Broker: UOB Kay Hian
Date of Report: Friday, 5 September 2025
Sun Hung Kai Properties FY25 Results: Resilient Profits, Mixed Segment Performance, and Growth Prospects for FY26
Introduction: Solid Performance Amidst Market Challenges
Sun Hung Kai Properties (SHKP), one of Asia’s largest real estate developers, has released its FY25 financial results, showcasing stable earnings, mixed performance across business segments, and a clear path for recurring income growth in FY26 and beyond. The company remains committed to rewarding shareholders and is positioned to benefit from new milestone projects set to launch in Hong Kong and Shanghai.
Company Overview: Diverse Operations and Strong Market Presence
SHKP operates across property development and investment, hotels, property management, car parking, logistics, construction, and transportation infrastructure. With a market capitalization of HK\$264.9 billion, the company’s major shareholder is the Kwok Family, holding 42.1%.
| Metric |
Value |
| Share Price |
HK\$91.40 |
| Target Price |
HK\$103.00 |
| Upside |
+13.2% |
| Market Capitalization |
HK\$264.9 billion |
| Major Shareholder |
Kwok Family (42.1%) |
| FY25 NAV/Share |
HK\$178.59 |
| FY25 Net Debt/Share |
HK\$23.67 |
FY25 Financial Results: Stability with Growth Potential
SHKP reported a 0.5% increase in underlying net profit for FY25, closely aligned with consensus estimates. The results were primarily driven by:
- Robust China property development margins
- Significant reduction in finance costs
- Offset by weaker margins in Hong Kong property development
Management maintained a 50% payout ratio for dividends, reinforcing a stable income stream for investors. The target price remains HK$103.00, representing a projected 4.0% yield for FY26.
| Metric |
FY24 |
FY25 |
YoY Change |
UOBKH Actual vs Est. |
| Revenue |
71,506 |
79,721 |
+11.5% |
-0.2% |
| EBIT |
26,752 |
26,078 |
-2.5% |
-9.5% |
| Net Finance Cost |
-3,567 |
-2,485 |
-30.3% |
-10.6% |
| Attributable Net Profit |
19,046 |
19,277 |
+1.2% |
— |
| Underlying Profit |
21,739 |
21,855 |
+0.5% |
-4.3% |
| EPS (HK\$) |
7.5 |
7.54 |
+0.6% |
-4.3% |
| DPS (HK\$) |
3.75 |
3.75 |
0.0% |
0.0% |
| Payout Ratio |
50% |
50% |
Flat |
— |
Segment Analysis: Development, Investment, and Hotels
| Segment |
FY24 Profit (HK\$m) |
FY25 Profit (HK\$m) |
YoY Change (%) |
| Hong Kong Development Properties (HK DP) |
6,513 |
3,200 |
-50.9% |
| China Development Properties (PRC DP) |
1,337 |
5,090 |
+280.7% |
| Hong Kong Investment Properties (HK IP) |
13,423 |
12,956 |
-3.5% |
| China Investment Properties (PRC IP) |
5,027 |
4,864 |
-3.2% |
| Singapore Investment Properties |
550 |
572 |
+4.0% |
| Hotel |
650 |
615 |
-5.4% |
| Other Businesses |
4,859 |
4,891 |
+0.7% |
Key Financials: Historical and Forecasted Performance
| Year Ended 30 Jun (HK\$m) |
2024 |
2025 |
2026F |
2027F |
2028F |
| Net Turnover |
71,506 |
79,721 |
88,726 |
92,215 |
89,953 |
| EBITDA |
32,752 |
32,378 |
34,786 |
35,701 |
36,559 |
| Operating Profit |
26,752 |
26,078 |
28,171 |
28,755 |
30,845 |
| Net Profit (Adj.) |
21,739 |
21,855 |
22,955 |
25,043 |
26,026 |
| EPS (HK\$ cent) |
750.2 |
754.2 |
792.2 |
810.0 |
866.7 |
| PE (x) |
12.2 |
12.1 |
11.5 |
11.3 |
10.5 |
| Dividend Yield (%) |
4.1 |
4.1 |
4.3 |
4.4 |
4.7 |
| Net Debt/(Cash) to Equity (%) |
18.3 |
15.1 |
10.9 |
7.7 |
16.1 |
| ROE (%) |
3.2 |
3.1 |
3.7 |
3.7 |
3.9 |
Property Sales: Robust HK Performance, Mixed Mainland Results
- Hong Kong property sales reached HK\$42.3 billion, the highest since 2020, with strong sell-through on projects like Cullinan Sky Phase 1 and Sierra Sea.
