UBS: Raise target price for LINK REIT (00823) to 47.2 Hong Kong dollars, market has not factored in asset recycling opportunities.

UBS released a research report stating that the target price for LINK REIT (00823) has been raised from 42 Hong Kong dollars to 47.2 Hong Kong dollars to reflect potential asset recycling and share buyback plans, with a "buy" rating. The report pointed out that Link will announce its performance for the fiscal year ending in March 2026 on May 28th, predicting a year-on-year decrease of 8% to 2.51 Hong Kong dollars in fund distribution per unit for the 2026 fiscal year, with a negative 8% rental adjustment rate for Hong Kong retail renewals, compared to the negative 7.5% in the first nine months of the fiscal year ending in December 2026. Although the short-term fundamentals remain weak, the bank sees upside potential from potential asset recycling and share buybacks. The bank pointed out that after selling Thomson Plaza, office assets in Australia and the UK, as well as logistics assets in China, could be the next targets for sale by Link. Underperforming shopping malls in Guangzhou and Beijing could also be potential mid-term sale targets. Overall, non-core assets could reach 34 billion Hong Kong dollars, accounting for about 15% of the total assets. The current stock price still provides a dividend yield of over 6%, much higher than peers (HANG LUNG PPT / Nine Dragons / Xi Shen between 5.3% and 5.8%), and the market is believed to have not fully factored in its revaluation potential.