Developers extend rally amid absence of curbs
Property firms expected to benefit from pick-up in sales activity but fast asset turnover is critical
Shares of property developers continued to climb yesterday after Wednesday's gains on relief that no harsh cooling measures were announced in the annual policy address by chief executive.
Cheung Kong, Sun Hung Kai Properties and Henderson Land Development rose between 0.5 per cent and 1 per cent as analysts expected home sales transactions to pick up now.
Cheung Kong, which had climbed 1.88 per cent on Wednesday, gained 0.99 per cent to HK$131.40 yesterday, while SHKP edged up 0.8 per cent to HK$126 following a 1.38 per cent rebound the previous day. Henderson added 0.59 per cent to HK$59.15.
Property agency Midland Holdings, which hit an intraday high of HK$4.25, closed up 4.27 per cent at HK$4.15 as investors expect the stock to benefit from a recovery in sales activity. Mid-sized developer KWah also went up 4.27 per cent to HK$4.64.
Chief Executive Leung Chun-ying revealed on Wednesday in his first policy address that 67,000 private housing units would become available in the coming three to four years and 22,000 public rental units would be available for allocation each year.
"In context of where future supply comes from in various channels, fast asset turnover should be a more critical strategy than just optimising profitability, since the macro environment could turn volatile and money flow is highly unpredictable," a report by Jefferies Equity Research said yesterday.
The present environment is still favourable to developers, as they can capitalise on high asset prices and homeowners are reluctant to sell too soon because they would have to pay a special stamp duty. Low interest rates on mortgages are also supporting property prices.
"Given the history, Cheung Kong and SHKP are doing the best in asset turnover, and we regard these two names as the preferred plays," Jefferies said.
SHKP yesterday released a price list of 60 more flats at The Wings II, its residential project in Tseung Kwan O.
The average price is about HK$10,313 per square foot based on gross floor area, a mild increase of 1 to 2 per cent over the previous batch. These units will go on sale next week. The developer is asking about HK$20,000 per square foot for a special unit.
The release came a day after SHKP released to the market a further 74 units at the development and sold three special units at about HK$19,000 per square foot based on gross floor area, the highest in this project so far.