CICC: Maintain HANG LUNG PPT (00101) Outperform rating with a target price of HK$9.46.

CICC released a research report stating that it maintains its outperform industry rating and unchanged profit forecast for HANG LUNG PPT (00101). It maintains a target price of HK$9.46 per share, corresponding to a 15 times 2025 core P/E, 5.5% dividend yield, and 5% upside potential. The company is trading at 14.6 times 2025 core P/E and 5.8% dividend yield. The bank suggests continuing to focus on year-on-year retail sales performance, the progress of the Hang Lung Plaza in Hangzhou, the cessation of the share dividend policy, and other fundamental potential catalysts such as the US Federal Reserve rate cuts. CICC's main points are as follows: Improvement trend in the third quarter and eleven mainland mall operations with a year-on-year comparison The bank expects a year-on-year increase in retail sales of +10% in 3Q25 and a seasonal improvement over the year (comparisons of -7% and -1% in 1Q25 and 2Q25 respectively). Reasons behind this improvement include the fact that last year's same period had the lowest annual base (a year-on-year -18% in 3Q24); secondly, benefiting from the company's rich marketing planning, foot traffic has been growing, with a year-on-year increase of 9% expected for July and August (a year-on-year increase of 3% in 1H25); and finally, in terms of categories, the bank expects a moderation in the year-on-year decline of high-end brands in 3Q25, while jewelry, Chinese fashion, and experiential categories are driving growth. During the National Day, the company announced a 15% year-on-year increase in retail sales from 1-4 October, with a 3% year-on-year increase in foot traffic, with Wuhan and Shanghai Harbor Plaza Hang Lung showing the most significant growth in retail sales. Release of the "Hang Lung V.3" strategy to strengthen market position in core cities In the next phase, the company is committed to focusing on reinvesting in existing projects and utilizing its market understanding to explore surrounding potential opportunities. For example, the third phase expansion of Shanghai Hang Lung Plaza (the bank expects a potential increase in leasable area of 30%), the transformation of Shanghai Harbor Plaza Hang Lung serviced apartment into a five-star hotel, and long-term leasing cooperation with the Top 100 in Hangzhou (the bank expects a potential increase in retail area of 40% and a significant improvement in project accessibility) are all concrete implementations of this strategy. Impressive performance of key malls in East China, each with its own strengths Shanghai Hang Lung Plaza: By accurately positioning and serving the top high-end customer base, it consolidates its leading position in Shanghai's high-end shopping malls. The bank expects the opening of LAOPU GOLD, Chanel, and others in the fourth quarter to further consolidate retail sales growth. Shanghai Harbor Plaza Hang Lung: Balance between luxury expansion and optimization of sports outdoor, fragrance, and dining brands, the bank expects a year-on-year increase of 31% in retail sales in 3Q25. Wuxi Hang Lung Plaza: After introducing high-end brands in 2019, the business has continued to grow. The bank expects the company to sign more than 180 new brands in 2024-25, with over 70 being the first store in Jiangsu or Wuxi. Risk Warning: Retail sales improvement trend falls short of expectations; new project opening performance falls short of expectations.