[ET Net News Agency, 29 December 2020] Citi Research lifted its target price for
Fortune REIT (00778) to HK$8.82 from HK$8 on higher rental assumptions in 2021-22 (+5%)
and maintained its "buy" rating.
The research house views Fortune REIT's portfolio as resilient, which should benefit
from a potential retail recovery from COVID vaccinations throughout 2021. With the payout
ratio being cut to 90%, Citi expects DPU (distribution per unit) has already bottomed in
2020.
As retail outlook improves once COVID concerns are removed, Citi expects its payout
ratio can increase to 95% in 2021 and to 100% in 2023, driving a 7% DPU CAGR in 2020-23.
That said, its 2020 yield remains attractive at 5.8% on 90% payout, 490bps premium over
10-year US Treasury. (KL)