Bank of America Merrill Lynch reiterated Taikoo's (00019.HK) neutral rating, and the target price dropped to 95 yuan. In addition to weak marine business, China's economic slowdown also dragged down the performance of its beverage and retail trade business in the second half of last year. However, the performance of its real estate business is generally steady, so it is more optimistic about Taikoo Properties (01972.HK). The target price is 29 yuan, and the rating remains “buy”. According to the bank, Taiji is the most attractive part of Taikoo's business, where the stock price is discounted by 42% compared to the net asset value of each share.
The bank expects Taikoo's steady dividend rate (4.4%) to support the stock price. Furthermore, management has been actively communicating with investors recently, which the bank believes is positive. Taikoo's core earnings forecast for FY2015 was raised by 6% to $7.72, but the earnings estimates for 2016 and FY17 were lowered by 20% and 28% to $5.22 and $5.28, respectively, to reflect the decline in profits of Cathay Pacific (00293.HK) and non-property businesses.