STOCKWATCH: SHK Properties lower in line with market/ahead of results

HONG KONG (AFX-ASIA) - Sun Hung Kai Properties Ltd shares were lower in line with the general market and ahead of the release of the company's six months to December results today, dealers said. They said, however, that the impending release of the company's results is not a factor in the weakness of the share price. At 11:15 am, Sun Hung Kai Properties was down 1.25 hkd at 78.0 on volume of 1.232 mln shares. The Hang Seng index was down 125.57 points at 13,378.60 while the property sub-sector lost 239.34 points to 18,034.55. An analyst with a foreign brokerage said Sun Hung Kai Properties' net profit is expected to be better than what some analysts are estimating. She said she expects a 1.0 pct hike in net profit for the six months to December. She said Sun Hung Kai Properties' management has already made it clear that the company will not be making provisions for its joint-venture Ocean Shores project. Swire Pacific, its joint-venture partner, made a 1.7 bln hkd provision for Ocean Shores development. She said the stock was not reacting to impending results but rather to the volatile general market. Dao Heng Securities' Eric Yuen said he is looking at a 10 pct drop in net profit to 4.735 bln hkd, adding that the market consensus is around 4.7-5.3 bln hkd. He said he is attributing the fall in net profit growth to a higher base level as the company recorded an exceptional gain the previous year from the sale of its stake in China Mobile. He does not see the company reporting exceptional profits for the first half. Yuen said he is recommending a 'hold' on the stock as valuations are unattractive based on historical standards. However, he said in a scenario of falling interest rates and improving residential property market, the long-term outlook for the sector looks promising.

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