Goldman Sachs released a research report indicating adjustments to Swire Pacific's (00019) profit forecasts for the current and next fiscal year, with changes ranging from a decrease of 9% to an increase of 2%. The target price was raised from HK$96.8 to HK$102.1. The firm maintained its "Buy" rating on both Swire Pacific and SWIREPROPERTIES (01972).
Swire Pacific announced its full-year results for the period ending December last year. A slightly positive surprise was the group's increase of its final dividend by 19% year-on-year to HK$2.5. Together with the interim dividend, the total dividend for the 2025 fiscal year amounts to HK$3.8, representing a 13% year-on-year increase. Goldman Sachs suggested this might be partly attributable to the conclusion of its HK$6 billion share buyback program in May 2025, with no subsequent program initiated. When questioned about the potential for another share repurchase plan, management did not rule out the possibility, mentioning that liquidity and public float are among the factors considered.
Goldman Sachs noted that during the results briefing, management expressed cautious optimism regarding the business outlook, expecting its three core divisions to perform well despite macroeconomic uncertainties. SWIREPROPERTIES has five build-to-rent projects under construction in Mainland China, scheduled to be progressively launched between the 2026 and 2028 fiscal years. Combined with accelerated sales of its residential property portfolio, the company anticipates their contribution to the group's earnings will grow at a compound annual growth rate of 11% during this period. In Hong Kong, encouraging signs of recovery have emerged in the residential and office markets since the second half of the 2025 fiscal year.
Regarding the beverage business, management believes fundamentals will improve, particularly in Mainland China. However, Cathay Pacific's plans to utilize the new third runway at Hong Kong International Airport in the 2026 fiscal year to expand passenger and cargo capacity present a factor. In other words, recent conflicts in the Middle East and a surge in oil prices could introduce downside risks to its profit growth.
Comments