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<Research>UBS: HK Homebuilders' Valuation Becoming Expensive; Stock Selection Favors Low Debt, High Div., Buyback Themes
Recommend 26 Positive 26 Negative 12 |
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The Hong Kong real estate sector started strongly in 2026, with several stocks approaching historical highs, UBS released a research report saying. As valuations appear increasingly expensive, even on a PB ratio basis, the broker is adopting a more selective approach. UBS particularly favored stocks with relatively low net gearing ratio, naming SINO LAND (00083.HK), CK ASSET (01113.HK) and KERRY PPT (00683.HK), considering them to have lower risks of equity-related issuance, given the industry's slow progress in deleveraging and the ongoing need for capital to replenish land reserves. Meanwhile, the broker also preferred stocks offering sustainably high dividends, such as SWIREPROPERTIES (01972.HK), SINO LAND and KERRY PPT. Moreover, stocks with low PB ratios and supported by capital recycling or share buyback plans, such as CK ASSET and LINK REIT (00823.HK), may see a valuation re-rating opportunity. UBS liked SWIREPROPERTIES, SINO LAND, LINK REIT, CK ASSET and KERRY PPT for 2026, and maintained a cautious stance on HENDERSON LAND (00012.HK) (before results announcement), HYSAN DEV (00014.HK) and MTR CORPORATION (00066.HK). For landlords, the broker raised its target prices for SINO LAND, CK ASSET, KERRY PPT, SHK PPT (00016.HK), SWIREPROPERTIES and HYSAN DEV. UBS' ratings and target prices for homebuilders are listed as follows: Stock | Rating | TP (HKD) SINO LAND (00083.HK) | Buy | 11.2 → 14.3 CK ASSET (01113.HK) | Buy | 42.9 → 54.9 KERRY PPT (00683.HK) | Buy | 24 → 29.3 SHK PPT (00016.HK) | Neutral | 96 → 136 SWIREPROPERTIES (01972.HK) | Buy | 26.1 → 29.6 HYSAN DEV (00014.HK) | Neutral | 15.7 → 22.4 AASTOCKS Financial News Website: www.aastocks.com |
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