Morgan Stanley: Lowers KERRY PPT (00683) target price to HK$22, maintains "In-line with the market" rating.

Morgan Stanley released a research report stating that KERRY PPT (00683) still faces short-term earnings pressure, and it is difficult for any positive surprises to emerge before the recognition of King's Court in Huangpu District, Shanghai. The bank believes that the group's new strategy of shifting toward the mass market should accelerate asset turnover, but profit margins may take longer to recover. The bank pointed out that expenses incurred before the opening of new investment properties in China may put pressure on investment property profit margins. The report also mentioned that the group's gearing ratio has improved and dividends are stable, but short-term recognition from development properties is limited. The bank lowered its valuation basis, widening the target NAV discount from 60% to 65%, and cut the target price for KERRY PPT from HK$25 to HK$22, maintaining an "In-line with the market" rating. To reflect rent adjustments upon lease renewals for retail and office properties, occupancy rates and interest rates; updated recognition and completion schedules for development properties; and land bank replenishment between 2026 and 2028, the bank raised its 2026 underlying net profit forecast for KERRY PPT by 8.1%, lowered the 2027 forecast by 2.3%, and lowered the 2028 forecast by 3%.