Sun Hung Kai Properties 0016

[winston]

Sun Hung Kai Rode Boom to Become World's Second Largest By Kelvin Wong

Sun Hung Kai Properties Ltd. (16), the Hong Kong developer at the center of a corruption probe, started by investing in industrial buildings and survived a family brawl to become the world's second-largest real estate company by value.

The builder of Hong Kong's tallest office tower listed on the city’s stock exchange in 1972 and went on to benefit from a three-decade surge in home prices.

The company's stock market value stands at more than $30 billion, with assets of HK$442 billion ($56.9 billion) as of December.

It lost $4.9 billion of market value today after anti-graft investigators arrested the billionaire brothers who run it.

http://www.bloomberg.com/news/2012-03-2 ... rgest.html

[winston]

Behind the Arrests of Hong Kong's Property Tycoons

The investigation is said to center on Rafael Hui, who allegedly disclosed confidential information to Sun Hung Kai pertaining to certain parcels of land.

Developers are known to have close links with officials, some of whom later benefit by retiring early and taking well-paying jobs with the developers. Land use decisions and sales procedures have often been seen to favor them at the expense of smaller developers and the public.

The ICAC reports only to the chief executive who has thus had the final say in prosecutions leading to suspicions in the past that big fish would be allowed to go free to avoid wider scandals leaving the ICAC to focus mainly on low level corruption by petty bureaucrats and police.

The ICAC has mostly been headed by a rising bureaucrat whose career might suffer from stirring up too much mud.

http://www.asiasentinel.com/index.php?o ... Itemid=204

[winston]

Sex and betrayal in the Kwok family

EVEN before last week, the Kwok family story had all the juicy ingredients of a Hong Kong TVB drama serial – a dynasty of billionaires, a kidnapping, feuding siblings, a mistress, charges of mental illness, a bitter boardroom coup, a family torn apart.

Now add dramatic arrests and allegations of corruption involving the highest levels of government.

http://biz.thestar.com.my/news/story.as ... c=business

[winston]

vested

DJ MARKET TALK: SHKP Down 3.8%; N/T Pressure, Possible M/T Opportunity

1024 [Dow Jones] SHK Properties (0016.HK) is down 3.8% at HK$92.85 (the worst-performing blue chip again) on top of its 13.1% slump Friday on news of arrest of its co-chairmen by ICAC on suspicion of corruption.

Citic Securities believes the stock in the near term will succumb to heavy selling pressure as investors wish to reduce exposure to the stock to minimize further potential downside risks;

Still, the stock "offers attractive upside potential in the medium term," as 90% of the property firms' assets are completed investment properties or properties under development for sale, which are very tangible, cash flow generating and, to some extent, liquid.

Trading volume is again heavy at HK$1.49 billion, accounting for 13.1% of Hong Kong market's total volume so far.

Source: Dow Jones Newswire

[winston]

vested

DJ Sun Hung Kai Says Development Projects In Pipeline On Track - Sources

HONG KONG (Dow Jones)--Blue-chip developer Sun Hung Kai Properties Ltd.(0016.HK) has said development projects in its pipeline remain on track, despite the high-profile bribery probe into the company, people familiar with the situation said Monday.

Sun Hung Kai's chief financial officer, Patrick Chan, said on a conference call with some investors that the blue-chip firm's business operations were normal, the people said.

Chan didn't elaborate on sensitive issues such as the investigation against the company's two chairmen--Thomas and Raymond Kwok--who were arrested last week on suspicions of corruption.

The company's efforts came as Sun Hung Kai's stock continued to slide, ending down 2.2% at HK$94.40 Monday after it slumped 13.1% Friday.

The chairmen were arrested Thursday by the Independent Commission Against Corruption on suspicion of corruption, in the most high-profile bribery scandal to rock this international financial center.

The enquiry is continuing and no one has been charged. Thomas and Raymond Kwok have both appeared at work Monday.

JPMorgan analyst Lucia Kwong said the arrest of Thomas and Raymond Kwok may have brought about an irreversible change in investors' perception of the firm's corporate governance standard.

"While the arrests are priced in, there may be an imminent slowdown of strategic development, as a result of the lack of segregation between shareholder and management," Kwong said in a report.

"In our view further uncertainty prevails--management changes in the worst case should the chairmen step down from the board," Kwong said.


Source: Dow Jones Newswires

[winston]

vest

DJ MARKET TALK: SHKP +2.9%; Kwok Brothers To Meet Reporters

1430 [Dow Jones] SHK Properties (0016.HK) rebounds more in the afternoon and is up 2.9% at HK$97.10, a 4.0% turnaround from its intraday low of HK$93.40.

Investors are perhaps hoping that its co-chairmen would offer some clarity with regard to ICBC's bribery probe, with Thomas Kwok and Raymond Kwok set to speak to reporters at 0730 GMT.

Still, such hopes may be unrealistic, as it's most likely the Kwok brothers won't be able comment too much specifically on the ICAC arrest, and more likely will only try to reassure investors about the company's operations remain on track.

Such an assurance wouldn't be able to spur the share price too much.

SHKP tumbled 15.0% Friday and Monday following news of arrest of its co-chairmen. Volume is heavy at HK$1.66 billion.

Source: Dow Jones Newswire

[winston]

vested

Valuation/Recommendation

Risk/reward trade-off unappealing.

