The Zhitong Finance App learned that UBS released a research report stating that the target price of Credit and Real Estate (00083) was lowered by 6% from HK$14.3 to HK$13.4, mainly reflecting the latest property development profit accounting plan, which rated “buy.” The bank raised its profit forecast for the 2027-2028 fiscal year by 6% to 8% to reflect a stronger interest income outlook.
The bank expects Sino to make a profit of HK$4.6 billion for the 2026 fiscal year ending the end of June, a decrease of 10% over the previous year. The main reason is a decrease in interest income and a decrease in St. George's Mansions project listings, leading to a decrease in confirmed property development profits. Meanwhile, the overall development margin should remain stable at around 7% compared to 7.2% in the first half of FY2026.
The bank expects a slight increase in rental income in the second half of fiscal year 2026, mainly due to an increase in office occupancy rates, despite continuing high single-digit negative rent growth. On the retail side, retail rent renewals in Hong Kong have remained in a negative growth range of as low as the number of units since the beginning of the year. The bank expects rent adjustments to continue to improve and is expected to be corrected in 2027. Furthermore, the hotel business is expected to continue to improve in the second half of fiscal year 2026, mainly due to the expansion of profit margins brought about by rising housing prices and rising occupancy rates in Hong Kong.
The bank predicts that Sino will keep its final dividend of HK$0.43 unchanged and that the annual dividend will reach HK$0.58 per share, with a dividend ratio of 5.7%. The bank also anticipates that Sino will not take many corporate actions such as buybacks in the 2026 fiscal year results. On the positive side, given Sino's strong net cash position, the bank believes it can benefit well from rising interest rates. The bank also expects the effective cash yield to increase from 3.1% to 3.2% in the 2026 fiscal year to about 4% in the 2027 fiscal year.