UBS Lowers Target Price for Link REIT, Maintains “Buy” Rating
In a recent rating report, UBS announced that it has lowered the target price of Link REIT to HK$53.9 and maintained a “buy” rating for the company. The report stated that Link’s distribution per fund unit (DPU) in the first half of fiscal year 2024 saw a 16% year-on-year decrease, in line with expectations. However, excluding the dilutive impact of the rights issue, distribution per unit actually increased by 0.4% year-on-year.
UBS believes that the stock price will react neutrally to the interim performance, and that future stock price performance will generally depend on the trend of the U.S. 10-year Treasury bond yield. The bank also pointed out that Link REIT expects Hong Kong’s rental renewal rate to slow down slightly in the second half of the year, but it is still capable of achieving mid-to-high single-digit growth throughout the year.
Additionally, UBS anticipates that the effective financing cost in fiscal 2024 is likely to remain below 4%, and it is believed that more potential merger and acquisition opportunities will be seen in the first half of the year, although no further details were provided on potential buybacks.
Despite lowering the target price from HK$59.2 to HK$53.9, UBS has maintained a “buy” rating for Link REIT. The bank’s report suggests that Link REIT still has potential for growth and remains a favorable investment option.
Overall, UBS’s rating report provides valuable insight into the performance and potential opportunities for Link REIT in the coming months. Investors and stakeholders will be watching closely to see how the company responds to these developments and whether it can continue to deliver strong results in the future.