复苏正在进行，但好事多磨；将CKA评级上调至买入

Recovery underway, but all good thingstake time; upgrade CKA to Buy Rating Change Move home price rebound to 2H26E; upgrade CKA to BuyIn view ofthestrong volume recovery in 9M25, we pull forward our expectation for 29 September 2025Corrected rebound in home prices from 2027 to 2H26 (+3%), with another 5%liftin 2027E. Whileinventory destocking and stagnant household income suggest an L-shaped marketrecovery with flattish home prices near term, we may see a virtuous cycle developing forretail and office segmentstoo. We upgrade CKA to Buy (new PO of HK$42),as 1) CKAhas been a laggard in the YTD developer rallyat only 9x FY26E P/E;2) we believe CKA’searningsandDPS have bottomed, and it can benefit from 2H26-27Ehome price recoverythanks to proactive landbanking (3mn sqftGFA) in 2021-22;and3) there may be upsideto EPS/DPS if CKA succeeds in its efforts to buy distressed HK assets/loans. Overall, welike CKA and Sino Land among developers, Hang Lung and Swire Prop among landlords,andSUNeVisionasanAI growth beneficiary. WereiterateU/Pon NWD andMTR. EquityHong KongReal Estate/Property Karl Choi, CFA>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 3108karl.choi@bofa.com Fan Tso, CFA>>Research AnalystMerrill Lynch (Hong Kong)+8523508 2875fan.tso@bofa.com Expect HK developer EPS/DPS to resume growth in FY27 We raise our PO by 3%on averageon higher NAV estimates, as well as lower NAV targetdiscount for select names. We also reviseupour FY25-27E earnings by0-4%on averageand expectsomedevelopers to seeearnings rebound in FY27. After the 20%+share-price rally YTD, we believe valuation repair for the sector is now complete (NAV discount1SD narrower than average since 2018 for developers and inline with average forlandlords). Stronger confidence inhome price/earningsrebound ahead is likely the nextcatalyst needed for a major re-rating, but until then(likely 2Q26), we favor names withabove-average and sustainable dividend yields. HK developers trade at 4.3% dividendyield; their yield spread over 10-year UST is 1SD below average. HK landlords trade at5.6% dividend yield, while their yield spread over UST is slightly above average. NAV and earnings sensitivity to home price growth For every 5% increase in home prices, we estimate a 1% boostto developers’NAV, a 2-6% boost to FY26E EPS (led by Sino and Kerry),and 3-8% boost to FY27E EPS (led bySino and CKA).SHKP’s earnings sensitivity is at the lower end of the peers’range givenits large rental incomebase, though it has the highestnumberof inventory units. Primary ASP discount could narrow; inventory analysis Usingour latest assumption of 19-20k primary transactionvolumeeach in 2025 and2026,we expectdestockingtoaccelerate, and thenumberofunits launched but unsoldtodropfrom21k units as of end-1H25to<10k units in 2027 (vs.thehistoricalaveragesince 2008 of 11-12k units). Based on our estimates, SHKPhasthe most launched butunsold inventory of 3.5k units (attributable basis),followed by HLD (2.6k units) andWheelock (1.5k units). According to Midland, primary units were sold at an average discountof 8%to secondary pricesin 2Q25, narrower vs. thetrough of 12% discount in 2Q24.We note that somehome buyershavestarted to make profit by flipping new home units–an early indication that the primary market discount could continue to narrow. For Glossary, pleaseseeExhibit 43. Upgrade CKA to Buy, lift PO to HK$42 We upgrade CKA from Neutral to Buy as a laggard developer stock amid an L-shapedrecovery. We like CKA because of the following reasons. 2022 vintage HK landbank to provide development upsideGiven CKA’s focus on quick asset turn, it does not have the most saleable residential resources immediately available to take advantage of any sharp rise in property prices.However, we only expect HK property prices (especially primary) to be flattish for thenext nine months anyway, as developers focus on destocking. On the other hand, into2H26 and 2027, CKA seems well positioned among HK developers to benefit from ourprojected rise in home prices then, thanks to its acquisition of 4.0mn sqft GFA of HKland sites in 2020-22, which could in turn provide HK$57bn of fresh saleable resources.As land prices had already started to decline in 2022, we project CKA’s 2022 vintage HKlandbank to provide respectable 10%+ gross margins. In turn, we project a recovery inHK DP margins to result in 12% growth in core profit in FY27. In fact, HK DP represents15% of CKA’s GAV, similar to SHKP’s 15%. Assuming CKA’s 600k-sqft Victoria Blossom project on the former Kai Tak Airportrunway would have launched by then, the following is a list of CKA’s new projects thatcould be available for presales in 2H26 and 2027. CKA could have HK$50b plus of new saleable resources available for presales in 2H26 and 2027 Optionality from bottom-fishing in HK propertyCKA has stated that it is interested in acquiring HK property assets from distressed developers, or non-performing real estate loans from HK banks. Gi