BOCOM International·2025-08-22 08:45Investment Rating - The report maintains a "Neutral" rating for the company with a target price raised to HKD 25.90, indicating a potential downside of 5.3% from the current price of HKD 27.34 [1][7][10]. Core Insights - The company's performance in the first half of 2025 met expectations, with a revenue decline of 18.8% year-on-year to HKD 9.55 billion, primarily due to a drop in property sales and other income [7][8]. - Core net profit decreased by 44.4% year-on-year to HKD 3.05 billion, attributed to a decline in gross margin and a one-time compensation from the government in the previous year [7][8]. - The company has a backlog of unsold properties worth HKD 12.7 billion, with approximately 66% expected to be recognized in the second half of the year, maintaining a gross margin of 15-20% [7][8]. - Rental income slightly decreased by 2.8% year-on-year to HKD 3.36 billion, with a stable occupancy rate of 93% [7][8]. Financial Overview - Revenue projections for the upcoming years are as follows: HKD 27.57 billion in 2023, HKD 25.26 billion in 2024, HKD 29.02 billion in 2025, HKD 30.50 billion in 2026, and HKD 32.41 billion in 2027, with a projected growth of 14.9% in 2025 [6][12]. - Core earnings per share are expected to be HKD 2.00 in 2023, HKD 2.02 in 2024, HKD 1.90 in 2025, HKD 2.05 in 2026, and HKD 2.29 in 2027 [6][12]. - The company maintains a dividend yield of 6.6% across the forecast period [6][12]. Market Position - The company is positioned within the Hong Kong real estate sector, facing challenges such as price uncertainty in property development and long recovery periods for investment properties [7][10]. - The report highlights that the rental growth potential is primarily driven by the leasing of The Henderson and the upcoming large-scale waterfront projects in Central, expected to be completed between 2026 and 2032 [7][10].