UBS released a research report stating that it downgraded Hang Lung Properties (00101) from “buy” to “neutral”. The target price was lowered by 50% to HK$7 from HK$14 due to the bank's concerns about weak retail sales of local luxury goods, increased competition in luxury malls, and the risk of stock price adjustments.
The bank expects that the company's profit for the full year of this year will drop 8% year on year, and the dividend per share will drop 23% to 0.6 yuan, but believes that the market has roughly absorbed the above factors, as the stock price has been revised 33% from the beginning of the year to date. The bank also lowered its 2024-26 profit forecast by 8% to 25%, respectively, to reflect the high interest rate environment, weak rental income in the Chinese and Hong Kong markets, and the lag in mainland real estate sales.