[ET Net News Agency, 29 July 2019] Goldman Sachs lowered its target price for Fortune
REIT (00778) to HK$10.2 from HK$10.5 and maintained its "neutral" rating.
The research house said 1H's slower pace of reversion at 7.8% (versus 2018's 12.7%) was
a reflection of softer market environment year-to-date, while the company sees outlook
remains uncertain at this point. Yet, management stated their malls should see largely
resilient performance due to their non-discretionary local spending exposure.
Kingswood is expected to be completed in by September 2019 with a 10% ROI, while the
uptick in occupancy should see the full period impact in 2H. However, at this stage, there
is no clear timeline for AEIs of the East block of Fortune Kingswood.
Looking ahead, Goldman modeled look for a mild growth in DPU of 0.3% in 2019, implying
some uptick in its operations' growth momentum in 2H amid ramp-up of Fortune Kingswood
post-AEI (Asset Enhancement Initiatives), while finance cost to stay largely stable hoh.
Goldman lowered its FY2019-21 EPS by up to 3% on this set of results. (KL)