Bank of America Securities: raises target price for WHARF HOLDINGS (00004) to HK$29, rating "Neutral"

Bank of America Securities released a research report stating that WHARF HOLDINGS (00004) is expected to see a rise in luxury home profits this year, supported by multiple new projects including the Dragon Road project, Mount Austin Road No. 1, and Chengdu IFS serviced apartments. More new projects are expected to be launched in the next two to three years. The bank expects its core net profit to increase by 19% year-on-year this year due to an adjustment in the estimated net asset value (NAV) per share. The target price has been raised from HKD 28 to HKD 29, representing a 4% increase. The stock is currently undervalued with a 64% discount to NAV, but with a target dividend payout ratio of 30%, the expected dividend yield is only 2% this year. The bank maintains a "neutral" rating. The report mentioned that WHARF HOLDINGS had a core profit of HKD 4.1 billion, a 47% year-on-year increase, which exceeded expectations by 12%, mainly due to a reduction in property development losses. Henderson Land recorded a surplus of HKD 10 billion in its listed share capital portfolio and sold investments worth HKD 9.7 billion in the 2025 fiscal year, with another HKD 2 billion sold in the first two months of 2026. As a result, its net debt decreased from HKD 6.5 billion at the end of June to HKD 2 billion at the end of December, and the book value per share increased by 2% to HKD 48.01. The bank revised its earnings forecast per share for the 2026-2028 fiscal years, mainly due to changes in the timing of property development revenue recognition. The bank also mentioned that rental income fell by 3% last year, EBIT fell by 4%, but mainland tenant sales rebounded in the first two months of this year. Management expects rental income to remain flat this year.