Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Thematic (Sector/Industry)

<ul>
<li>2025 YTD, HK/China RE companies rebounded from recent lows (10% - 30%), and we think this will continue and turn into a sector re-rating</li>
<li>A combination of reduced global geopolitical tensions, expected monetary easing from US, China’s fiscal and monetary stimulus, HK’s robust capital inflow and lower interbank rate will support re-rating</li>
<li>Despite recent rebound, valuation remains attractive.  We recommend LONG COLI 688 HK and SHKP 16 HK.  For higher risk tolerance and higher beta, we recommend NWD 17 HK</li>
</ul>


2025 YTD, HK/China RE companies rebounded from recent lows (10% - 30%), and we think this will continue and turn into a sector re-rating
A combination of reduced global geopolitical tensions, expected monetary easing from US, China’s fiscal and monetary stimulus, HK’s robust capital inflow and lower interbank rate will support re-rating
Despite recent rebound, valuation remains attractive.  We recommend LONG COLI 688 HK and SHKP 16 HK.  For higher risk tolerance and higher beta, we recommend NWD 17 HK


HK/China Real Estate Bottoming Out, Upcoming Re-Rating with Multiple Catalysts

Equity Bottom-Up

Sun Hung Kai Properties / Equity Bottom-Up

<ul>
<li>MSCI China has rallied 19% YTD, outperforming DM and EM by 18% and 14% respectively.  We think it makes sense to look at China and Hong Kong again</li>
<li>Part of the rally is driven by AI optimism.  In terms of fund flow, we are seeing increasing south-bound fund flow to HK equity market at a fast pace</li>
<li>We think Sun Hung Kai Properties, which is a proxy for Hong Kong, may benefit and play the catch up game on the back of very attractive valuation</li>
</ul>


MSCI China has rallied 19% YTD, outperforming DM and EM by 18% and 14% respectively.  We think it makes sense to look at China and Hong Kong again
Part of the rally is driven by AI optimism.  In terms of fund flow, we are seeing increasing south-bound fund flow to HK equity market at a fast pace
We think Sun Hung Kai Properties, which is a proxy for Hong Kong, may benefit and play the catch up game on the back of very attractive valuation


Seeking Value and Safety in HK/China: SHKP 16 HK

<ul>
<li>After announcing full year results, one investment bank revised down share price target excessively (we will look at reasons).  On Monday, HSBC also announced adjustment of mortgage rate cap</li>
<li>These 2 events caused a sell-off in the property sector, SHKP, in particular, was down 10% and trading at HKD80 per share. We think it is overdone</li>
<li>At this valuation, market is pricing in super bearish scenario.  At 0.38x P/B, I think it is a bargain to buy now.  It is a value trade.</li>
</ul>


After announcing full year results, one investment bank revised down share price target excessively (we will look at reasons).  On Monday, HSBC also announced adjustment of mortgage rate cap
These 2 events caused a sell-off in the property sector, SHKP, in particular, was down 10% and trading at HKD80 per share. We think it is overdone
At this valuation, market is pricing in super bearish scenario.  At 0.38x P/B, I think it is a bargain to buy now.  It is a value trade.


Sun Hung Kai Properties (16 HK): After Excessive Price Correction, Why I Think It Is a Bargain! BUY

<ul>
<li>1M HIBOR has declined by 300bps to 0.6%, which is a sharp decline. Mortgage rate, which is tied to HIBOR, will have to be adjusted downward</li>
<li>Mortgage rate declines, affordability will improve, and there is positive carry.  Developers will enjoy lower borrow cost and better earnings. 100bps change in rates leads to 2% earnings impact</li>
<li>However, the HIBOR decline can reverse, if capital flow changes and affects HKMA’s aggregate balance.  US/China interest rate movements and geo-political risks also have to be monitored closely</li>
</ul>


1M HIBOR has declined by 300bps to 0.6%, which is a sharp decline. Mortgage rate, which is tied to HIBOR, will have to be adjusted downward
Mortgage rate declines, affordability will improve, and there is positive carry.  Developers will enjoy lower borrow cost and better earnings. 100bps change in rates leads to 2% earnings impact
However, the HIBOR decline can reverse, if capital flow changes and affects HKMA’s aggregate balance.  US/China interest rate movements and geo-political risks also have to be monitored closely


Quick Note: 1M HIBOR Decline by 300bps – Implications for Hong Kong Real Estate

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. </li>
<li>That would be That is Special Stamp Duty, Buyer's Stamp Duty, New Residential Stamp Duty. "Measures no longer necessary given the current economic and market conditions."</li>
<li>This should cause people to get excited short-term about property developers.</li>
</ul>


RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
That would be That is Special Stamp Duty, Buyer's Stamp Duty, New Residential Stamp Duty. "Measures no longer necessary given the current economic and market conditions."
This should cause people to get excited short-term about property developers.


Hong Kong To Scrap All "Spicy Measures" (Property Cooling Measures)

Hong Kong

Sun Hung Kai Properties Limited develops and invests in properties. The Company operates and manages hotels, properties, car parking, and transportation infrastructures. Sun Hung Kai Properties serves customers in Hong Kong.

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Sun Hung Kai Properties (16 HK)

HK/China Real Estate Bottoming Out, Upcoming Re-Rating with Multiple Catalysts

2025 YTD, HK and China developers have rebounded 10-30%. We think the re-rating will continue, driven by 1) reduced global tensions 2) US rate...

Jacob Cheng

Seeking Value and Safety in HK/China: SHKP 16 HK

MSCI has ralied 19% YTD, we think it makes sense to re-visit Hong Kong and China again. Sun Hung Kai Properties, the largest real estate company...

Jacob Cheng