Goldman Sachs has released a research report noting that SHK PPT's (00016) fiscal year 2026 results, ending June, were in line with expectations. Excluding property fair value losses, underlying net profit rose 5% to HK$22.9 billion, matching both the bank's and market forecasts. Hong Kong property sales exceeded targets, development property margins are on track for recovery, and the company recorded gains from agricultural land resumptions.

The firm reiterated its "Buy" rating, slightly trimming its target price from HK$170 to HK$169. The report highlights that the company's first-half underlying net profit growth was supported by a reduction in effective borrowing costs to 3% and lower debt balances.

Hong Kong's attributable contracted development property sales reached HK$38.1 billion, surpassing the company's conservative target of HK$30 billion and the bank's projection of HK$37 billion. Mainland development property sales were RMB 220 million. The full-year development property margin was approximately 11%, improving to 15% in the second half.

The company also recorded HK$1.1 billion in compensation and HK$400 million in corresponding gains from agricultural land resumptions along the San Tin and Northern Link corridors, with an additional HK$2.2 billion in related compensation expected to be recognized in fiscal year 2027.

Management has guided for contracted development property sales of HK$33 billion in Hong Kong for fiscal year 2027, anticipating further margin recovery to high-teens percentages. The bank forecasts sales of approximately HK$34 billion and expects underlying net profit to grow 12% year-on-year to HK$25.6 billion.

Rental portfolio revenue and EBIT rose 2% and 1% year-on-year, respectively, last fiscal year. The final dividend per share was HK$2.93, up 5% year-on-year, bringing the full-year total dividend to HK$3.91 per share, a 4% increase that met market expectations. The underlying earnings payout ratio remained at approximately 50%.

In response to the latest business trends and property timeline, the bank has lowered its earnings per share forecasts for fiscal years 2027-2028 by 5% to 6% and introduced estimates for fiscal year 2029. Goldman believes that as a leading Hong Kong developer and landlord, the company is well-positioned to benefit from a multi-year upcycle in the Hong Kong property market, with its current valuation remaining attractive.