Morgan Stanley-Hong Kong Property July-24 Hong Kong Retail Sales Show More...-110127801
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M
Hong Kong Property | Asia Pacific
July-24 Hong Kong Retail Sales
Show More Leakage During
Summer Holiday
Praveen K Choudhary
!!"#$%&$'(%)!"*%( +,--+.+/,01+
Jeffrey Mak, CFA
2!33!"4'(%)!"*%( +,---56/70..
Asia Pacific
July's retail sales decline widened to 12% YoY (June: -10%), worse
than we expected, and the dollar amount was lowest since full
border reopening. This suggests spending per capita weakened
further during the summer holiday. We see a 12% YoY drop in
August and cut our 2024 forecast to -9% from -5%.
Stocks with retail exposure – Wharf REIC, Link REIT and Hysan – have
underperformed the Hang Seng Index by 20-24ppts YTD. Retail sales growth turned
negative in March. We expect retail sales YoY growth to remain negative in 2H24,
suggesting continued pressure on these stocks.
We prefer residential developers over retail and office landlords.
Among retail landlords, we prefer Wharf REIC (OW) and Link REIT (OW). Potential
upcoming US rate cuts suggest a wider dividend yield spread vs. the 10-year UST,
and lower interest expense could drive EPS and DPS higher. We rate Hysan EW due
to slowing retail momentum, high office exposure, and the dividend not being
supported by cash flow.
!"#(-12% YoY, -3%
MoM, -25% vs. July 2018); 7M24 retail sales fell 7% YoY (-23% vs. 7M18).
$%&'()(*)+#,
-!.#(-25% YoY, -12% MoM, -48% vs. July 2018); 7M24 luxury retail sales dropped
15% YoY (-40% vs. 7M18).
grew 1% YoY and accounted for 7.8% of total retail sales (Juny
2024: 7.8%).
/( July 2024 retail sales were worse than our expectation of a 7%
decline. This came despite Chinese visitation rising to 64% of 2018's level in July
(64% vs. 2018 in June) and Hong Kong resident departures decreasing to 112% of the
2018 level in July (116% vs. 2018 in June), reflecting weaker spending per capita from
locals and tourists during the summer holiday.
All major category sales growth was negative YoY. Luxury (-25% YoY), department
stores (-24% YoY), and clothing/footware (-17% YoY) saw the widest declines.
0"122Chinese visitation picked up to
78% of 2018's level in August (71% of 2018 in July). This has been offset by rising
Hong Kong resident departures at 122% of the 2018 level, in August (112% of 2018 in
July). 34545 122)4561!
Morgan Stanley does and seeks to do business with
companies covered in Morgan Stanley Research. As a result,
investors should be aware that the firm may have a conflict of
interest that could affect the objectivity of Morgan Stanley
Research. Investors should consider Morgan Stanley
Research as only a single factor in making their investment
decision.
For analyst certification and other important disclosures,
refer to the Disclosure Section, located at the end of this
report.
+= Analysts employed by non-U.S. affiliates are not registered
with FINRA, may not be associated persons of the member
and may not be subject to FINRA restrictions on
communications with a subject company, public appearances
and trading securities held by a research analyst account.
