SHKP

Sun Hung Kai Properties Limited is one of Hong Kong’s major property developers. According to an Economic Observer report in April 2010, COLI had always taken Hong Kong companies such as Hutchison Whampoa Limited and SHKP as its models, emphasising risk control and being relatively cautious in its development, which was one of the reasons COLI kept seeking to lower its loan ratio. The report said that COLI’s risk-control-focused style stemmed from the lessons of the 1997 Asian financial crisis.

According to a February 2019 report by Caixin, the Hong Kong property sector has long spoken of the “four great families”, one of which is the Kwok Tak-seng family of SHKP (00016.HK), alongside the Li Ka-shing family of Cheung Kong, the Lee Shau Kee family of Henderson Land and the Cheng Yu-tung family of New World Development. The report said that although these four families had entered the second or even third generation of management, they still controlled the lifeblood of Hong Kong’s property market; in terms of land reserves, the four families held farmland reserves of more than about 100 million square feet (about 9.2903 million square metres), equivalent to one quarter of the total land area of all existing public and private housing in Hong Kong. The report also noted that several rounds of property market adjustment, including the bursting of the stock market bubble in the 1970s, the 1997 Asian financial crisis, the 2003 SARS outbreak and the 2008 financial crisis, had enabled many Hong Kong developers to lay deep foundations and build strong resilience to risk.

SHKP is regarded as a typical example of the transformation from a development-for-sale model to one that combines leasing and sales. According to a December 2014 report, SHKP focused mainly on development for sale when it was founded in 1963 and took 30 years to transform into a company combining leasing and sales: the ratio of cash flow income from development properties to that from investment properties first shifted from 8:2 to 2:8 and was finally adjusted to 5:5. According to statistics from Cushman & Wakefield, as of the end of June 2014, among mainland and Hong Kong developers SHKP ranked behind only Wanda with 3.75 million square metres of held investment property; in the same period, SHKP’s income from held properties was 14.64 billion yuan, accounting for nearly 80% of its total income. The report summed up this path as the internal funding balance under a heavy-asset model that the Hong Kong model emphasises, and cited the view of Gaotong Think Tank that property companies face pressure on returns during the transformation, and that for companies in the early stage of combining leasing and sales the top priority is to expand the cash flow platform of development properties.