[ET Net News Agency, 6 February 2018] Macquarie Research lifted its target price for
Hang Lung Properties (00101) to HK$20.52 from HK$19.08, and maintained its "neutral"
rating.
The research house said the target hike is due to appreciation of RMB against HKD,
rental increases for Plaza 66 mall and Fashion Walk after renovation, and higher occupancy
in non-Shanghai malls.
Both Hong Kong and China malls are seeing recovery in sales. However, Macquarie believes
that it may take three years to see strong improvement in total rental income due to major
ongoing renovation, a change in the tenant mix change with negative rental reversion for
some malls, and new openings in Kunming and Wuhan in 2019 are suffering losses in the
first two years, based on the research house's estimates.
Macquarie expects sales of Blue Pool Road houses will accelerate from 1 unit in 2017 to
7 units in 2018, in order to fund capex for projects under development in China and
renovations in Shanghai and Hong Kong without increasing gearing ratio. It has also
factored in potential sales of non-core Hong Kong IPs such as AquaMarine, with estimated
proceeds of HK$3bn and net profit of HK$1bn, taking its earnings estimate 51% above
consensus. (KL)