Morgan Stanley's analyst rating of "Equal-weight" for CK ASSET (01113.HK) is based on several factors discussed during the 24th Annual Asia Pacific Summit. The management indicated that while the Hong Kong residential market may have bottomed out, as evidenced by a 3% year-to-date increase in the CCL Index, pricing power has not yet recovered. Additionally, the office market is facing oversupply issues, which are expected to prolong the recovery period.
Morgan Stanley noted that CK ASSET's property, CKC II, has a low occupancy rate of around 30%, but its excellent location allows the company to wait for better pricing before leasing. Furthermore, due to limited land reserves, CK ASSET may be cautious in launching new projects like Victoria Blossom in Kai Tak and may prefer to retain more cash. The target price of HK$39 reflects these considerations, leading to the Equal-weight rating.
