Kaiyuan Securities released a research report stating that Swire Properties (01972) disclosed its operational data for the first quarter of 2026. The company focuses on assets in prime locations within high-tier cities, demonstrating a solid fundamental foundation and consistent dividend growth. With residential projects progressively entering the handover phase and multiple shopping centers on the mainland commencing operations, the company's future performance is expected to be fully realized. The profit forecast is maintained, with projected net profits attributable to shareholders for 2026-2028 at HKD 4.31 billion, HKD 5.48 billion, and HKD 6.35 billion, respectively. Corresponding EPS figures are HKD 0.75, HKD 0.95, and HKD 1.10. The current stock price corresponds to P/E ratios of 33.4x, 26.3x, and 22.7x for those years. The "Buy" rating is reaffirmed. Key viewpoints from Kaiyuan Securities are as follows:
Shopping Centers: Divergence in High-End Consumption, Accelerated Growth in Hong Kong In Q1 2026, the occupancy rates for the company's three major shopping centers in Hong Kong, China, all remained at 100%. Retail sales growth accelerated compared to the full year of 2025. Pacific Place's retail sales growth (+13.9%) slightly exceeded the overall market (+12.1%), potentially indicating a higher degree of benefit for premium properties. Citygate Outlets (+21.8%) significantly outperformed the market, reflecting the high resilience of the discount outlet model. In Q1 2026, the combined occupancy rate for Swire Properties' six major shopping centers on the mainland was 98.3%, largely unchanged from 2025. Among them, Taikoo Li Chengdu and Taikoo Hui Shanghai saw overall occupancy rates increase compared to 2025. Year-on-year retail sales growth was achieved across all centers, with Taikoo Hui Shanghai and Taikoo Li Sanlitun Beijing recording substantial sales growth, benefiting from mall renovations and upgrades.
Office Buildings: Pressure in Hong Kong, China; Structural Improvement on the Mainland In Q1 2026, the company's overall office occupancy rate in Hong Kong, China, was recorded at 91%, consistent with the full-year 2025 average. The overall rental adjustments for Pacific Place and Taikoo Place in Q1 2026 were both recorded at -14%, essentially flat compared to -13% and -15% for the full year 2025, showing no significant deterioration but also no signs of stabilization. In Q1 2026, the company's overall office occupancy rate on the mainland was 93.1%, a significant improvement from 91.8% in 2025 and 91.4% in Q1 2025. This performance is markedly superior to the market average vacancy rate of 25%, reflecting the defensive characteristics and operational capabilities of the company's high-quality properties.
Residential Properties: Steady Sales Progress for On-Market Projects, 2026 Marks a Major Year for Deliveries The company's residential projects for sale are primarily located in Hong Kong, China, and overseas. In 2026, the main project for sale in Hong Kong is Hyde Park Phase I in Chai Wan. As of May 3, 2026, 236 units had been sold, representing a sales rate of approximately 40%. The company's three on-market projects on the mainland are all located in Shanghai, developed in cooperation with Lujiazui Group, and are nearing the final sales stages, with deliveries scheduled to commence from 2026 onwards. Among these, the Lujiazui Swire Source Mansion project was the main sales driver in 2025. By the end of March 2026, the project had released 76,000 square meters of salable area, with 69,000 square meters contracted, achieving a sales rate of 91%.
Risk Warnings: Continued pressure in the office market; slower-than-expected recovery in mainland retail; and project tenant acquisition falling short of expectations.
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