Champion REIT: Lowering Fair Value by 9% as Northbound Traveling Puts Pressure on Langham Place Mall

We lower our fair value estimate for no-moat Champion REIT by 9% to HKD 2.32 from HKD 2.54 as we factor in weaker rental income from Langham Place mall due to the impact of the northbound traveling trend in Hong Kong. We also trimmed our net property income margin assumptions as we anticipate the trust will have to bear certain operating expenses of vacant office units at Three Garden Road and Langham Place office while keeping promotion expenses at a higher level to attract shoppers to Langham Place mall. Overall, we reduced our 2024-26 earnings and distribution per unit forecasts by 5%-8%.