[ET Net News Agency, 9 March 2018] Macquarie Research initiated coverage on Wharf REIC
(01997) with an "outperform" rating and target price of HK$61.36.
The research house is bullish on HK retail sales' prospects of a recovery and expects
Wharf REIC to be a key beneficiary, especially in the luxury spending segment, driven by
domestic consumption. Harbour City (HC, 48% of NAV), as a tourist landmark, should see
faster growth in tourist arrivals (and not just from the mainland) than most other places.
But it is more cautious on Times Square (TS, 14% of NAV) due to a competitive
environment in Causeway Bay and demanding local traffic looking for innovative lifestyle
elements.
During 2017, tenancy sales at HC and TS were 14% and 22% below their respective peaks
achieved in 2014, but their combined retail revenues in 2017 were 16% above the 2014
levels, Macquarie noted.
It might take a few years for retail sales to recover to their historical highs,
considering the structural change of the retail landscape. This should lead to very mild
retail revenue growth in the near future, it added. (KL)