＜Research＞Jefferies Cuts HENDERSON LAND (00012.HK) TP to $23, Expects Stable DPS but Earnings Challenged

　　Jefferies noted in a report that HENDERSON LAND (00012.HK) -0.450 (-1.965%) Short selling $7.55M; Ratio 47.020% has sold but unbooked sales of about $7.2 billion in Hong Kong and $6.5 billion in Mainland China for FY24. Of the $7.2 billion in Hong Kong, 60% is likely to be booked in 1H24, mainly driven by the completion of Baker Circle Phase 1 in Hung Hom, which is expected to have a profit margin of around 30%. Year-to-date cumulative attributable sales amounted to $10 billion, of which 40% was inventory, mainly from Belgravia Place in Cheung Sha Wan and Baker Circle Greenwich in Hung Hom.

　　Jefferies believed that $1.8 billion of HLD's $5.7 billion land resumption compensation will be recognised in 1H24, generating a gain of about $1 billion (with a profit margin of about 55%), which will help support the company's overall profit margin at about 30% to 33%. The broker expected HLD's development property margins to deteriorate to the mid-teens level (around 13% to 17%) in FY25 to FY26 unless the developer's land resumption in San Tin makes further progress.

　　Related NewsM Stanley Believes HENDERSON LAND (00012.HK) Will Outperform Mkt in Next 60 Days, Expects Interim Div. to be Maintained

　　In addition, the broker's profit forecast on HLD for FY24 to FY26 is lower than the market's consensus by 10% to 20%, with a profit of about $5.4 billion for 1H24, down 9% YoY. However, if including the gain on the disposal of Harbour East, the developer's profit is expected to reach around $6.5 billion.

　　Jefferies expected HLD to endeavour to maintain a stable dividend despite the challenges to its earnings. The broker lowered its target price from $24 to $23, with a Hold rating. The broker nevertheless preferred SHK PPT (00016.HK) -1.800 (-2.498%) Short selling $46.66M; Ratio 48.970% , as its gross margins are more resilient and its profitability trajectory will continue to improve from FY25 onwards.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-16 12:25.)

　　Related NewsJPM: HK Developers May Outperform in ST on Rate Cut Hope; But Upswing Unlikely to Sustain; LINK Favored

　　AAStocks Financial News