Frequent new primary launches
? During the virtual conference, Sino said that it is launching Villa Garda in
Lohas Park after upbeat sales performance at Grand Mayfair I and II.
? Management is keen to replenish land in HK and the Greater Bay Area.
? Management is committed to sustainable growth in DPS (50-60% payout
based on our records). We reiterate our Add call with a TP of HK$12.1.
Frequent new primary launches in recent months
? Grand Mayfair I and II (Kam Sheung Road Station Package One) have in aggregate
achieved 95% sell-through rate while pre-sales of Grand Victoria is ongoing.
? Sino is launching Villa Garda (Lohas Park Package 11) with K. Wah and China
Merchant Land, which supplies a total of 1,880 flats.
? Management thinks that homebuyers’ reaction to interest rate hikes is being factored
in and that the current absolute level of HK’s mortgage rates is still low. Hence,
management believes that HK’s residential property market will continue to benefit
from robust local demand.
Interested in selective landbanking in HK
? Sino’s management is keen to acquire land in HK and the Greater Bay Area, and
believes that the HKSAR Government will continue to take action to increase land
supply in HK.
? While it has not purchased any parcels from the locations above so far in FY6/22F,
according to our records, it has acquired two projects in Singapore: i) a 25% effective
stake in a JV for redeveloping Golden Mile Complex, and ii) a 20% stake in a mixeduse development in Jalan Anak Bukit.
? Sino is open to taking up project stakes from Chinese developers with liquidity
problems. Several months ago, it acquired an additional 6.75% stake in Grand Victoria
from Shimao Group (813 HK, Hold) and boosted its total stake in the project to
29.25%.
HK retail tenants resuming normal operations
? Sino granted rental relief to retail tenants in HK on a case-by-case basis during the
fifth wave of Covid-19 outbreak. Management expects the absolute amount of rental
relief to be much smaller than in previous fiscal years.
? Management is glad to see retail tenants resuming normal operations after the launch
of the second round of the Consumption Voucher Scheme (CVS), with a rebound of
footfall in its malls.
? Management expects the HK office market to remain challenging, on the back of
plenty of new completions, e.g. in Kwun Tong and Kowloon Bay.
? Sino is developing two parcels in Qianhai, which will be developed into serviced
apartments and a commercial development, with an attributable GFA of 500k sq ft for
rental purposes.
Reiterate Add with a TP of HK$12.1
? Management is committed to sustainable growth in DPS; based on our records, Sino’s
payout ratio was 50-60% for most of the time over the past 10 fiscal years.
? We reiterate our Add call for Sino with a TP of HK$12.1, based on a 40% discount to
NAV of HK$20.1. We believe that its share price strength in the past two months
should be maintained, on the back of the launch of the Phase 1 of Villa Garda.
? Key downside risks are prolonged closure of HK’s borders and further decline in
occupancy of its IP portfolio. Stronger DP pre-sales and recovery in occupancy for its
IP portfolio are potential re-rating catalysts.