"Big Banks" JP Morgan: Hong Kong real estate stocks' performance has bottomed out, with HANG LUNG PPT, SWIREPROPERTIES, and SINO LAND as top picks

The earnings season for Hong Kong property stocks will begin at the end of January. JP Morgan released a report indicating that most companies' earnings are likely to have bottomed out, with a rebound expected in the fiscal year 2026. New World Development (00017.HK) has fully reflected the most concerning risks, and the bank has upgraded its rating from "Underweight" to "Neutral," with upcoming earnings expected to show slight improvement.

JP Morgan expects that the average earnings of property stocks will decline by 7% year-on-year in the fiscal year 2025. Among them, Swire Properties (01972.HK) is expected to see a 17% increase in earnings driven by asset disposal gains, making it the best performer; Sun Hung Kai Properties (00016.HK) and Cheung Kong Holdings (1113.HK) are expected to record low single-digit growth. In contrast, Henderson Land (00012.HK) may see earnings drop by over 30% due to a lack of farmland reclamation and asset disposals; New World Development may still record a loss, but the loss is expected to narrow.

In terms of dividends, Hongkong Land, Swire Properties, Hang Lung Properties, and Sino Land (00083.HK) have the highest dividend stability, while Henderson Land faces a risk of reduction due to a payout ratio that may exceed 100%.

JP Morgan pointed out that Hong Kong's retail and office rental income is affected by negative growth, with short-term pressure still present, but retail performance in mainland China is positive. The preferred property stocks are Hang Lung Properties, Swire Properties, and Sino Land.

JP Morgan's investment ratings and target prices for property stocks are as follows:

Stock | Investment Rating | Target Price (HKD)

Sun Hung Kai Properties (00016.HK) | Neutral | 92 → 109

Henderson Land (00012.HK) | Overweight | 31 → 33

Cheung Kong Holdings (01113.HK) | Neutral | 36 → 41

Sino Land (00083.HK) | Overweight | 11 → 12.5

New World Development (00017.HK) | Underweight → Neutral | 4.3 → 9.5

Swire Properties (01972.HK) | Overweight | 24 → 27

Wheelock Properties (01997.HK) | Overweight | 27.5

Hang Lung Properties (00101.HK) | Overweight | 10 → 11.5

Link Real Estate Investment Trust (00823.HK) | Neutral | 38 → 36