Morgan Stanley: Raises Hang Lung PPT (00101) target price to HKD 10.5, Mainland retail business improves

Morgan Stanley released a research report stating that the target price of HANG LUNG PPT (00101) has been raised from 9 Hong Kong dollars to 10.5 Hong Kong dollars, due to improved fundamentals and a narrowed NAV discount (from 60% to 50%), maintaining a "buy" rating. The report pointed out that the group's mainland retail business is starting to improve, with tenant sales in Shanghai's Grand Gateway 66 and Plaza 66 increasing by 31% and 8% year-on-year in the third quarter, compared to a 10% increase and 8% decline in the first half of the year. During the National Day Golden Week, overall tenant sales in mainland shopping centers increased by 15% year-on-year in the first four days, with Heartland 66 in Wuhan and Grand Gateway 66 in Shanghai recording year-on-year growth rates of over 70% and 50% respectively. Due to the expected slow stabilization of EBIT profit margins from now until 2027, the bank has lowered its earnings forecasts for 2026 and 2027 to 0.62 Hong Kong dollars and 0.68 Hong Kong dollars (previously 0.65 Hong Kong dollars and 0.69 Hong Kong dollars). The bank mentioned that luxury goods group LVMH reflected an improvement in its mainland business in the third quarter, and the arrival of LAOPU GOLD (06181) at Plaza 66, as well as the opening of Hangzhou Plaza 66, are all key catalysts. Hangzhou Plaza 66 has already achieved 83% pre-leasing for retail space and 27% for office space, and is expected to make a significant contribution in 2027.