Better Buy: Swire Properties vs. Sun Hung Kai Properties

Swire Properties Limited (SEHK:1972) and Sun Hung Kai Properties Limited (SEHK:16), also known as SHK, are two of the biggest real estate giants in Hong Kong. Both of these companies have a footprint in a number of countries, including China, and in various types of real estate. Before investing in Hong Kong property companies though, there are a number of factors you should consider. Let’s take a closer look at Swire and SHK to see which of them comes out on top for investors.

Property portfolio diversity

When investing in a real estate stock, you want to have an idea of the different types of properties the company has in its portfolio. Let’s take a look at what properties Swire and SHK have in their respective portfolios.

Property Type Swire SHK
Retail Yes Yes
Office Yes Yes
Residential Yes No
Hotels Yes No
Industrial Yes No

While both companies are invested in retail and office properties, Swire wins out in terms of its property investment portfolio – it’s also invested in residential, hotel and industrial real estate. This makes it a more diversified option for investors who are seeking exposure to a variety of property types.

Winner: Swire Properties


In comparing two companies of different market capitalisations, it’s important to consider profitability ratios. Specifically, here I’ll review Swire’s and SHK’s 2018 performance for its Gross Profit Margin and Operating Profit Margin.

2018 Profitability Ratios Swire SHK
Gross Profit Margin 69.9% 49.8%
Operating Profit Margin 51.0% 38.8%

Source: Nikkei Asian Review

From the table above, we can see that Swire has outperformed SHK in both profit ratios, suggesting Swire makes a larger profit for each dollar spent in terms of expenses and has a proportionally higher income than SHK.

Winner: Swire Properties

Dividend growth

One other factor to consider when investing in a real estate company is how much dividend yield you might receive for each share you have. The following table shows the dividend per share (DPS) from the last three years.

Dividend per Share (DPS) 5-Year Growth Rate
2014 2015 2016 2017 2018
Swire 0.62 0.71 0.71 0.77 0.84 6.3%
SHK 3.35 3.35 3.85 4.10 4.65 6.8%

Source: aaStocks, Reuters

While both companies have experienced dividend growth in the past five years, SHK edged out Swire with a slightly higher five-year growth rate of almost 7%, making it the winner of this round.

Winner: SHK

Foolish summary

Swire reigns over SHK on several fronts including profitability and property investments, securing it as an overall safer investment option. While SHK has seen a larger increase in its recent 2018 dividend distribution, this growth alone does not suggest that SHK is the better buy. Swire’s significantly higher profitability and diversified portfolio of investments, alongside a steadily growing dividend distribution, provide investors with a healthy (and sturdy) option as a stock investment in the property market.



想提早退休? 想提高每月的被動收入?


HK MoneyClub (