Morgan Stanley: New World Development's mid-term interest exceeds expectations, but the 2.8% implied dividend yield lacks attractiveness

Morgan Stanley published a report stating that Sun Hung Kai Properties (00016.HK) increased its interim dividend per share by 3% year-on-year as of the end of December last year, which was better than expected, but the implied dividend yield of 2.8% is not very attractive.

The report indicated that the group recorded contract sales of approximately HKD 17.4 billion in Hong Kong for the first half of the fiscal year, with an additional HKD 9 billion sold year-to-date. The full-year sales are expected to exceed the annual guidance of HKD 30 billion. Additionally, the outlook for office and retail properties in Hong Kong is positive.

Furthermore, the bank noted that Sun Hung Kai's net debt ratio has further decreased to 13.5%. The actual interest rate of 3% has led to a 37% year-on-year decline in interest expenses.

The bank has given Sun Hung Kai a "Buy" rating with a target price of HKD 120