Citi: Raises Hang Lung Properties target price to HKD 7.7, maintains "Hold" rating
Citi released a research report stating that HANG LUNG PPT's performance in the first half of the year met expectations, with the interim dividend remaining unchanged. Sales from mainland tenants have shown continuous improvement since the fourth quarter of last year, but overall tenant sales in the first half of 2025 are still dragged down by a decline in luxury goods sales. Given the weak market sentiment and the normalization of outbound tourism has yet to improve, Citi expects luxury goods sales to continue to decline over the next 12 months. Considering the clearer expectations for interest rate cuts by the Federal Reserve and the continuous improvement in HANG LUNG's mainland tenant sales, Citi has narrowed the discount of the net asset value (NAV) relative to the target price from 78% to 67%, raising the target price from HKD 5.4 to HKD 7.7. However, as luxury goods sales in China have not yet bottomed out, Citi maintains a "Hold" rating on the stock. Citi believes that HANG LUNG has one of the best luxury shopping centers in mainland China, with the highest exposure to luxury goods sales among listed companies, and can be seen as a representative of luxury goods sales in China. Positive catalysts include: if the U.S. Federal Reserve's interest rate cuts exceed expectations, it should trigger a reassessment of high-yield stocks like HANG LUNG. However, negative catalysts include: weaker-than-expected sales from Chinese tenants, which will lead to profit pressure and affect the ability to maintain absolute dividends and deleverage
According to the Zhitong Finance APP, Citi released a research report stating that Hang Lung Properties (00101) achieved performance in the first half of the year that met expectations, with the interim dividend remaining unchanged. Sales from mainland tenants have shown continuous improvement since the fourth quarter of last year, but overall tenant sales in the first half of 2025 are still dragged down by a decline in luxury goods sales. Given the weak market sentiment and the normalization of outbound tourism has not yet improved, Citi expects luxury goods sales to continue to decline over the next 12 months. Considering the clearer expectations for interest rate cuts by the Federal Reserve and the continuous improvement in Hang Lung's sales from Chinese tenants, Citi has narrowed the discount of the net asset value (NAV) relative to the target price from 78% to 67%, raising the target price from HKD 5.4 to HKD 7.7. However, as luxury goods sales in China have not yet bottomed out, Citi maintains a "Hold" rating on the stock.
Citi believes that Hang Lung has one of the best luxury shopping centers in mainland China, with the highest exposure to luxury goods sales among listed companies, making it a representative of luxury goods sales in China. Positive catalysts include: if the U.S. Federal Reserve's interest rate cuts exceed expectations, it could trigger a reassessment of high-yield stocks like Hang Lung. However, negative catalysts include: weaker-than-expected sales from Chinese tenants, which will lead to profit pressure and affect the ability to maintain absolute dividends and deleverage
