UBS: Hong Kong retail sales in March beat expectations, bullish on WHARF REIC (01997), Henderson Land Development Co. Ltd. (00014) and LINK REIT (00823)

UBS released a research report stating that the target price for Henderson Land Development (00014) is 22.4 Hong Kong dollars, with an investment rating of "Neutral"; the target price for WHARF REIC (01997) is 23 Hong Kong dollars, with an investment rating of "Neutral"; and the target price for LINK REIT (00823) is 42 Hong Kong dollars, with an investment rating of "Buy." UBS stated that the government's Census and Statistics Department announced yesterday that the provisional estimate of total retail sales value in March was 33.9 billion Hong Kong dollars, a year-on-year increase of 12.8%, marking the 11th consecutive month of growth, which exceeded market expectations of 9.4% growth. The revised estimate of total retail sales value for the first two months of the year showed an 11.8% increase year-on-year. The provisional estimate of total retail sales value for the first quarter increased by 12.1% year-on-year, exceeding the bank's previous expectation of high single-digit growth. The better-than-expected growth was mainly attributed to: i) the strong gold price; ii) sustained strong demand for new iPhone models; and iii) early purchases of electric vehicles before the expiry of the first registration tax exemption. Excluding exempted consumer electronics (30% year-on-year increase) and one-off car and component sales (81% year-on-year increase), retail sales in March are expected to increase by 8% annually, slightly slower than the 9% in the first two months of 2026. UBS believes that Hong Kong's retail sales performance in March exceeded expectations and has positive implications for retail property developers that focus on non-essential consumer goods, such as Nine Dragons and Henderson Land. However, the long-term high oil prices remain a major downside risk, as a decrease in mainland tourist arrivals could indicate weaker per capita consumption. On the other hand, a decrease in outbound travel by Hong Kong residents could benefit community shopping mall operators, as local consumption tends to benefit from it. In this context, UBS believes that Link REIT is relatively well-positioned to benefit.