[ET Net News Agency, 20 January 2020] DBS Group Research lowered its target price for
Wharf REIC (01997) to HK$44.1 from HK$45.7 and maintained its "hold" rating.
The research house said retail sales at Harbour City and Times Square fell sharply by
35% and 30% respectively in 3Q 2019 and underperformed the overall market. Business
conditions remained very tough in October and November. Against this backdrop, turnover
rents, which made up 14% of the company's retail income (or 18% for Harbour City) in 1H
2019, should see a substantial decline in 2H 2019. This should in turn drag retail income.
DBS estimated occupancy cost ratio for both malls edged up further to >24% in 2H 2019.
After posting single-digit rental growth upon renewal in FY2019, reversionary growth at
its office assets at Harbour City/Times Square should moderate. (KL)