DBS Bank raises the target price for New World Development to HKD 122, expecting new land reserves to support profit recovery

DBS published a research report stating that Sun Hung Kai Properties (00016.HK) is the largest property developer in Hong Kong, with a large land reserve and a robust investment property portfolio, which constitutes its core advantages. Among the approximately 19.7 million square feet of developable land reserves, many are agricultural land, which is expected to benefit from the accelerated development of the Northern Metropolis.

The bank pointed out that the company acquired six residential land parcels last year through various means such as government tenders and land use conversions, which are expected to provide a total gross floor area of over 3 million square feet. With favorable land costs, the estimated pre-tax profit margin for the related projects exceeds 30%, which will support the company's earnings recovery.

Sun Hung Kai's Kai Tak "The Sky" Phase II and Sierra Sea 2A are both receiving market attention. DBS expects that the related "The Sky" Phase II, Sierra Sea 2B, as well as projects in Tsuen Wan and Kwu Tung, will also be in demand, thereby providing upward space for the stock price, raising its target price from HKD 112.1 to HKD 122, with a rating of "Buy."