Hong Kong 29 May 2012 Initiating Coverage BUY Swire Properties A Proxy Hong Kong Landlord Share price: HKD21.25 Target price: HKD26.02 Archetypal HK landlord with strong brand equity. Swire Properties (SP) is a leading developer, owner and operator of mixed-use commercial properties in HK and China with a well-established record Ivan CHEUNG, CFA of creating long-term value through designing, developing and
[email protected] managing transformational mixed-use projects in urban areas. Going by (852) 2268 0634 its portfolio of mixed-use investment properties, we expect this major HK landlord to be able to replicate its success in core and affluent cities across China. With a target net gearing of 20% for FY12F, SP guided a payout of 50% of its underlying profit over the economic cycle. Stock Information Three key growth drivers in the medium term. In our view, SP’s Description: Swire Properties, a leading HK landlord, has a portfolio of 25.1m sq ft of investment and development medium-term growth initiatives would centre on (1) increasing GFA properties in HK, China, USA and the UK. through expansion and redevelopment in HK, (2) gaining critical mass via its vast investment portfolio in China, and (3) launching Ticker: 1972 HK Shares Issued (m): 5,850 development projects in a timely manner in HK, China and the US. Market Cap (USDm): 15,999 Short-term catalysts include stronger-than-expected sales of its HK 3-mth Avg Daily Turnover (USDm): 8.5 luxury residential properties and stronger-than-expected rental HSI: 18,801 Free Float (%): 18.0 reversions in its office and retail investment portfolios.