Lyon: WHARF REIC (01997) reported better-than-expected performance in the first half of the year, with a significant increase in the payout ratio to 90%, which is a pleasant surprise.

Citi released a research report stating that it maintains an "Outperform" rating for WHARF REIC (01997) and a target price of HKD 40, which represents a 38% discount to the projected net asset value of HKD 64.60 in 2026, narrowing the discount by one standard deviation compared to the five-year average. Citi noted that WHARF REIC's performance in the first half of 2026 exceeded expectations, with the dividend payout ratio significantly raised from 65% to 90%. The interim dividend per share increased by 42% year-on-year to HKD 0.94, reflecting management's commitment to enhancing shareholder returns by converting previously non-distributable profits into distributable cash flow following the sale of Wheelock Place in Singapore. Citi stated that WHARF REIC has been designated as its top pick in Hong Kong's real estate sector since March 2026, benefiting from significant exposure to the recovery cycle of luxury residential sales in Hong Kong, along with several recent actions favorable to minority shareholders, which help narrow the discount to net asset value and drive revaluation.