CK Prop leads HK major developers YTD

Thanks to outstanding sales performance.

It has been noted that CK Property illustrated the effectiveness related to recent group reorganization by offering flexible pricing to capitalize on robust buying demand in the HK market.

According to a research note from Jefferies, YTD, the company has led the pack of all HK major developers as a result of outstanding sales performance.

Based on Midland and CRIC, it has recorded aggregate property sales of HK25.3bn as of June 4, implying c67% and 2.2x higher than its closet peer SHKP and the average of the four other major developers respectively.

With HK property sales that exceed HKD20bn, CK Prop already secured almost 70% of its HKD30bn sales target in 2015; suggesting high earnings visibility.

Here's more from Jefferies:

Value creation through group reorganization. Benefiting from the removal of holdco discount through group restructuring, on our estimate market value of Cheung Kong Group including CKH Holdings and CK Prop has increased HKD216bn to a total value of HKD702bn since the announcement of reorganization proposal in early Jan 15.

Only within the last eight trading days, about HKD65bn was created through the spin-off of CK Prop into a standalone property entity. This watershed event clearly demonstrated management's capability to unlock the group value to benefit its shareholders.

In regard to the Hang Seng Index, the group's weighting expanded from 4.55% in early Jan to 5.35% as at June 5. We reckon the increase in its significance in the index will enhance fund flows into either one or both of the group companies.