Morgan Stanley: Lower SEAZEN (01030) target price to HK$2.88 with a rating of "overweight"

Morgan Stanley released a research report stating that the target price for SEAZEN (01030) has been lowered from 3.17 Hong Kong dollars to 2.88 Hong Kong dollars, based on maintaining a 40% discount on the net asset value (NAV). The bank believes that operations are returning to normal, the investment property value is expected to be released, and the drag from the residential business is decreasing, with the potential for dividends to be restored in the medium term, giving it a "hold" rating. They updated the risk-return analysis for SEAZEN. They included performance forecasts for 2025 and introduced forecasts for 2028, lowering SEAZEN's core earnings per share forecast by 9% for 2026 and 3% for 2027 to reflect: 1) updated development property revenue recognition and completion schedule; 2) weak property sales; 3) better development property gross profit margins. The bank noted that, considering the reduction in the number of newly opened shopping malls under the heavy asset model, they lowered the mid-term shopping mall rental growth forecast from the original 7%-8% annual compound growth rate to 5%-6%. However, due to a decrease in financing costs and significant improvement in liquidity, they have lowered the weighted average cost of capital from 10.4% to 9%.