早上快照

Link REITs (Link) announced FY21/22 results inline with expectations. Rev grew 8% YoY to HK$116bn, NPAV grew 1.1% YoY to HK$77.1bn, DPU grew 8.2% YoY to HK$3.0567, and NDR was down from 24.6% (Dec 21) to 22% (Mar 22) with average borrowing cost of ~2.3%. Management plans to buy back shares worth HK$1.5bn (vs HK$826mn last year). Despite Covid impact, Link showed resilient operating metrics which we attribute to (1) diversified investment portfolio (geographic and asset type), (2) >90% high occupancy, and (3) focus on mass retail (less impacted by Covid). Our view – we believe HK business will further recover as (1) social distancing relaxes, (2) retail mall footfall and sales bottomed (up ~90% vs Covid levels), and (3) despite Covid challenges, occupancy rate hit a new high in FY21/22. Adding to the diversification and expansion, we are positive on Link’s outlook. Key strengths: Diversified investment portfolio helps mitigate downside risk. Management’s target is to reduce HK contribution to ~60-70% (current ~74.8%) by 2025, with overseas contribution at 10-15% (current ~7.8%) and China contribution at 20-25% (current ~17.4%). We believe a balanced portfolio helps achieve sustainable growth. In fact, geographic diversification helps maintain growth. China retail property rent income grew 24.8% YoY to HK$10.61bn (rental income HK retail 1.04% YoY). Moreover, Mgmt believes recent acquisition of Australian retail and office portfolio will contribute in FY23F. Meanwhile, the company is also looking for projects in Japan and Singapore. Strong performance from car park business. HK car park and related business rent income grew 13.1% YoY to HK$21.3bn, while monthly per-carpark rent also grew 10.4% YoY. With 2 car park/services centre acquisitions completed in Dec 2021, we believe car park business