Daiwa Hongfu Industries (00808.HK) raised the group's target price from 3.42 yuan to 3.72 yuan, equivalent to 5% and 5.1% of the group's dividend payout rate this year and next, and downgraded its rating from "buy" to "outperform the market".

According to Daiwa, the distributable income of Hongfu industry rose 5.3% to 131 million yuan in the first half of the year, and the rent increase rate slowed to 9.6% (32% to 36% from 2012 to 2014). It is believed that the rental income of several properties owned by the group in the past has risen sharply with the market, and it is believed that the future rent growth will depend on the overall market conditions.

Daiwa refers to that Hong Fu Plaza in Kwun Tong still occupies the most advantageous position in the property portfolio, which is believed to be related to its transformation into semi-retail. At present, retailers account for about 40% of the whole building. It is believed that Hong Fu Plaza will continue to transform into retail property. It will help drive the rental growth of the group.

The bank has lowered its forecast for allocation per fund unit this year and next by 3.2% to 7.1% to reflect the slowdown in rental income growth of properties other than Hong Fu Plaza, but it is believed that rental income growth in Hong Fu Plaza will help the Group to maintain a high allocation per fund unit after 2018.