Hong Kong Property: 1H26 Result Preview: Upside in Margin, EPS & DPS Taking Shape

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Hong Kong Property: 1H26 Result Preview: Upside in Margin, EPS & DPS Taking Shape

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09 Jul 2026 13:10:22 ET │ 11 pages

Hong Kong Property

1H26 Result Preview: Upcycle in Margin, EPS & DPS Taking Shape

CITI'S TAKE

Griffin Chan AC

Positive preview on 1H26 results; focus on DPS upside & forward +852-2501-2438

guidance — We enter 1H26 with positive expectations: (1) development griffin.chan@citi.com

margin recovering to est.13-18% (vs 1H25: 3-8%); (2) revenue recognition

backed by strong sales, which tend to include 20-30% from completed Cindy Li AC

units; (3) positive rental reversions across China retail, and narrower +852-2501-2710

negative reversions elsewhere; (4) finance cost improved on less debt (on cindy.li@citi.com

property sales & capital recycling), despite reduced interest capitalization

on new assets. We forecast DPS growth for Swire Properties & HKLD on

committed mid-single-digit increase; SHKP & CKA on EPS growth under

pre-set payout ratios. As profit is backward looking, investors are likely to

focus more on forward indicators at 1H result (e.g., sales target, margin

guidance, reversionary outlook, leasing of new assets, capex & FCF

position). We favor stocks with improving FCF and shareholder returns.

Stock picks: Swire Properties, SHKP, CKA, Link REIT.

Earnings bounce led by development profits; CN retail also positive — [1] Strong

growth: Henderson Land (we expect 1H26E earnings increase >30%yoy given

est.Rmb10bn+ DP revenue recognition at 17-18% OPM), Swire Properties (+30%yoy

to c.HK$4.5bn, including c.HK$1bn profit from the HK$2.2bn sale of Houses at 6

Deep Water Bay Road, and 3-5%yoy rental profit growth). [2] Moderate growth:

Hongkong Land (+7-10%yoy on lower finance cost with declined debt scale after