Daiwa Capital Markets maintains a "Hold" rating on New World Development and raises its earnings forecast for the fiscal year 2026

Daiwa Capital Markets published a research report indicating that Sun Hung Kai Properties (00016.HK) is expected to see a 16.7% year-on-year growth in underlying profit for the first half of the 2026 fiscal year, which corresponds to about 53% of the bank's full-year forecast. This growth is primarily supported by strong profit growth from property sales in China and a decline in overall borrowing and financing costs, leading to stable portfolio earnings. The interim dividend increased by 3.2% year-on-year to HKD 0.98 per share, exceeding market expectations. The profit margin from property sales in Hong Kong decreased by 7 percentage points year-on-year to 8%, while the net debt ratio fell by 4.4 and 3.2 percentage points year-on-year and half-year respectively to 13.5%.

The bank expects that the group's profit margin from property sales in Hong Kong will recover starting from the second half of the 2026 fiscal year, with resilient performance and expansion plans for both Hong Kong and mainland investment property portfolios. Management has also reiterated its commitment to maintaining a dividend payout ratio between 40% and 50%. Considering the higher-than-expected profits from property sales in China, the bank has raised its profit forecast for Sun Hung Kai Properties for the 2026 fiscal year by 5%, while keeping the profit forecasts for 2027 and 2028 unchanged, maintaining a "Hold" rating with a target price of HKD 143.8, and reiterating that Sun Hung Kai Properties remains the best choice to capture opportunities in the Hong Kong property market