Goldman Sachs has issued a research note stating that SHK PPT (00016)'s fiscal 2026 results for the period ending June 30 were in line with expectations. After excluding property fair value losses, underlying net profit rose 5% to HK$22.9 billion, matching both the bank's and market consensus forecasts. The company's Hong Kong property sales exceeded targets, development property margins are on a recovery track, and it recorded compensation income from agricultural land resumption. The bank has reaffirmed its "Buy" rating, with the target price slightly reduced from HK$170 to HK$169.

The bank highlighted that the company's first-half underlying net profit increase was supported by lower effective borrowing costs, which dropped to 3%, and a reduction in debt balances. Hong Kong's attributable contracted development property sales reached HK$38.1 billion, surpassing the company's conservative target of HK$30 billion and the bank's projection of HK$37 billion. Mainland development property sales amounted to RMB 2.2 billion.

Development property margins reached approximately 11% for the full year, improving to 15% in the second half. The company also recorded HK$1.1 billion in compensation related to agricultural land resumption for the San Tin and Northern Link projects, generating a corresponding HK$400 million gain, with an additional HK$2.2 billion in related compensation expected to be recognized in fiscal 2027.

Goldman Sachs cited management guidance indicating a fiscal 2027 Hong Kong contracted development property sales target of HK$33 billion, alongside expectations for development property margins to further recover to high single-digit percentages. The bank projects sales of approximately HK$34 billion and anticipates underlying net profit to rise 12% year-on-year to HK$25.6 billion.

In the previous fiscal year, rental portfolio revenue and EBIT increased 2% and 1% year-on-year, respectively. The final dividend per share was HK$2.93, up 5% year-on-year, while the full-year dividend per share of HK$3.91 represented a 4% increase, in line with market expectations and maintaining a payout ratio of approximately 50% of underlying earnings. Reflecting the latest business trends and property development timelines, the bank has lowered its earnings per share estimates for fiscal 2027 and 2028 by 5% to 6% while introducing fiscal 2029 projections.

The bank believes that as Hong Kong's leading developer and landlord, the company is well-positioned to benefit from a multi-year upturn cycle in Hong Kong's property market and that its current valuation remains attractive.