UBS: CK ASSET Maintains Prudent View on HK Residential Market; Special Dividend May Be Decided at Interim Results

UBS published a research report noting that CK ASSET (01113.HK) -1.350 (-2.797%) Short selling $72.33M; Ratio 22.387% maintained a prudent view on the Hong Kong residential market at the "Asia Investment Forum" on May 26. Management emphasized that although residential demand in Hong Kong remains resilient, supported by local pent-up demand and a steady inflow of mainland buyers, particularly for properties priced below HKD8 million, overall momentum is unlikely to accelerate significantly. Property prices continue to edge up moderately, but transaction volumes in the mid- to high-end segment have declined, while demand for luxury homes remains weak. Management highlighted macro uncertainties, including geopolitical risks and persistent inflationary pressure, reinforcing its view that the market is stabilizing rather than entering a strong upcycle. On development, CK ASSET expects Hong Kong property development margins to remain under pressure, as recognized projects are mainly those sold in previous years.CK ASSET expects the occupancy rate of Cheung Kong Center Phase II to exceed 50% by end-2026, compared with the current level of about 20%. Rents have rebounded to above HKD100 per square foot. On the retail front, rental performance at its shopping malls is stabilizing.UBS noted that following the completion of the sale of UK Power Networks (UKPN), CK ASSET will shift to a net cash position and maintain high discipline in capital allocation. With current government bond yields at 4% to 6%, management sees limited urgency to redeploy capital into lower-return development projects and maintains a high double-digit margin threshold for Hong Kong development projects, focusing on defensive, income-generating assets. The board will discuss the possibility of a special dividend when announcing 1H26 results, reflecting the substantial disposal gain from the UKPN transaction.UBS gave CK ASSET a Buy rating with a TP of HKD62, representing a 40% discount to its estimated net asset value, and maintained its Buy rating.CK ASSET closed at HKD46.92 at midday, down 2.8%, with turnover of 2.7668 million shares, involving HKD132 million. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-26 16:25.)