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News that Sun Hung Kai’s billionaire co-chairmen have been charged for bribery has cast a pall over the stock and prompted a downgrade from Barclays on Monday, as investors continue to weigh the extent of the fallout from the scandal on Asia's largest developer.
Barclays, which has an underweight position on the stock, downgraded its price target on the company to HK$87.50 ($11.25) from HK$92.16, warning that the shares could be vulnerable to heavier losses in the coming months. This represents a downside of about 7 percent from the stock’s current value.
Barclays’ call comes even as several analysts CNBC contacted maintained a buy on the stock.
“Some investors have argued that given Sun Hung Kai Properties’ hard asset business, the arrests and charging of its co-chairmen should only have a limited impact on valuation. We disagree,” says Andrew Lawrence, head of Hong Kong property research at Barclays, adding that property companies should not just be valued on their asset base, but also on the quality of the management team that operates those assets.
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