Company Coverage
Link REIT (823 HK): 1QFY27 Operations On Track; Reiterates FY27 Guidance
BUY (Maintained)
Current price:
Target price:
Upside:
HK$38.72
HK$44.30
13.4%
Analyst
Analyst
Highlights
The performance of Link REIT’s Hong Kong retail portfolio was in line with that of the market in 1QFY27, with a mid-single-digit negative rental reversion. Other segments remained resilient. Its cost optimisation initiatives and unit buyback programme remain on track.
Management reiterated its guidance for FY27 Hong Kong retail rental reversion and its target of DPU stabilisation in FY27.
Maintain BUY with an unchanged target price of HK$44.30.
Analysis
Hong Kong retail portfolio is in line with market performance. Link REIT’s Hong Kong tenant sales fell 1.1% yoy in 1QFY27, vs a 0.4% yoy decline in non-discretionary spending in Hong Kong. Sales growth of Link REIT’s F&B tenants further improved to 1.5% in 1QFY27, as compared with a 0.4% yoy growth in total restaurant receipts of Hong Kong. The growth of Link REIT’s F&B was driven by active tenant remixing, eg replacing traditional Chinese restaurant with smaller shops of mainland F&B brands. With negative rental reversion, Link REIT’s occupancy cost ratio edged down 0.1ppt to 12.6% in 1QFY27.
Management reiterates its rental reversion guidance for FY27. The rental reversion of Link REIT’s Hong Kong retail portfolio fell into negative mid-single digit in 1QFY27. Management reiterated its guidance that Hong Kong retail rental reversion for FY27 will be at similar level as FY26’s -8.2%. Further stabilisation of spot rent is a key highlight of 1QFY27.
Highlights
The performance of Link REIT’s Hong Kong retail portfolio was in line with that of the market in 1QFY27, with a mid-single-digit negative rental reversion. Other segments remained resilient. Its cost optimisation initiatives and unit buyback programme remain on track.
Management reiterated its guidance for FY27 Hong Kong retail rental reversion and its target of DPU stabilisation in FY27.
Maintain BUY with an unchanged target price of HK$44.30.
Analysis
Hong Kong retail portfolio is in line with market performance. Link REIT’s Hong Kong tenant sales fell 1.1% yoy in 1QFY27, vs a 0.4% yoy decline in non-discretionary spending in Hong Kong. Sales growth of Link REIT’s F&B tenants further improved to 1.5% in 1QFY27, as compared with a 0.4% yoy growth in total restaurant receipts of Hong Kong. The growth of Link REIT’s F&B was driven by active tenant remixing, eg replacing traditional Chinese restaurant with smaller shops of mainland F&B brands. With negative rental reversion, Link REIT’s occupancy cost ratio edged down 0.1ppt to 12.6% in 1QFY27.
Management reiterates its rental reversion guidance for FY27. The rental reversion of Link REIT’s Hong Kong retail portfolio fell into negative mid-single digit in 1QFY27. Management reiterated its guidance that Hong Kong retail rental reversion for FY27 will be at similar level as FY26’s -8.2%. Further stabilisation of spot rent is a key highlight of 1QFY27.
BUY (Maintained)
Current price:
Target price:
Upside:
HK$38.72
HK$44.30
13.4%
Analyst
Analyst
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