Bank of America Merrill Lynch reiterated that Taikoo (00019.HK) outperformed the market rating, and the target price was lowered from 86 yuan to 74 yuan to reflect the challenges faced by many businesses other than real estate. The bank expects the company's distribution per share to fall 30% year over year to $2.55, and the payout ratio will still reach 72%, which is higher than the company's target payout ratio of 50% in the economic cycle, but the expected dividend return of only 3.1% will disappoint investors.

Taikoo pointed out that 2016 profits were affected by Cathay Pacific (00293.HK)'s weak performance in the second half of the year; Hong Kong Aircraft Engineering (00044.HK) was impaired by 210 million yuan and the loss of the US division increased; and Taikoo Marine recorded an impairment of 2,426 billion yuan.

The bank lowered the company's core profit forecast for 2016-2018 excluding impairment by 4% to 15% to reflect the weak performance of Cathay Pacific and HAECO Engineering. It is expected that core earnings will fall 54% in 2016, and will only rebound 16% each in 2017 and 2018, mainly driven by profits from the property business.