Core Viewpoint - Morgan Stanley's report indicates that Kowloon Development (01997) has shown improvement in rental income for the first half of the year, but management remains cautious about the outlook for the second half, anticipating a low single-digit decline in retail renewal rents, which aligns with market expectations [1] Group 1: Financial Performance - Rental income for Kowloon Development has improved on a half-year basis, but management's outlook remains conservative [1] - Morgan Stanley forecasts a 1% and 2% growth in earnings per share and dividends for the fiscal year 2025, respectively, maintaining an "Overweight" rating with a target price of HKD 27.5, which represents about a 50% discount to the net asset value (NAV) per share [1] Group 2: Market Trends - Management reported an improvement in retail sales since May, with Harbour City merchants outperforming the market average, but they believe further observation is needed to confirm if the market has fully bottomed out [1] Group 3: Strategic Initiatives - Kowloon Development's Marco Polo Hotels is evaluating an asset enhancement plan, with a comprehensive renovation expected to require capital expenditure of approximately HKD 2 billion, potentially starting at the end of 2026, which is estimated to have a temporary impact of 5% to 6% on rental income during the enhancement period [1]

Core Viewpoint - Morgan Stanley's report indicates that Kowloon Development (01997) has shown improvement in rental income for the first half of the year, but management remains cautious about the outlook for the second half, anticipating a low single-digit decline in retail renewal rents, which aligns with market expectations [1] Group 1: Financial Performance - Rental income for Kowloon Development improved on a half-year basis [1] - Management expects a slight improvement in rental income for the second half, benefiting from a decrease in HIBOR, which reduces financing costs [1] - Morgan Stanley forecasts a 1% and 2% growth in earnings per share and dividends for the fiscal year 2025, respectively [1] Group 2: Management Insights - Management reported an improvement in retail sales since May, with Harbour City merchants outperforming the market average [1] - However, management believes it is necessary to observe for a few more months to confirm if the market has fully bottomed out [1] Group 3: Future Plans - The company is evaluating an asset enhancement plan for its Marco Polo hotels, with a total capital expenditure of approximately HKD 2 billion [1] - The full renovation is expected to start as early as the end of 2026, with a temporary impact of 5% to 6% on rental income during the enhancement period [1]