UBS: Swire Pacific A (00019) dividend growth exceeds expectations, target price of 72.7 Hong Kong dollars.

UBS released a research report stating that Swire Pacific A (00019) has a "neutral" rating with a target price of 72.7 Hong Kong dollars. Swire Group's recurring basic profit increased by 5% year-on-year to 9.8 billion Hong Kong dollars last year, which was 4% lower than the bank's forecast, mainly due to lower-than-expected contributions from the beverage business. However, the company announced that Swire A's full-year dividend per share increased by 13% year-on-year to 3.8 Hong Kong dollars, exceeding the bank's expectations, implying a dividend payout ratio of 53% of recurring basic profit, which is expected to decrease to 51% by 2024. During an analyst briefing, the management reaffirmed the gradual dividend policy based on the recovery of the aviation business over the past 5 years, expecting the dividend payout ratio to remain above 50% of recurring basic profit, with a forecast of mid-single-digit growth in dividend per share annually. The bank also noted that the company's net debt ratio improved from 22.1% in December 2024 to 20.6% at the end of last year. Benefiting from the inclusion of Thailand and Laos beverage business performance in the financial statements starting in October 2024, the basic EBITDA is expected to increase by 8% year-on-year; dividends income from joint ventures and associates increased by 3%, mainly reflecting dividends from CATHAY PAC AIR (00293). The bank expects Swire Group's cash flow to continue improving this year.