SWIREPROPERTIES(HK:01972) Huachuang Securities·2025-05-15 13:30Investment Rating - The report maintains a "Recommended" rating for Swire Properties (1972.HK) with a target price of HKD 21.55 [2][8]. Core Insights - The company's Q1 performance met expectations, with improvements in the operation of shopping centers in mainland China. Retail sales in key locations such as Shanghai and Beijing showed positive growth, while declines in other areas were significantly reduced compared to 2024 [2][8]. - The report highlights the strong competitive advantage of Swire Properties due to its prime location shopping centers and robust leasing capabilities, which are expected to drive rental income growth in the coming years [8]. Financial Summary - Total revenue is projected to reach HKD 14,428 million in 2024, with a slight decline of 2.1% year-on-year, followed by a recovery with growth rates of 1.3%, 2.6%, and 24.3% in the subsequent years [4]. - The net profit attributable to shareholders is expected to recover from a loss of HKD 766 million in 2024 to HKD 2,676 million in 2025, reflecting a significant growth of 449.3% [4]. - Earnings per share (EPS) is forecasted to improve from -0.13 HKD in 2024 to 0.46 HKD in 2025, indicating a positive turnaround [4]. Market Performance - The report notes that Swire Properties' shopping centers in Hong Kong maintained full occupancy, with slight improvements in retail sales growth compared to the previous year [8]. - The overall rental market for office spaces in Hong Kong remains under pressure due to oversupply, with an occupancy rate of 89% in Q1 [8]. Investment Recommendations - Swire Properties is characterized as a commercial real estate company that generates stable cash flows through holding assets with a competitive moat. The expected growth in net profit and consistent dividend growth of 5% per year supports the investment thesis [8].