CIMB is staying positive on shares of Hongkong Land despite 2017 earnings missing its forecasts.
Core profit rose 14 percent on-year to US$970 million in 2017, missing expectations by 5 percent on higher operating expenses and tax, CIMB said in a note dated Thursday.
But it added that the Hong Kong portfolio remained stable, while office vacancy declined to 1.4 percent; CIMB also said it expected faster rental growth for both office and retail.
”We believe that HKL’s Central office portfolio will continue to benefit from strong mainland demand and limited supply in the medium term,” CIMB said. “The retail recovery in Hong Kong, especially in the luxury segment, is expected to continue in 2018.”
The stock is trading “attractively” at a 52 percent discount to net asset value, compared with peers Swire Properties at 38 percent and Champion REIT at 37 percent, CIMB noted.
It kept an Add call with a target price of US$9.10.
The stock ended Friday up 3.85 percent at US$7.02.