Citigroup: Maintains "buy" rating on Hang Lung Properties (00101), target price raised to 11.2 Hong Kong dollars.

Citigroup released a research report stating that it maintains a "buy" rating for HANG LUNG PPT (00101) and has raised the target price from 10.1 Hong Kong dollars to 11.2 Hong Kong dollars. The bank believes that the company's same-store sales growth (SSSG) target of around 5% to 7% in Mainland China in 2026 has room for upward growth. It is expected that in the fourth quarter of 2025, SSSG will increase by 18% year-on-year, reaching a historical high, mainly benefiting from the continued enrichment of the non-luxury category portfolio, the opening of a series of new flagship stores in the second half of 2025, and various measures to attract customer traffic and increase customer retention. The bank predicts that the group's profit compound annual growth rate from 2026 to 2028 could reach 4.5%, mainly driven by an estimated 5% growth in Chinese retail rents, the expected revenue of over 1 billion RMB from the retail and office projects in Hangzhou after their full operation in 2029 (bringing about a 10% increase in rental income), and the total financing costs supported by the interest rate environment and reduction of debt. However, due to a decrease in capitalized interest, it is expected that profits will slightly decline by 1% in 2026. The report points out that with the gradual decrease in the debt ratio and capital expenditure, along with the growth of rental income, HANG LUNG PPT has the opportunity to provide cash dividends starting from 2026, with an expected yield of around 5.6%. The company is currently searching for a successor for the CEO, who will retire in August 2026 and transition to an advisory role.