On August 7, Swire Properties released its 1H17 operating statement. Wesummarize our key takeaways for each segment as well as preview our expectationsfor 1H17 results.
HK office rental portfolio: Pacific Place (PP) is still showing n strong rentalreversion in 1H17 at +15% versus 1Q17/2016’s +15%/+14%.
HK retail rental portfolio: Pacific Place Mall showed substantial improvement intenant sales, +2% yoy in 1H17 versus 1Q17/ 2016’s -2%/ -13%.
1H17 results preview: Reports August 17; GSe 24% yoy increase in underlyingprofit to HK$4.4bn amid HK development profit recognition.
We are Buy-rated. Swire Prop trades at 0.71X price-to-last-reported-BVPS vs. 5-yr.average/-1s.d. of 0.66X/0.58X, and at an 28% discount to FY18E NAV vs. 5-yr.avg./-1 s.d. of 28%/38%.