UBS: Raises the target price for WHARF REIC to HKD 23, expects long-term headwinds to persist, maintains a "Neutral" rating
UBS released a research report stating that as Hong Kong's retail sales have recently stabilized, WHARF REIC's stock price has risen 13% this year. UBS believes that driven by the decline in HIBOR, the market has absorbed the recent stability in retail sales and the rebound in profits (expected to reach 2% to 9% in 2025 to 2026). However, long-term resistance remains, mainly from the rebound in outbound tourism by Hong Kong residents; more convenient tax refund arrangements in the mainland; and intensified competition among high-end shopping malls. Therefore, it maintains a "Neutral" rating on the stock and raises the target price to HKD 23. UBS stated that although retail sales have rebounded, it expects this trend to be temporary, as local discretionary spending will face pressure after the National Day Golden Week. In the long term, UBS believes that expanding the pilot tax refund scheme to land border control points (including Hong Kong residents) and intensified competition from mainland e-commerce platforms will bring structural resistance. Based on HIBOR assumptions, UBS has raised its earnings per share estimates for WHARF REIC for 2025 to 2027 by 4% to 8%; it believes that strong growth in Hong Kong retail sales is unlikely in the next two years, maintaining a cautious stance and predicting that retail sales will remain nearly flat in the next two years
According to the Zhitong Finance APP, UBS has released a research report stating that as Hong Kong's retail sales have recently stabilized, Wharf Real Estate Investment Company Limited (01997) has seen its stock price rise by 13% this year. UBS believes that driven by the decline in HIBOR, the market has absorbed the recent stability in retail sales and the rebound in profits (expected to reach 2% to 9% in 2025 to 2026). However, long-term resistance remains, mainly from the rebound in outbound tourism by Hong Kong residents; more convenient tax refund arrangements in the mainland; and intensified competition among high-end shopping malls. Therefore, it maintains a "Neutral" rating on the stock and raises the target price to HKD 23.
UBS stated that although retail sales have rebounded, it expects this trend to be temporary, as local discretionary spending will face pressure after the National Day Golden Week. In the long term, UBS believes that expanding the pilot tax refund scheme to land border control points (including Hong Kong residents) and intensified competition from mainland e-commerce platforms will bring structural resistance.
Based on HIBOR assumptions, UBS has raised its earnings per share estimates for Wharf Real Estate Investment Company Limited for 2025 to 2027 by 4% to 8%; it believes that strong growth in Hong Kong retail sales is unlikely in the next two years, maintaining a cautious stance and predicting that retail sales will remain nearly flat in the next two years
