Ge Long Hui·2025-08-10 03:33Core Viewpoint - The performance of Swire Properties in 1H25 met market expectations, with a revenue increase of 20% year-on-year to HKD 8.72 billion, while the recurring net profit attributable to shareholders decreased by 4% to HKD 3.42 billion, but increased by 15% to HKD 4.42 billion when considering asset disposal gains [1][2] Financial Performance - Revenue for 1H25 rose by 20% to HKD 8.72 billion - Recurring net profit attributable to shareholders decreased by 4% to HKD 3.42 billion - Basic profit attributable to shareholders increased by 15% to HKD 4.42 billion, aligning with market expectations - Interim dividend declared at HKD 0.35 per share, a 3% increase year-on-year, corresponding to a current dividend yield of 1.66% [1] Operational Highlights - Retail sales in mainland shopping centers improved, with a 1% year-on-year increase in 1H25, compared to a decline of 7% in 1H24 - Notable retail sales growth in Shanghai Taikoo Hui (+14%) and Beijing Sanlitun Taikoo Li (+7%) - Rental income from mainland shopping centers increased by 2% to HKD 2.27 billion in 1H25 - Hong Kong office rental income decreased by 5% to HKD 2.46 billion, with an occupancy rate of 88% [1][2] Asset Disposal and Financial Strategy - The company recorded asset disposal gains of HKD 1 billion in 1H25, primarily from the Miami shopping center and adjacent land, with a total consideration of up to USD 760 million - The net debt ratio remained stable at 15.7% compared to the end of 2024 [2] Investment Plans - The company has a HKD 100 billion investment plan, with HKD 50 billion allocated to the mainland market, of which HKD 46 billion is already earmarked - Upcoming projects include the phased opening of Guangzhou Julong Bay Taikoo Li by the end of 2025, the opening of Sanya Taikoo Li in 2026, and the completion of Xi'an Taikoo Li in 2027 [2] Shareholder Returns and Financial Safety - The company reiterated its guidance for a mid-single-digit annual growth in dividends, supported by asset disposals and residential sales - The company has confirmed or planned asset disposals for the second half of the year, including the Miami site and the sale of the 43rd floor of the Eastern Island Center [2] Earnings Forecast and Valuation - Earnings forecasts remain largely unchanged, with expected recurring net profit for 2025 and 2026 projected to decrease by 5% and increase by 17% to HKD 6.17 billion and HKD 7.20 billion, respectively [2] Rating and Target Price - The company maintains an outperform rating with a target price of HKD 23.8 per share, implying a 30% target NAV discount and a 4.8% target dividend yield for 2025, indicating a 13% upside potential [3]