Sun Hung Kai Properties' Fiscal 2022 Result Weaker, Long-Term Prospects Unchanged

Sun Hung Kai Properties', or SHKP's, fiscal 2022 result was below our and consensus expectations. The booking of development properties in Hong Kong and China was below our forecasts and revenue from investment properties in China was weaker than our expectation. Underlying profit, excluding revaluation of investment properties, was 3.8% lower against fiscal 2021 at HKD 28.7 billion. The final dividend was unchanged against the same period last year at HKD 3.70 per share with the full-year dividend also steady at HKD 4.95 per share. In line with peers, investment properties in both Hong Kong and China were affected by lockdowns. Rents remained pressured, but occupancy level improved by 1% against the first half to 92% for the Hong Kong portfolio, reflecting the high quality of the portfolio. In our view, rents in Hong Kong are starting to stabilize though a recovery is dependent on the relaxation of restrictive border measures. This also remains a key positive catalyst for the stock and the wider real estate sector.