Sun Hung Kai Properties Ltd.

Overview Key strengths Key risks Leading market positions in residential development and commercial leasing businesses in Hong Kong. Limited geographic diversity with more than 70% of profit coming from Hong Kong. Robust recurring income from a sizable and diversified leasing portfolio that accounts for close to half of earnings. Consistently strong liquidity and good rental income to interest coverage. An abundant sales pipeline of mass-market residential projects and strong execution will allow SHKP's property sales in Hong Kong to rebound in fiscal 2022 (year ending June 30, 2022), with the company likely to achieve its medium-term annual sales target of HK$40 billion. Tepid sales performance of HK$23.3 billion in fiscal 2021 was mainly due to a delay in obtaining pre-sale

...Sun Hung Kai Properties Ltd.'s (SHKP) contracted sales set to rebound. An abundant sales pipeline of mass-market residential projects and strong execution will allow SHKP's property sales in Hong Kong to rebound in fiscal 2022 (year ending June 30, 2022), with the company likely to achieve its medium-term annual sales target of HK$40 billion. Tepid sales performance of HK$23.3 billion in fiscal 2021 was mainly due to a delay in obtaining pre-sale consents for its major projects. We expect sales in Hong Kong will reach about HK$50 billion per year in fiscals 2023 and 2024, supported by SHKP's ample residential land bank of over 17 million square feet (sqft). Property sales in mainland China for the company will likely be lower than last year's level of HK$5.7 billion due to the softening residential property market. We project sales in China to be HK$5 billion in fiscal 2022....

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