[ET Net News Agency, 2 March 2018] Credit Suisse lifted its target price for Hysan
Development (00014) to HK$52.3 from HK$47.1, and reiterated its "outperform" rating.
The research house said Hysan's tenant sales were up 9% for FY2017 with momentum picking
up from 3% YoY in 1H to 14% YoY in 2H. Both Lee Gardens (LG) and Hysan Place delivered
sales growth +12% YoY, while Lee Theatre was softer at +2% YoY in FY2017.
The negative retail rental reversion in FY2017 was in line with management expectations.
A healthier occupancy cost to below 20% together with outperforming sales performance
should provide room for rental increase, hence, Credit Suisse raised its retail rental
growth forecast to 4-6% YoY (from 0-2% YoY).
Management remains positive on office, albeit a smaller reversion is expected. The
completion of LG3 will also enhance its rental income. Credit Suisse estimated LG3 to
generate HK$309mn/HK$338mn in rental income in FY2019/20, or an increase of 10% from the
total income of HK$3,227mn in FY2017. (KL)