Daiwa said in a report that Sunshine Real Estate Fund (00435.HK) downgraded its rating from "buy" to "outperform the market" and raised its target price from 4.60 yuan to 5.60 yuan, mainly reflecting the medium-and long-term growth prospects for per-unit distribution.

The bank pointed out that distributable income of Sunshine Real Estate rose 10.6% year-on-year in fiscal year 2016, mainly driven by an increase of 12.7% and 18.2% in office and retail property rents respectively, as well as a decline in cost as a share of income. The bank believes that the asset improvement project at Sheung Shui Centre is conducive to long-term allocation growth, but the vacancy caused by the project will affect distribution growth in the first half of 2017. According to Daiwa, Sunshine Real Estate forecasts the distribution of 0.264, 0.286 and 0.307 yuan per fund from 2017 to 2019.