Goldman Sachs has released a research report revising its financial forecasts for Sun Hung Kai & Co. (01686) upward, citing stronger-than-expected results and updated operational assumptions.

The bank raised its revenue projections for fiscal years 2027 to 2029 by 1% to 5%, and its EBITDA estimates by 1% to 6%. This adjustment reflects the company's better-than-anticipated performance, the latest move-in schedule, revised contract premium pricing, and rental adjustments. However, the firm also lowered its assumptions for net capacity additions.

Consequently, the target price has been increased from HK$5.4 to HK$6, while the "Neutral" rating remains unchanged.

The company reported better-than-expected results for the second half of fiscal year 2026, which ended on June 30. Total revenue grew 10% year-over-year to HK$1.609 billion, surpassing both Goldman Sachs' and market consensus estimates by 4% and 1%, respectively. Revenue from data centers and IT facilities saw a 10% year-over-year increase, driven by the ramp-up of capacity at MEGA IDC and MEGA Two, along with positive rental adjustments and contract renewals from major financial and corporate clients.

EBITDA rose 12% year-over-year to HK$1.204 billion, exceeding the bank's and market expectations by 7% and 5%, respectively. Net profit surged 24% year-over-year to HK$614 million, outperforming both the firm's and market forecasts by over 10%. The gross margin reached 60.3%, up 3.2 percentage points year-over-year, also beating predictions.