According to a report from HSBC Global Research, since March 2024, the share price of Wharf Holdings (00004) has fallen by about 33%, underperforming the Hang Seng Index by 39 percentage points. The market has expressed concerns about the company's profit growth prospects. Market consensus earnings forecasts for 2024-25 have been lowered by 19-21% in the past six months, close to the bank's cautious profit forecast.
The bank points out that although Wharf Holdings' real estate sales business in Hong Kong may benefit from the interest rate reduction cycle, a forecast dividend yield of 2.2% for the fiscal year 2025 and moderate profit growth may not be attractive enough.
The bank still has concerns about the company's business fundamentals, but has upgraded the rating from "sell" to "hold", indicating that the current valuation largely reflects the bank's concerns about Wharf Holdings' growth. The target price is maintained at HK$17.3.
