Lyon downgraded Taikoo (00019.HK) to outperform the market rating, and the target price dropped from 97 yuan to 87 yuan.

Lyon published a research report indicating that Taikoo's basic profit rose 2% last year, but after excluding one-time factors, the bank estimates that the basic profit was only flat, but as expected, dividends remained flat, but in line with the performance of various subsidiaries.

According to the bank, profits during the period were affected by one-time losses from the sale of British hotels; rental income recorded a 4% increase due to the recovery of the Hong Kong office market, but retail performance did not change; profit from property sales rose 5%. The bank believes that the Group's prospects are stable.

The bank also pointed out that it expects no major change in the outlook for Cathay Pacific (00293.HK); the performance of the Port Engineering (00044.HK) project is weaker than expected; the marine development (SPO) business is expected to reduce losses due to cost savings; and the beverage business believes natural growth will continue to moderate. Overall, the bank lowered its 2016-17 earnings forecast by 4%.

However, the bank believes that since Taikoo maintains balanced business investment and a stable debt ratio, it believes that the dividend ratio is defensive and sufficient to support stock prices.