Title: UBS Lowers Hysan Industrial’s Target Price and Maintains “Buy” Rating
Written by Gelonghui | Date: August 11, 2023 | Time: 10:56:14
UBS, a leading global financial services company, recently released a research report on Hysan Industrial, a prominent real estate company in Hong Kong, adjusting the firm’s target price and maintaining a “Buy” rating.
The report highlights that Hysan’s interim results were below expectations, with the company maintaining its first interim dividend of 27 cents per share, in line with forecasts. This has resulted in a further 4 percentage point increase in the dividend payout ratio, reaching 34%. The company has been successful in controlling financing costs, with a 34% rise in financial expenses to 231 million yuan. Hysan’s effective financing costs have reached 3.9%, higher than the 2.8% in 2022, and the fixed-rate debt ratio has hit 76%. Additionally, less than 5% of the total borrowings will mature within a month.
Despite this setback, the bank remains optimistic about Hysan’s future prospects. UBS believes that the company’s retail rental income will improve in the second half of the year, and the completion of the asset enhancement project (AEI) in the first half of next year is expected to generate positive results. These factors have led the bank to assert that Hysan can maintain a stable dividend policy. Given the company’s dividend rate of 8.2% in 2023, UBS believes that there is a downside support for the company’s share price.
However, UBS has adjusted its profit forecast for Hysan from 2023 to 2025, lowering it by 6% to 13%. The revision is a reflection of the bank’s belief in the weak recovery of the company’s gross profit expectations and the retail space loss due to ongoing asset enhancement projects. Consequently, UBS has lowered the target price for Hysan shares from HK$28.7 to HK$26.3 to reflect these changes.
In light of the revised target price and the anticipated long-term growth potential, UBS has reiterated its “Buy” rating for Hysan Industrial. The bank’s analysis predicts that the company’s share price has the potential to perform well.
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Source: Gelonghui