JPMorgan has released a research report maintaining an "Overweight" rating on SHK PPT (00016) with a target price of HK$135. The company's annual profit for the fiscal year ending June 30 rose 5% year-on-year, aligning with expectations.

JPMorgan noted that some investors, primarily hedge funds, had previously anticipated that land resumption of the group's agricultural sites could generate additional disposal gains, expecting annual profit growth to exceed 10%. However, the bank pointed out that these potential gains still exist, with SHK PPT deciding to recognize them only in the next fiscal year, making this merely a timing difference.

The bank added that the bottom has been reached for SHK PPT's Hong Kong development property margins, which have slightly declined from 12% in fiscal 2025 to 11% in fiscal 2026. On a half-year comparison basis, the second half of the fiscal year reached 15%, recovering from 8% in the first half of fiscal 2026. Management also expects development property margins to gradually recover, although they believe the likelihood of margins returning to above 30% is low, given the land cost structure and the company's focus on mass-market projects to accelerate asset turnover.

JPMorgan projects that SHK PPT's development property margins will recover to 18% and 22% in fiscal 2027 and 2028, respectively, and estimates the company is on track to achieve its full-year sales target. The bank expects SHK PPT's fiscal 2027 profit to grow 5% year-on-year, driven by recovering Hong Kong development property margins, reduced interest expenses, new rental contributions from IGC, and land resumption gains.