Morningstar

Link Real Estate Investment Trust 00823

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Stock XHKG Rating as of
HK$39.45 +0.30 (0.77%)
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As of Delayed Price Closed

Company Report

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Link REIT: Resilient Through Current Downturn; We Continue to See Long-Term Value

Xinfu Lee, Kathy Chan

We maintain our fair value estimate of HKD 45 per unit for no-moat Link REIT after its pre-results blackout meeting as our long-term thesis is unchanged. We think the spending leakage due to the northbound traveling trend in Hong Kong has already been priced in, and we believe that Link’s focus on nondiscretionary trades leaves its portfolio resilient through economic cycles. This underpins steady rental and distribution growth over the long term. Despite the recent unit price rally, we continue to see Link REIT as undervalued, with a 13% discount to our valuation. Our fiscal 2025 (ending March) distribution per unit forecast of HKD 2.51 also implies an attractive 6.4% distribution yield.

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Price vs Fair Value

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00823 is trading at a 322% premium.
Price
HK$39.45
Fair Value
HK$97.00
Uncertainty
Medium
1-Star Price
HK$67.41
5-Star Price
HK$66.90
Economic Moat
Yltm
Capital Allocation
Trjphbdpwg

Bulls Say, Bears Say

Bulls

Capital recycling is expected to enable Link REIT to consolidate around its top assets and dominate key districts. The portfolio effect enables the company to initiate another round of AEIs and reposition its assets, in our view.

Bears

The company exhausted its primary growth driver of higher rents and lower vacancies for its Hong Kong portfolio and is seeking riskier expansion internationally.

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Trading Information

Previous Close Price
HK$39.15
Day Range
HK$38.45–40.05
52-Week Range
HK$29.75–44.20
Bid/Ask
HK$39.45 / HK$39.50
Market Cap
HK$101.65 Bil
Volume/Avg
14.3 Mil / 10.3 Mil

Key Statistics

Price/Earnings (Normalized)
21.98
Price/Sales
7.44
Dividend Yield (Trailing)
6.66%
Dividend Yield (Forward)
6.72%
Total Yield
7.58%

Company Profile

Link REIT is Asia's largest REIT, listed in 2005 to privatize retail assets held by the Hong Kong Housing Authority. It owns 154 properties and about 60,000 car park spaces. It expanded its investment mandate in 2014 to allow overseas acquisitions and has since acquired retail, office, and logistics properties in China, as well as an office development project in Hong Kong. More recently, Link expanded its footprint to Sydney, Melbourne, London, and Singapore.
Sector
Real Estate
Industry
REIT - Retail
Stock Style Box
Large Value
Total Number of Employees
973
Website
https://www.linkreit.com

Competitors

Valuation

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Metric
00823
01972
01997
Price/Earnings (Normalized)
 21.9813.4213.19
Price/Book Value
 0.560.350.46
Price/Sales
 7.446.766.45
Price/Cash Flow
 17.9821.9412.82
Price/Earnings
00823
01972
01997

Financial Strength

Metric
00823
01972
01997
Quick Ratio
 0.730.450.11
Current Ratio
 0.760.940.17
Interest Coverage
 0.345.652.27
Quick Ratio
00823
01972
01997

Profitability

Metric
00823
01972
01997
Return on Assets (Normalized)
 −0.82%1.98%2.49%
Return on Equity (Normalized)
 −1.16%2.45%3.20%
Return on Invested Capital (Normalized)
 −0.30%2.29%3.21%
Return on Assets
00823
01972
01997

REIT - Retail Industry Comparables

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1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Simon Property Group Inc
SPG
JndsptmtfCkxz$54.9 Bil
 Realty Income Corp
O
GnfggnwcdbZcbbm$54.3 Bil
 Kimco Realty Corp
KIM
DgcgpxbzBsj$15.4 Bil
 Link Real Estate Investment Trust
LKREF
—Cfsfm$13.0 Bil
 Scentre Group
STGPF
—Vrk$12.9 Bil
 Regency Centers Corp
REG
KpkqxsvvJlyc$12.9 Bil
 CapitaLand Integrated Commercial Trust
CPAMF
—Phlbbyb$12.0 Bil
 Unibail-Rodamco-Westfield ADR
UNIRF
—Plgk$11.6 Bil
 Federal Realty Investment Trust
FRT
LrjwtsgwkpGpkbc$9.3 Bil
 Macerich Co
MAC
NywlmkjjsTpty$3.8 Bil

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