HSBC Research: KERRY PPT's cash flow provides visibility for dividend stability, slightly raising target price to HKD 22.6

HSBC Global Research report indicates that KERRY PPT (00683.HK) had weak performance in the first half of the year, with underlying profit down 30% year-on-year, in line with expectations. The company's business is progressing smoothly and is consistent with management's plans, including the deleveraging process and property sales. Management expects the net debt ratio for the next fiscal year to decrease to around 30% to 33%, down from the previous guidance of around 33% to 37%, benefiting from higher sales prices achieved in the Shanghai Jinling Huating project. The company anticipates that the next sales prices may be even higher.

The report states that the company's net debt ratio as of the end of June decreased by 3.1 percentage points year-on-year to 38.4%. Although there is a time lag between contract sales and revenue recognition, the company's cash flow situation should continue to improve, providing good visibility for dividend stability. Based on a forecasted dividend yield of 6.5% for 2026, the stock is maintained at a "Buy" rating, with the target price slightly adjusted from HKD 22.3 to HKD 22.6