- Victoria Harbour II contributed HK\$3.9 billion, ranking as the third largest contributor.
- Mainland China contracted sales dropped to RMB 4.0 billion (vs RMB 11.0 billion in FY24) due to a shift in saleable resources.
Margins and Impairments
- Excluding Dynasty Court, HK property sales margin was 12% (down 14ppt YoY); including it, 19% (down 7ppt YoY).
- Sierra Sea dragged margins, while Victoria Harbour boosted them.
- HK\$1.4 billion impairment provision booked for Cullinan Sky development properties.
- Land resumption gains up 3.8% YoY to HK\$1.14 billion, but expected to fall 60% YoY in FY26.
Investment Properties: Hong Kong and China Performance
- Hong Kong retail portfolio saw a 2.1% YoY decline in rental income but maintained stable occupancy cost ratios.
- Hong Kong office assets outperformed in vacancy and rental reversion.
- Mainland China: New projects (Nanjing IFC Mall, TODTOWN office) helped offset retail turnover rent declines and office rental pressure.
Occupancy Ratios
| Date |
HK Retail |
HK Office |
| Jun 25 |
~95% |
~90% |
| Dec 24 |
~93% |
~90% |
| Jun 23 |
~94% |
~91% |
| Dec 23 |
~95% |
~92% |
Growth Drivers: New Milestone Projects on the Horizon
SHKP is set to drive recurring income growth with several major projects scheduled for completion and opening in FY26:
| City |
Project |
Attributable GFA |
Schedule |
| Hong Kong |
Scramble Hill Mall |
360,000 |
Opens in phases 2H25 |
| Hong Kong |
Cullinan Sky Mall |
220,000 |
Opens from 4Q25 |
| Hong Kong |
IGC Office (West Kowloon Terminus) |
1,154,000 |
Completed end-25, handover 2026 |
| Shanghai |
ITC Office Tower B |
2,573,000 |
Complete late 25 |
| Shanghai |
Andaz Hotel |
375,000 |
Complete late 25 |
| Shanghai |
ITC Mansion (Retail) |
2,640,000 |
Opens in phases 2H25 |
Dividend Commitment: Stability and Confidence for Investors
SHKP management has reinforced its commitment to a 50% payout of underlying profit as dividends. This policy, consistently applied since 2022, enhances visibility and reliability for shareholders.
Sales Pipeline: Strong Prospects for Next 10 Months
| Project |
Stake |
Attributable GFA (sq.ft) |
| Sierra Sea 2A&2B (Ma On Shan) |
100% |
839,000 |
| Cullinan Sky Ph. 2 (Kai Tak) |
100% |
495,000 |
| Fanling Seung Shui Town Lot No.279 Ph1 |
100% |
315,000 |
| 13-23 Wang Wo Tsai Street |
100% |
201,000 |
| Cullinan Harbour Ph.2b (Kai Tak) |
100% |
186,000 |
Outlook: Valuation, Risks, and Catalysts
- Sales targets for FY26: HK\$30 billion in Hong Kong; HK\$3.5 billion in mainland China.
- Management expects improved margins for mass market and luxury projects.
- Positive signs observed in retail sales and office segment net take-up.
- Risks include lower visibility of margin recovery in HK property sales, reflected in a higher NAV discount (42%) for the target price.
- Key catalyst: Stronger-than-expected recovery in the Hong Kong property market.
Profit & Loss, Balance Sheet, and Cash Flow Snapshot
| Year to 30 Jun (HK\$m) |
2025 |
2026F |
2027F |
2028F |
| Net Turnover |
79,721 |
88,726 |
92,215 |
89,953 |
| Net Profit (Adj.) |
21,855 |
22,955 |
25,043 |
26,026 |
| EBITDA Margin (%) |
40.6 |
39.2 |
38.7 |
40.6 |
| ROE (%) |
3.1 |
3.7 |
3.7 |
3.9 |
| Net Debt/(Cash) to Equity (%) |
15.1 |
10.9 |
7.7 |
16.1 |
| Dividend Yield (%) |
4.1 |
4.3 |
4.4 |
4.7 |
Conclusion: Sun Hung Kai Properties Poised for Recurring Income Growth
SHKP’s FY25 results demonstrate resilient profits despite margin pressure in Hong Kong property development. With robust China sales, disciplined financial management, stable dividends, and a pipeline of milestone projects set to drive recurring income growth, the company remains an attractive investment for those seeking yield and long-term value in the real estate sector. The outlook hinges on a potential recovery in the Hong Kong property market, while the launch of new assets in Hong Kong and Shanghai stands as a key catalyst for future growth.