Before the high-profile arrest, we set our fair price based on target discount to NAV of 18% (13% historical mean less 5% to reflect higher policy risk for the Hong Kong market now than in the past).

Even if the investigation comes to an amicable outcome, we doubt SHKP will regain the premium rating it used to have over its peers (from high transparency and relatively solid corporate governance), meaning the stock will be de-rated over the long term due to this incident.

We expect share price will settle between mean less 1SD (the best case, ie both Thomas and Raymond Kwok are dismissed without charges) and mean less 2SD (the worst case when both chairmen are convicted of bribery), ie HK$105.50 and HK$82.00.

In the worst case, even the appointment of a new head will not dispel the concern on how well the new leader will be able to work with the rest of the management team straightaway.

We set our target price tentatively at mid-way between these two scenarios, ie at HK$93.70.

Our SELL rating reflects our view that the risk/reward trade-off still looks unattractive at this point.

Source: UOBKH

[winston]

Arrested Hong Kong billionaires say did "nothing wrong" By Alison Leung

HONG KONG (Reuters) - Hong Kong's billionaire Kwok brothers, whose arrest last week on suspicion of corruption has gripped the financial hub, said on Tuesday they had done nothing wrong and insisted it was business as usual at the family conglomerate they jointly run.

"I can tell you definitely that I personally did not do anything wrong and I believe that Thomas Kwok has done nothing wrong," Raymond Kwok told reporters as the pair faced the media at the company's headquarters in Hong Kong's busy Wan Chai district, in their first public appearance since their arrests.

"There is one thing I must say to you: 'Don't worry, here at SHKP it is business as usual'," said Thomas Kwok, reading in Chinese from a prepared statement as the company's executive directors stood behind the brothers in a show of solidarity

"I feel that a lot of long funds are still hanging on to the stock as it is such a quality stock and you can't just panic and sell," said Sylvia Wong, an analyst at UOB Kay Hian.

http://www.reuters.com/article/2012/04/ ... sinessNews

[winston]

vested

Sun Hung Kai a Buy Despite Worries Over Governance: Analysts By: Ansuya Harjani

The Kwok brothers attempt to reassure investors at a public appearance this week might not have helped lift Sun Hung Kai Properties’ share price, but analysts say further downside is limited and recommend buying the stock at current levels.

“I think the short-term concerns about corporate governance have been priced into its share price,” Dickie Wong, Executive Director of Hong Kong-based Kingston Securities told CNBC on Thursday.

He sees a further fall in the share price to be limited with the support level for the stock at HK$90 ($11.5) - six percent lower than current levels.

Wong adds that the company also looks attractive on a valuation basis, trading at 0.8 times price-to-book, which he says is relatively low compared to other local property stocks.

Shares of Sun Hung Kai Properties [0016.HK 95.90 -0.30 (-0.31%) ] have fallen more than 14 percent since the arrest of its billionaire owners on suspicion of corruption on March 29. The Kwok brothers were later released on bail.

The company’s share price has not recovered even after the chairmen Raymond and Thomas Kwok professed their innocence at their first public appearance since the arrests, on Tuesday. They also told investors it was “business as usual” at the property firm.

Donald Han, Senior Advisor at real estate services firm HSR Property Group, agrees that investors should take advantage of the recent weakness in the stock to increase their exposure to the company.

“On a stock basis, it’s still a blue chip company. If there is an opportunity to buy it cheaper now, taking advantage of the market situation, this could be your best bet to do so,” Han said.

“Investors will not treat them (Sun Hung Kai) any differently (and) will continue to support them,” he added.

However, some brokerages including Barclays Capital [BARC.L 219.30 0.80 (+0.37%) ] and Citi [C 34.79 -0.25 (-0.71%) ] have downgraded the stock since news of the arrest.

Last Friday, Barclays downgraded the stock to '3-Underweight' from '2-Equal Weight' with a 12-month price target of HK$92.16. Citi also dropped the rating on the share from 'Buy' to 'Neutral'. It lowered its target price to HK$115.95 from HK$165.64.

Han says in a worst-case scenario where the Kwok brothers are found guilty, their share should be spilt from the company, which should then exist as “a separate legal entity.”

“The company needs to be sheltered away from negative outcome and negative news, if indeed it happens,” he said.

However, Wong and Han say investors should not loose sight of the fact that the company is among the top property developers in Hong Kong.

“As a group itself nothing has changed in terms of its ability to deliver quality products especially property developments in the near future,” Han said.

Wong adds that he is confident of the company’s ability to run its operations without the Kwok brothers. “I think the company can run easily without one or two people,” he said.

http://www.cnbc.com/id/46960754

[winston]

vested

DJ MARKET TALK: ICAC Probe To Be Overhang On SHK Properties-Barclays

1142 [Dow Jones] STOCK CALL: Barclays keeps SHK Properties (0016.HK) at Underweight with a 12-month price target at HK$92.16, assuming a soft landing scenario for the mainland economy and no negative macroeconomic impact to markets.

In its upside case, the house estimates a fair value of HK$105 per share, assuming the ICAC investigation is dropped; and in its downside case, it estimates a fair value of HK$85.

Barclays expects the ICAC investigation to remain an overhang on the stock price for some time, and tips Cheung Kong (0001.HK) and Sino Land (0083.HK) to benefit from investors switching out of SHKP. SHKP is down 0.6% at HK$94.80.


Source: Dow Jones Newswire