UBS: WHARF HOLDINGS (00004) met expectations in its performance last year. Target price is 16.3 Hong Kong dollars.

UBS released a research report stating that WHARF HOLDINGS (00004) is expected to achieve a basic profit of 4.1 billion Hong Kong dollars for the 2025 fiscal year, a year-on-year increase of 47%, which roughly meets the expectations of UBS. The increase in profit is mainly due to the reduction of impairment provision related to property development in mainland China to 800 million Hong Kong dollars (compared to 2 billion Hong Kong dollars in the 2024 fiscal year). UBS has given Wharf a "sell" rating with a target price of 16.3 Hong Kong dollars. By the end of 2025, Wharf has turned a profit of 9.7 billion Hong Kong dollars from realizing its equity investment portfolio, resulting in a net cash position of 2 billion Hong Kong dollars, compared to a net liability of 7 billion Hong Kong dollars in the 2024 fiscal year. After the sale, the value of the equity investment portfolio remained at 43.2 billion Hong Kong dollars year-on-year. The company announced that it will maintain the second interim dividend at 0.2 Hong Kong dollars per share, making the annual dividend reach 0.4 Hong Kong dollars per share, with a dividend payout ratio of 30% (compared to 44% in the 2024 fiscal year). During the earnings briefing, the management expressed optimism about the luxury residential market in Hong Kong and anticipated limited negative impact from the recent increase in luxury residential stamp duty. Wharf plans to launch the Dragon Court No. 8 project for sale in 2026. As for property development in mainland China, the management pointed out that despite the low average selling prices, difficulties in inventory sales, mainly office buildings, persist due to the weak market conditions.