10.3010.05-2.4%9.446.5% New World Dev*NeutralNeutral-5.5%-3.9%-4.5%26.4826.841.4%-55%-55%12.0012.100.8%11.505.2% MNACT*NeutralNeutral-0.1%-0.6%-1.3%1.211.20-0.8%n.a.n.a.1.221.21-0.8%1.182.5% H
36、enderson LandSellSell0.0%-2.1%-0.8%70.4770.26-0.3%-40%-40%42.0042.000.0%43.00-2.3% Link REIT*Not RatedNot Rated0.0%0.0%0.0%70.2070.200.0%n.a.n.a.n.a.n.a.n.a.80.40n.a. Note: *SHKP, Sino, NWD are Jun-FY-ended; *Link REIT and MNACT are Mar-FY-ended, FY+1 means FY19E for these 5 stocks and FY18E for all
37、 others Source: Datastream, Company data, Goldman Sachs Global I nvestment Research 17 January 2019 6 Goldman SachsHong Kong Real Est at e Exhibit 6: TP methodol ogy and key risks for our coverage Price on TickerMVJan.15TPRatingMethodologyRisks (US$ bn) (HK$)(HK$) Sun Hung Kai Properties0016.HK42.48
38、123.70171.00Buy*25% discount to one-year forward NAV estimate Abrupt economic downturn, unexpected policy changes, unforeseen interest rate moves. Wharf REIC1997.HK18.9148.8559.00Buy25% discount to one-year forward NAV estimateHigher interest rates; more supply and competition; Government policies;
39、and negative tourists spending trend Hongkong Land (US$) HKLD.SI15.596.938.80Buy25% discount to one-year forward NAV estimateSevere macro slowdown hurting office demand; abrupt changes in government policies affecting Chinese outbound flows; greater-than-expected competition from new quality office
40、supply in non-CBD areas. Sino Land0083.HK10.9714.4619.80Buy25% discount to one-year forward NAV estimateSlower-than-expected rental growth and abrupt economic slowdown, abrupt changes in government housing/ land policy, and weaker-than-expected physical market sentiment. Hang Lung Properties0101.HK8
41、.9415.6220.00Buy40% discount to one-year forward NAV estimateSlower-than-expected Chinese macro growth; weaker-than-expected RMB; NAV-dilutive acquisitions; project delays and slower-than-expected ramp-up of newly completed projects. CK Asset1113.HK29.8763.3573.90Neutral35% discount to one-year forw
42、ard NAV estimateDownside: Worse-than-expected conditions for asset monetization and/or M distribution of special dividends; NAV-accretive M better-than-expected uplift from improved infrastructure. Downside: An abrupt economic slowdown dampening HK office demand; weaker Chinese outbound travel; lowe
43、r-than-expected ramp-ups of new projects New World Development0017.HK13.7711.5012.10Neutral55% discount to one-year forward NAV estimateFaster-than expected sales progress in China; lower-than-expected initial rents achieved by NWC redevelopment. Hysan Development0014.HK5.0937.6543.00Neutral35% disc
44、ount to one-year forward NAV estimateUpside: Faster-than-expected growth in tourist spending in Hong Kong; Downside: Weaker-than-expected domestic spending. Kerry Properties0683.HK5.1728.4033.40Neutral55% discount to one-year forward NAV estimateFaster/slower-than-expected property sales in Hong Kon
45、g and China; changes in government policies; Rmb FX volatility. Henderson Land0012.HK20.9243.0042.00Sell40% discount to one-year forward NAV estimate Share price weakness could invite more aggressive-than-expected stake raises from?significant?shareholders; faster-than- expected property sales or fa
46、rmland conversions. Champion REIT2778.HK4.045.596.10Neutral50% of DCF plus 50% of 30% premium to one-year forward NAV estimate Accretive asset monetization, faster-than-expected Central office growth (upside); Faster-than-expected rates hike, weaker- than- expected retail tenant sales (downside). MN
47、ACT (S$)MAPE.SI 2.321.181.21NeutralDCF valuation methodUpside: better-than-expected rental reversion; downside: higher refinancing costs in the long term Fortune REIT0778.HK2.039.5410.05NeutralDCF valuation methodUpside: better-than-expected AEIs uplift; downside: lower-than-expected reversion; Down
48、side: Weaker-than-expected domestic spending. Link REIT0823.HK21.2280.40n.a.Not Rated n.a.n.a. Note: *denotes the stock is on our Conviction List. Source: Datastream, Company data, Goldman Sachs Global I nvestment Research 17 January 2019 7 Goldman SachsHong Kong Real Est at e Rebound from rates tra
49、de l argel y behind, property market fundamental s to driver further move Historically, HK PropCos have witnessed a high correlation between their share price and NAV, which was a function of the property price level and their portfolio size. Over the past fi ve years, we have seen a larger discount between the level of property price and share price. For example, the average home price was up c.50% since 2013, while the FTSE E/N HK was largely unchanged. Yet, we notice investors debate has increasingly focused on sales volume and rates expectation, which in turn would af f ect developers p
