Goldman Sachs lowered its target price for Hang Lung Properties (HLP)(00101) to HK$18 from HK$20 and downgraded its rating to "sell" from "neutral" on relative outperformance while earnings recovery is unlikely to be fast.
The research house thinks the thesis of HLP seeing continued improvement in mainland China operations and additional contributions from new openings is intact. However, on the back of the weaker RMB and softer HK rental outlook, its earnings recovery path is unlikely to be as fast as Goldman previously expected.
Goldman now forecast underlying EPS CAGR of 3% for FY2019-21 (versus 5% previously) after incorporating our slower rental assumptions (Goldman looks for 8% FY2018-21 CAGR of net rental) and residential sales progress.
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