share_log

太古地产(1972.HK):商业地产又迎来充满挑战的一年

Taikoo Properties (1972.HK): Commercial real estate has ushered in another challenging year

東方證券(香港) ·  Jun 15, 2022 00:00  · Researches

Established in Hong Kong in 1972 and headquartered in Hong Kong, Swire Properties focuses on mixed-use property operators in Hong Kong and mainland China. It has completed an investment property portfolio of 22.3 million square feet. Swire Properties plans to invest HK$100 billion over the next ten years to drive future growth and aim to achieve medium single-digit dividend growth. Although the Group announced solid financial results in 2021, the pandemic control measures in Hong Kong and China in the first half of 2022 damaged Taikoo Properties' operating environment. We expect the overall rental rate to drop slightly in 2022, and the renewal rate remains negative. We first gave Swire Properties an “increase in holdings” rating, with a target price of HK$21.0.

Most of the projects that hope to invest 100 billion dollars can be launched within 5 years. The investment portfolios of Hong Kong and China are the Group's dual growth engine. Swire Properties plans to invest over HK$50 billion in the Mainland, focusing on retail-led mixed-use development projects in first-tier and emerging first-tier cities. One-third of the funding was used to expand and enhance Taikoo Place and Pacific Place. For the Southeast Asia market, the group will focus on Ho Chi Minh City, Jakarta, Singapore and Bangkok.

Strong performance in 2021. Although basic profit declined year-on-year, mainly due to a decrease in profit from the sale of non-core properties, Swire Properties' recurring basic profit increased 1% to HK$7.152 billion, reflecting strong retail performance in mainland China and reducing losses in the hotel business. The dividend per share was HK$0.95, up 4% year on year, and exceeded general market expectations.

This year's business environment is still full of challenges. In the first half of '22, the epidemic control measures in Hong Kong and China caused problems with business recovery. We believe the rental renewal rate for office buildings in '22 will continue to be negative. The Group provided rent relief to retail tenants forced to close due to the pandemic, which had an impact on the Group's profits.

Risk of RMB depreciation and interest rate hikes. Future investments of more than 100 billion dollars will increase loan costs in the face of US interest rate hikes. The weakening of the RMB in 2022 and more revenue in the future are expected to come from mainland China's investment portfolio. Exchange rate changes will affect the Group's profit from converting to Hong Kong dollar currency.

First, it was given an “increase in holdings” rating. We used the DDM model to value Taikoo Properties and obtained a stock price of HK$21.0, which is equivalent to 0.4 times the predicted net market ratio of FY22. Affected by rent relief and declining rental rates, we expect 2022 revenue to decline 10% year over year. We gave our first “Overweight” rating, with a target price of HK$21.0, implying an upward margin of 9.1%.

The translation is provided by third-party software.


The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
    Write a comment