[ET Net News Agency, 6 January 2021] Goldman Sachs raised its target price for Swire
Properties (01972) to HK$25 from HK$24.5 and maintained its "neutral" rating.
On the HK office segment (accounting for 43% of Swire Properties' FY2021 NAV), the
research house expects more divergence in CBD (central business district) versus non-CBD
rents as cost-saving strategies continue to prevail.
Goldman's base-case assumptions are for a 10%/35% decline in rental/ASP growth for
overall/CBD office from the peak of June 2019, with reference to 2002/03 SARS downcycle.
It thinks there is still negative absorption driven by the downsizing of MNCs and closures
of co-working operators and retail-related trades.
On the HK retail front (accounting for 14% of Swire Properties' FY2021 NAV), Goldman
noted a period of easier comps comparing to 2019, and the proactive lease restructuring by
landlords has brought rental adjustments forward and has helped to protect occupancy. Its
base-case assumptions are for 15%/35% declines for overall/prime retail from the peak of
June 2019, with reference to the latest retail run-rate and SARS outbreak in 2003.
As a result, its FY2020-22 underlying EPS forecasts changed by +3%/4%/2%. (KL)