领展房地产投资信托基金（823 HK）：买入：保持韧性

Issuer of report:TheHongkong and ShanghaiBanking Corporation LimitedView HSBC Global Research at:https://www.research.hsbc.comHSBC Global Research Podcasts| Listen to our insightsMAINTAIN BUYTARGET PRICE(HKD)45.00SHARE PRICE(HKD)40.90(as of27 May 2025)MARKET DATAMarket cap(HKDm)Market cap (USDm)3m ADTV (USDm)FINANCIALS AND RATIOS(HKD)Year toHSBC EPSHSBC EPS (prev)Change (%)Consensus EPSPE (x)Dividend yield (%)EV/EBITDA (x)ROE (%)52-WEEK PRICE(HKD)Source:LSEGIBES, HSBC estimatesRaymond Liu*, CFAAnalyst, Asia Real Estate and ConglomeratesThe Hongkong and Shanghai Banking Corporation Limitedraymond.w.m.liu@hsbc.com.hk+852 2996 6743Michelle Kwok*Head of Asia Real Estate and HK Equity ResearchThe Hongkong and Shanghai Banking Corporation Limitedmichellekwok@hsbc.com.hk+852 2996 6918Tong Yu*AssociateGuangzhou* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquitiesREITsHong Kong05/24Target price: 45.00 ◆◆◆ PREVIOUS TARGET(HKD)44.60UPSIDE/DOWNSIDE+10.0%105,620Free float13,478BBG56RIC03/2025a03/2026e2.722.623.02.6514.96.715.94.111/24High: 41.15 Low: 29.90 Current: 40.90 Find out more100%823 HK0823.HK03/2027e03/2028e2.742.752.782.642.68na3.72.8na2.652.702.7814.914.914.76.76.76.815.615.615.74.34.34.428.0037.5047.0005/25 2Financial statementsYear to03/2025a03/2026e03/2027eProfit & loss summary (HKDm)HK rental income6,6626,5696,514HK car parkincome2,5072,5282,551HK other income1,2511,3431,332Mainland China revenue &overseas3,8033,8684,036Operating expenses(3,604)(3,648)(3,666)Net property income10,61910,65910,768Non-property expenses(915)(880)Chg in fair value of props/gain(16,280)0Net interest expense(1,872)(1,245)(1,321)Share of profit of joint ventures(419)282PBT(8,867)8,8168,876Taxation(564)(1,687)(1,704)Net profit after MI(8,863)6,9476,989Distribution income7,0257,0677,110Cash flow summary (HKDm)Net cash from op. activities8,0318,9959,161Cash flow from inv.activities(263)(1,855)(2,160)Issue costs/new issue1,2520Net bank financing(5,564)10,000Distribution paid(6,865)(7,038)(7,117)Other financing activities(2,096)(1,686)(1,729)Net cash usedin fin. activities(13,273)1,275(8,846)Net change in cash(5,505)8,415(1,844)Cash at beginning9,6894,18412,599Cash at end4,18412,59910,755Balance sheet summary (HKDm)Shareholders’ funds163,398163,489163,544Long-term liabilities48,92150,83651,007Deferred items3,5873,6753,764Total capital employed215,906218,000218,315Fixed assets221,780224,234226,968Current assets4,91510,0458,169Total assets227,172234,757235,614Ratio, growth and per share analysisYear to03/2025a03/2026e03/2027eY-o-y % changeRevenue5%1%Operating profit4%1%HSBC PBT7%19%Reported EPS (diluted)5%0%HSBC EPS5%0%Ratios (%)EBIT margin68%68%Core profit margin49%49%Interest cover ex-exceptional (x)4.65.8Total debt/gross assets20%20%Net debt/EBIT (x)5.04.8CF from operations/net debt16%19%Per share data(HKD)EPS reported (diluted)(3.47)2.71HSBC EPS2.722.74DPS2.7232.737Source: Companydata, HSBC estimatesFinancials & valuation:Link REIT Highlights in chartsFig 1. Net property income (HKDbn) andNPI marginSource: Company data, HSBCFig 3. Breakdown of portfolio value as atMarch 2025Source: Bloomberg, HKEX, HSBCFig 5. 12-month forward dividend yieldSource: Companydata,LSEGDatastream, HSBC024681012FY14FY15FY16FY17FY18FY19FY20FY21FY22FY23ThousandsNPI (HKD bn,LHS)20%3%11%2%1%4%7%HK - RetailHK - Car ParkHK - Officemainland China - Retailmainland China - OfficeMainland LogisticsOverseas - OfficeOverseas - retail0%1%2%3%4%5%6%7%8%9%10%Jan-19Apr-20Jul-21Oct-22Spread between bond yield and dividend yield (%)Link REIT's 12m Fwd dividend yield (%)+1 SD5-year avg-1 SD FY25results highlightsLink REIT reported distribution per unit (DPU) of HKD2.72,up3.7% y-o-y. Ifwe look at2Hresults, DPU increasedc3.7% y-o-y tocHKD1.38. Growth wasprimarily due to the full-yearcontribution of its Shanghai project, lower borrowing cost,andsome one-off items like taxsavings.The company reportedFY25revenue growth of4.8% y-o-y to HKD14,223m.◆Hong Kong retail rental increased by0.1% y-o-yto HKD6,657m.Its retail portfoliocontributed47% of FY25revenue.Rental reversion was reportedat-2.2%,droppingfrom+7.9% for FY24. Tenants’ salesdecreased by3.0% y-o-y, outperformingthe broader trendwithin Hong Kong’s retail sectorofa7.0% decline. The occupancy rate for retail stayed highat97.8% in FY25compared to98.0% inFY24.◆14.2% contribution from mainland China portfolio.In FY25, mainland China assetscontributed14.2% of totalrevenue (upfrom11.6%in FY24) and13.8% oftotal NPI (from11.4% in FY24).Itwas primarily due tothefull-yearcontribution from its Link Plaza Qibaoproject in Shanghaiand resilient performance ofLink CentralWalk and Link Plaza Tianhepost asset enhancements. NPI margindecreased by0.6ppt y-o-y to72.7%. We viewretailreversion asnegative at0.7%, primarily impacted by its Link Plaza ZGC in Beijing.Ifexcluding theeffect,the rental reversion would have been 7.6%.◆Book NAV downby9.6% y-o-y to HKD63.30