【研究报告内容摘要】
A hefty effective price cut by as much as 25%
Over the weekend, SHKP priced 181 units (out of 311 inventory units) at TheCullinan atop of Kowloon Station at ASP of HK$29k psf (at par to secondary market)on saleable area. To facilitate sales, SHKP provides various discounts andincentives including 1) 3% discounts for SHKP club members, 2) 2% discount fornot seeking second mortgage, 3) 3-9% cash rebate for shorter payment period and4) rebate of 70% on stamp duty. As such, a purchaser is entitled to a maximum of25% savings of total cost (purchases price plus stamp duty rebate) or effective ASPof HK$22-23k psf.
Still decent margins of 50%-60% expected
We estimate SHKP can still achieve a high 50-60% margin after offering variousdiscounts/rebates, down from 70-80%. We believe the remaining 311 units wouldsell well, fetching estimated proceeds of HK$8-9bn. It is positive to SHKP as 1) Itwould lock in 40% of its HK$19bn sales target. 2) It would lock in HK$4-5bn ofdevelopment profit in FY14 (vs. HK$6.1bn achieved in FY13), which providessupport to earnings and dividends. 3) It helps generate cash flows which wouldlower net gearing (FY13:12.5%) and help fund the land payment of RMB21.7bn forShanghai Xujiahui land.
70% cash rebate on stamp duty comes as a surprise
The offering of 70% rebate on stamp duty is out of our expectations. This representsan effective price cut of as much as 16%. We have forecasted 20-25% drop inresidential prices and cut our NAV by 10% in early July. Even if we assume thiscash rebate to apply to all SHKP’s projects, this would reduce our NAV by around3%. In our view, this incentive would only apply to luxury projects with higherpercentage of potential mainland buyers and investors as this help alleviate theirstamp duty burden. A more near-term impact of the launch of The Cullinan would beon NWD’s upcoming launch The Austin. If we assume 10% discount on ASP forAustin vs. The Cullinan and same discounts/incentives offering, The Austin couldfetch a margin of 18%. This would lower our NAV for NWD by 0.6%.
Speed up property price correction; Volumes to rebound
In our view, developers’ price cuts for primary launches should help speed upphysical property price correction. Primary volumes are likely to rebound to a normallevel of 1,000 units a month. We believe developers with higher exposure to luxuryflats would be impacted more as they have to offer similar discounts/incentives asSHKP to facilitate primary sales. The developers which bought land recently at highprices such as Kerry and some mid/small developers would have less room to cutprice. They have to sell at a thin margin/no profit or hold on to the property. Hence,CK is our top pick with its more exposure to mass property and strong performancefor Hutch followed by NWD and SHKP due to attractive valuations.