UBS has issued a research report, increasing the target price for LINK REIT (00823) from HK$42 to HK$47.2. The adjustment reflects the potential for asset recycling and share repurchase initiatives, with a "Buy" rating maintained. The report notes that LINK REIT is scheduled to announce its FY2026 results for the period ending March 31 on May 28. UBS forecasts a year-on-year decline of 8% in distribution per unit for FY2026 to HK$2.51, with Hong Kong retail renewal rent adjustments projected at negative 8%, compared to negative 7.5% for the first nine months of FY2026 as of December last year. While near-term fundamentals remain weak, the bank identifies upside potential from prospective asset recycling and share buybacks. Following the divestment of Thomson Plaza and office assets in Australia and the UK, UBS suggests that logistics assets in China could be the next disposal target for LINK REIT. Underperforming malls in Guangzhou and Beijing are also noted as potential mid-term divestment candidates. Overall, non-core assets could amount to approximately HK$34 billion, representing about 15% of total asset value. The current share price continues to offer a dividend yield exceeding 6%, significantly higher than peers such as Hang Lung Properties, Wharf REIC, and Hysan Development, which range between 5.3% and 5.8%. UBS believes the market has not yet fully priced in the potential for a revaluation of the trust.
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