The report from "The Big Banks" predicts a rebound in Hong Kong's residential profit margins, with New World Development and Henderson Land as the main beneficiaries

HSBC Global Research report indicates that despite a slight decline in the profits of Hong Kong property stocks in the second half of last year, more companies have raised their outlook guidance. Blue-chip stocks such as Sun Hung Kai Properties (00016.HK) and Cheung Kong (01113.HK) have resumed dividend growth, which helps support investor confidence in the industry's prospects. At the same time, with increased capital circulation activities and expectations of improved shareholder return plans, the overall performance of companies may surprise.

Among the sub-sectors, the bank believes that the residential market shows positive momentum for improvement. Supported by increased sales and rising average prices, the bank expects the profit margins of the residential business to rebound. In terms of office buildings, although the extent of negative rental growth is narrowing, the overall office market still faces pressure, while more signs of bottoming out have appeared in Central office buildings. Additionally, although the overall market has improved, the performance gap between high-end shopping malls and essential goods malls is widening.

The bank believes that Sun Hung Kai Properties and Henderson Land (00012.HK) will be the main beneficiaries of the residential market recovery cycle, with target prices of HKD 150.6 and HKD 35.8, respectively; Hysan (00014.HK) also presents investment opportunities, as its mall portfolio is expected to benefit from consumption growth driven by wealth effects and increased visitor numbers, with a target price of HKD 23. Furthermore, Swire Properties (01972.HK) is transforming into a comprehensive owner, which is favorable for its valuation reassessment, with a target price of HKD 30.2. All of the above stocks are rated as "Buy."