Date
27 September 2024

Broker
MIB Securities (Hong Kong) Ltd

Overview of CK Asset

CK Asset (1113 HK) is highlighted in the report as a key player in the Hong Kong property market. The company is recommended due to its attractive valuation and favorable positioning in the market. CK Asset’s current forward price-to-earnings ratio (PER) is 8x, which is considered low compared to the industry average of 10.5x. This makes CK Asset an appealing option for investors looking for undervalued opportunities in the property sector.

Market Conditions Impacting CK Asset

Hong Kong’s rental market has seen a strong rebound, with rents climbing for six consecutive months to reach a five-year high. This is driven primarily by the influx of mainland students and expatriate professionals, particularly in the banking sector, taking advantage of various immigration and education policies. However, while rents have surged, residential property prices have hit an eight-year low, creating a divergence between property prices and rental costs.

CK Asset’s Potential for Market Recovery

The report notes that the gap between mortgage payments and rental yields is shrinking, which could encourage potential buyers to enter the market. With the Hong Kong Monetary Authority (HKMA) recently cutting rates, CK Asset is well-positioned to benefit from increased property purchases as rental yields rise above mortgage rates. This environment is expected to lead to a market recovery in the upcoming quarters, which could enhance CK Asset’s overall performance.

Strategic Outlook for CK Asset

CK Asset’s relatively low valuation compared to its industry peers positions it as a strong candidate for investors. The company’s ability to leverage the market recovery, supported by lower funding costs due to the rate cut, could enhance its profitability. Investors are advised to monitor how CK Asset and other developers respond to the market, particularly in terms of pricing strategy for new property launches.