Bocom Intl released a research report and maintained a 'buy' rating for Link Real Estate Investment Trust (00823), with a target price of HK$47.7.
The bank recently visited Shanghai Qibao Vanke Plaza under Link REIT. Link completed the acquisition of the remaining 50% equity of the company in February 2024. It has been optimizing its tenant mix and introducing some popular brands such as Lululemon, Salomon and other luxury brands to enhance the overall rental capacity of tenants.
Compared with Link's latest lending cost, the project's transaction yield is attractive and can increase dividends by about 1-2 cents per share. The bank believes that Link is now managing its idle cash more actively, bringing higher long-term dividends to unit holders of the fund. Since late May 2024, Link's dividend yield has remained more than 300 basis points above the yield of 10-year US Treasury bonds, which is lower than 1.3 standard deviations below the long-term valuation and suggests attractive rental returns with good performance in the acquisition project operation.