September 1, 2024 10:00 PM GMT
M
Key Charts
8%!!!&9#:;/(%%$!&<
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
0
10,000
20,000
30,000
40,000
50,000
60,000
Jan-18
Jun-18
Nov-18
Apr-19
Sep-19
Feb-20
Jul-20
Dec-20
May-21
Oct-21
Mar-22
Aug-22
Jan-23
Jun-23
Nov-23
Apr-24
Retail Sales YoY
HK$ mn
%*!=#!&*>!?(!@%)!A!!*$
B!!!&9#:;/(%%$!&<
-100%
-50%
0%
50%
100%
150%
200%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Jan-18
Jun-18
Nov-18
Apr-19
Sep-19
Feb-20
Jul-20
Dec-20
May-21
Oct-21
Mar-22
Aug-22
Jan-23
Jun-23
Nov-23
Apr-24
Luxury Retail Sales YoY
HK$ mn
%*!=#C>!?(!@%)!A!!*$
?!(4!!!!&
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Jan-18
Jun-18
Nov-18
Apr-19
Sep-19
Feb-20
Jul-20
Dec-20
May-21
Oct-21
Mar-22
Aug-22
Jan-23
Jun-23
Nov-23
Apr-24
Supermarkets vs. 2018
HK$ mn
%*!=#!&*>!?(!@%)!A!!*$
#%$)D3%%E!!!!&
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jan-18
Jun-18
Nov-18
Apr-19
Sep-19
Feb-20
Jul-20
Dec-20
May-21
Oct-21
Mar-22
Aug-22
Jan-23
Jun-23
Nov-23
Apr-24
Clothing, Footwear & Allied Products vs. 2018
HK$ mn
%*!=#!&*>!?(!@%)!A!!*$
D%3F$3AG#&H "HI!!
;%;
-45%
-30%
-15%
0%
15%
30%
45%
8
10
12
14
16
18
20
22
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Jul-23
Jan-24
Jul-24
1997.HK Wharf REIC P/E (reference 4.HK before 2017)
0014.HK Hysan P/E
HK Retail Sales YoY
Retail Sales YoY - MS Est
P/E
Retail Sales
YoY
%*!=#!&*>!?(!@A!3 *%!D@%)!A!!*$":%!=
J)!9&K!&3%?!?!*?<3%H*!2/-0"
L!!!?!*!)!%3%
Jul-24, 7.8%
0%
2%
4%
6%
8%
10%
12%
14%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Jan-20
May-20
Sep-20
Jan-21
May-21
Sep-21
Jan-22
May-22
Sep-22
Jan-23
May-23
Sep-23
Jan-24
May-24
Online retail sales (HK$mn) As % of total retail sales
%*!=#C>!?(!@%)!A!!*$
M
#$!! % &HI!&!&!?!
9(?!%<
Jul-24, 3.1
Aug-24, 2.7
Jul-24, 8.8
Aug-24, 8.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Chinese visitors arrival (mn persons) HK resident departure (mn persons)
%*!=G(()%>!?(!@#G#@%)!A!!*$":%!=)/-. !!3!* %
%3-6)"
#$!! % &HI!&!&!?!
9M%3-0N+<
Jul-24, 71%
Aug-24, 77%
Jul-24, 112%
Aug-24, 122%
0%
20%
40%
60%
80%
100%
120%
140%
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Chinese visitor arrival as % of 2018 HK Resident Departure as % of 2018
%*!=G(()%>!?(!@#G#@%)!A!!*$":%!=)/-. !!3!* %
%3-6)"
! 8A#(%$&%(!*?%)!
Jul-24: -4%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
0
20
40
60
80
100
120
140
160
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
Apr-24
Jul-24
Monthly Domestic Service Patronage
vs. 2018 (CNY smoothed)
mn ppl
%*!=8A#@#G#@%)!A!!*$
" HI!!O!4&%E
16 32 35 33 26
918 9
314 312 297 303 265
155 62
78
0
100
200
300
400
500
2018 2021 2022 2023 2024E
HK Retail Sales Breakdown
Online Sales Voucher Scheme for Locals Local Offline Spending From Chinese
485
353 350
HK$bn
407
-27% vs. 2018
-1% YoY +17% YoY
-9% YoY
368
%*!=%)!A!!*$9<!(!
4AG8=> &!&;!&?!&%JN0;8
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
Div Yield Spread to US 10Yr Link
30-Aug-24: 3.2%
%*!=A!3 @%)!A!!*$
F$3AG#=> &!&;!&?!&%JN0;8
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24
Wharf REIC Div Yield Spread to US 10Yr
30-Aug-24: 2.3%
%*!=A!3 @%)!A!!*$
摘要：
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