JP Morgan: LINK REIT (00823) first-quarter operating data slightly below expectations, maintains "neutral" rating.

JPMorgan released a research report stating that considering that the stock price of LINK REIT (00823) has risen by 36% from the beginning of the year to date, compared to the Hang Seng Index which has risen by about 28% during the same period, there may be profit-taking in the short term. They are maintaining a "overweight" rating at the moment, with a forecast of a 2% decrease in Distribution Per Unit (DPU) for the fiscal year 2026 compared to a 4% drop year-on-year, with the target price adjusted from HK$49 to HK$48. JPMorgan pointed out that Link REIT recently released operating data for the first quarter of the fiscal year ending in June this year, which slightly lagged behind expectations. The year-on-year decline in sales from Hong Kong tenants narrowed to 0.8%, compared to a 2.1% decline in the previous quarter, indicating that business is stabilizing. However, due to intensified competition from cross-border e-commerce, the likelihood of a significant recovery in the short term is low. The renewal rental adjustment rate for the period remained at a low single-digit percentage decline, similar to the 5% decline in the second half of the fiscal year 2025, slightly below the "low to mid-single-digit percentage" guidance issued by management in May.