Macquarie Research lifted its target price for Swire Properties (01972) to HK$29.81 from HK$24.6, and maintained its "outperform" rating.
The research house estimated DP (development properties) operating profit of HK$1.7bn in 2017 and HK$1.4bn in 2018 (HK$1-1.4bn/year from 2013 to 2016), followed by severe decline if there are no asset disposals in HK or strong recovery of the Miami property market.
This should not be a surprise as Swire had only bid for five sites in open tendering in HK last five years.
Macquarie sees two implications for the 9% jump in DPS: parent Swire Pacific (00019) faces continuous challenges and cash needs; a structural increase of payout ratio in preparation of a drop of DP profits, which are both good news for Swire Properties shareholders. (KL0
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