The Zhitong Finance App learned that Goldman Sachs released a research report saying that it is expected that the profit margins of Hong Kong real estate developers will shrink to less than 30% and continue to drag down return on assets. The bank upgraded the rating of Sun Hung Kai Properties (00016) from “neutral” to “buy”, with a new target price of HK$92, while the rating of Henderson Land (00012) was downgraded from “neutral” to “sell”. The new target price was HK$21.4.

According to the report, although the affordability of citizens improved after the fall in residential property prices, the degree of improvement is in line with the pace of increase in actual residential mortgage interest rates, so the value has not yet been shown. The bank said that since investment properties and related contributions account for about 70% of developers' profits, Goldman Sachs believes that the developer's stock price should be more correlated with the book value of each share compared to the net asset value per share. Therefore, the bank adjusted the calculation method for the target price for development, and the average target price was lowered by 16% as a result.