Zhi Tong Cai Jing·2025-09-05 03:20Core Viewpoint - Goldman Sachs has lowered the target price for Sun Hung Kai Properties (00016) to HKD 96 while maintaining a "Buy" rating, citing ongoing benefits from the gradual turnaround in the Hong Kong property market cycle [2][3] Financial Performance - For the half-year ending June 30, Sun Hung Kai Properties reported a basic earnings per share of HKD 3.93, reflecting a 9% increase compared to the previous half but an 11% year-on-year decline, which was 7% lower than Goldman Sachs' expectations [2] - Revenue was 24% below Goldman Sachs' forecast, primarily due to lower-than-expected contributions from property development and other non-property businesses [2] Profitability and Dividends - Goldman Sachs noted that property development revenue was 39% lower than their predictions, attributed to lower-than-expected revenue recognition in both Hong Kong and mainland markets [3] - Despite lower revenue, EBIT exceeded expectations due to higher profit margins from mainland operations [3] - The forecast for property development profit margins for the fiscal year ending June 2026 is set at 13%, with gradual recovery to 15% and 18% in the fiscal years 2027 and 2028, respectively, benefiting from an industry rebound [3] - Dividend forecasts for the fiscal years 2026 to 2028 have been adjusted downwards by 4%, 3%, and increased by 3%, respectively, with an expected average payout ratio of approximately 49% over the next three years, compared to an average of 52% over the past five years [3]