Shenwan Hongyuan Group Co., Ltd. has initiated coverage on KERRY PPT (00683) with a target price of HK$26.4 and a "Buy" rating. The company's high-end residential development and premium IP leasing businesses are expected to drive growth.

KERRY PPT focuses on luxury residential projects and commercial properties in five key cities, positioning itself for strong future growth. The company maintains a solid financial position with a high dividend yield.

Shenwan Hongyuan forecasts net profits attributable to shareholders of HK$1.75 billion, HK$1.62 billion, and HK$4.03 billion for 2025-2027, representing year-on-year changes of +116%, -7%, and +149%, respectively. Core profits are projected at HK$2.30 billion, HK$1.88 billion, and HK$3.96 billion, with corresponding P/E ratios of 16x, 18x, and 7x.

**Key Highlights:** - **Diversified Business Model:** In 2024, KERRY PPT reported revenue of HK$19.5 billion (+49% YoY), with property development, IP leasing, and hotel operations contributing 66%, 25%, and 9%, respectively. Geographically, mainland China and Hong Kong accounted for 66% and 34% of revenue. - **Land Bank:** As of H1 2025, the company held a land bank of 49.71 million sq ft, with 76% in mainland China, 10% in Hong Kong, and 14% overseas. - **IP & Hotel Expansion:** By 2031, KERRY PPT plans to expand its IP and hotel portfolio by 36% to 28.93 million sq ft, with a 7% CAGR. - **Property Sales:** H1 2025 sales surged 130% YoY to HK$16.2 billion, driven by strong performance in Shanghai and Hong Kong. - **Financial Strength:** Net gearing improved to 38.4% in H1 2025, with a target to reduce it to the low 30% range by end-2026. The company offers a stable dividend yield of 6.9%.

**Risks:** Potential tightening of property regulations and slower-than-expected sales.