反價潮啟動, 投行講樓市

小子最近又開始收到電話問間屋放唔放，租唔租等等。一葉知秋，應該市場好缺盤下，問下經紀，不問由自何，一問直頭嚇親，呢家啲業主叫價心雄到咁！

不過無他，太古城舊到爆全樓景，仲要唔係近地鐵都做緊1200萬起跳，海怡就算950兩房，個則無咁好，但係環境好啲，仲要平30%，實在唔係非常過份（更加唔好比西區泓X個垃圾則近啲不受歡迎設施，2房1100-1200萬）

今朝又收到親愛的JPM 講樓市 (廢話一篇)
HK property - catching the falling knife?

Dear all,

A topic which is closed to our heart

·      View on property price given stronger property supply in the market
o   Property price will go up 15% this year, so far it’s 10% and is expected to surpass target
·      Worries about rising interest rates, which will impact mortgage rate and property price
o   It should be noted that it’s not the nominal interest rate but the real interest rate that drives the property price
o   Even though we expect HK inflation to increase by 100bps following US, HK real interest rate is still negative.
o   1/3 of the inflation in Hong Kong is driven by housing rental, which usually leads the CPI by 12 months; last year we saw housing rental increased by 10%, which will further drive inflation this year.
o   There is long-term high negative correlation between real interest rate and Hong Kong property price (I really wanna laugh >.< '', 地產界有一句好中, 有分析, 無出色)

·      Income unaffordability supported by more aggressive financing
o   About 30% of the property sales is supported by refinancing;
o   Leverage ratio is currently safe in Hong Kong property market, with only 13% total leverage
o   The highest LTV was in 2003 with ~30%. LTV is more of a function of property value, where the LTV boosts up when property price drops.

·      Land Supply situation in Hong Kong
o   The most likely option to be supported by public and implemented by the government to solve the limited land supply situation will be farm land conversion
o   The potential solution supports our previous positive view on Henderson Land, which has converted several farm land already
o   One of the land supply solutions is to remove the entire terminal away from Kwai Chung. (wait until 2099 la on99)

o   Estimated impact on NAV if the terminals were converted to residential use will be HK$16.6Bn for Modern Terminals and HK$13.9Bn for HIT Terminals in terms of Present Value, which represent 21% and 40% of the current market cap respectively; although it is expected to take place in 20 years’ time.

·      Recent Land Acquisition strategy by aggressive local developer
o   From Developers’ points of view they have been conservative over the last few years. (and also for most of the property owners in the market la DLLM)
o   The recent high P&L and margin over the last two years incentivize developers to be more aggressive.
·      Investment opportunity discussion - Sino land & Henderson Land & CK Asset
o   Sino land hasn’t been a high profile developer previously as for the last four years. However, the company will launch 4 different projects from summer 2018 to Q1 2019, with gross sales of US$48Bn and US$42Bn net cash inflow. On top of the current net cash, there will be
US$ 63bn net cash in 12-month time, which represents 74% of its current market cap.
o   Dividend hike is expected from increasing net cash flow; on average Sino has ~40% margin from the projects; the company has a track record of increasing dividends when disclosing projects.
o   Henderson Land is expected to benefit from farm land conversion.
o   CK Assets – Center transaction is a done deal and S&P signed; Share buyback from the company is not expected and this signals the probability that the company is waiting for a large investment where the cash will be used.

·      Retail segment
o   Strong retail sales with shopping malls reporting 20% ~30% YoY retail sales growth; While people usually believe that retail sales drives up retails rent, this is not going to be the case anymore.
o   Rental income used to be very sensitive to rental sales back in 2012; However when retail market is on the down trend, a lot of retail landlord asked for a much higher proportion of base rent and smaller proportion of rent turnover rate when renewing the lease with tenants, trying to put themselves in a more defensive position. Since then the rental income has been less sensitive to retails sales during upsides and there has been disconnection between retail sales and rental income.
o   Occupancy costs for mall operators are still stretched
o   Investing directly in retail segment won’t be actively advised.

·      Link REIT
o   Link REIT’s share price has grown over 10 times since its listing with low volatility
o   Even if the shopping mall is only reporting 6-7% retail sales growth, rental sales growth as well as reversion remain strong.
o   Link REIT’s management has realized that they cannot always rely on organic retail growth in HK so they are heavily engaged in share buyback and actively look for opportunity for new investments in China shopping malls from which they generated decent revenue.