Open Securities maintains a "buy" rating on SWIREPROPERTIES (01972), Chinese Hong Kong office buildings under pressure waiting for recovery.

Open Source Securities released a research report stating that SWIREPROPERTIES (01972) released its operating data for the first quarter of 2026. The company focuses on high-energy urban core assets, with a stable fundamentals, continuous dividend growth, and the future performance is expected to be fully released as residential properties continue to enter the contribution period and multiple shopping centers in mainland China are gradually opening. The profit forecast is maintained, with the company's net profit attributable to shareholders for 2026-2028 expected to be HK$4.31 billion, HK$5.48 billion, and HK$6.35 billion respectively, with EPS of HK$0.75, HK$0.95, and HK$1.10 respectively. The current stock price corresponds to PE ratios of 33.4, 26.3, and 22.7 times, maintaining a "buy" rating. The main points of Open Source Securities are as follows: Shopping Centers: Differentiation of high-end consumption, comprehensive acceleration of growth in Hong Kong In 2026Q1, the company maintained a 100% rental rate in the three major shopping centers in Hong Kong, with retail sales growth rates higher than the whole year of 2025. The retail sales growth rate at Pacific Place (+13.9%) slightly exceeded the market as a whole (+12.1%), reflecting a higher benefit for high-end properties; Citygate Outlets (+21.8%) significantly outperformed the market, reflecting the high elasticity of the discount outlet model. In 2026Q1, SWIREPROPERTIES maintained an overall rental rate of 98.3% in its six major shopping centers in mainland China, with Chengdu Taikoo Li and Shanghai Xingye Taikoo Hui achieving an increase in rental rate compared to 2025; retail sales all achieved growth year-on-year, with significant increases in retail sales at Shanghai Xingye Taikoo Hui and Sanlitun Taikoo Li in Beijing due to mall renovations. Office Buildings: Pressure in Hong Kong, structural improvement in mainland China In 2026Q1, the overall office rental rate in Hong Kong was 91%, consistent with the average for the whole year of 2025. The rental adjustments for Pacific Place and Pacific Place Harbour City in 2026Q1 recorded -14%, remaining relatively stable compared to the -13% and -15% for the whole year of 2025 and not showing significant deterioration but also not achieving stabilization. The overall office rental rate in mainland China was 93.1% in 2026Q1, significantly higher than 91.8% in 2025 and 91.4% in 2025Q1, and significantly better than the market average vacancy rate of 25%, reflecting the company's high-quality properties' resilience and operational capabilities. Residential Properties: Steady clearance of projects for sale, 2026 is a year of delivery The company's residential projects for sale are mainly located in Hong Kong and overseas. The main project for sale in Hong Kong in 2026 is the first phase of Chai Wan Hydrotechnics, with a cumulative sale of 236 units as of May 3, 2026, with a clearance rate of approximately 40%. The company has three projects for sale in mainland China, all located in Shanghai, and in cooperation with Shanghai Lujiazui Finance & Trade Zone Development Group. The progress is nearing completion, with deliveries starting in 2026. The main project for sale in 2025, Shanghai Lujiazui Finance & Trade Zone Development Tai Gu Yuan Di project, had as of the end of March 2026, 76,000 square meters of saleable area released, with 69,000 square meters signed, achieving a clearance rate of 91%. Risk warning: Continued pressure in the office market, retail recovery in mainland China lower than expected, project leasing lower than expected.