Lyon released a research report saying that Hysan Development (00014)'s profit forecast for this year and next two years was lowered by 18.1% and 23.1%, reflecting a reduction in sales and profitability assumptions for its joint venture housing project. The target price was lowered from HK$20.3 to HK$14.2, and the rating was downgraded from “buy” to “outperform the market.”
The bank indicated that due to the weak office market and the refurbishment of the retail property portfolio, Hysan's recurring basic profit fell 11.2% year over year. I was also disappointed with Hysan's 25% cut in dividends, but understood management's concerns about the business challenges. Furthermore, it was mentioned that management intends to maintain a stable and progressive dividend payment policy after cutting dividends. The bank believes that the current 60.5% dividend ratio is similar to before the pandemic, and believes it is more sustainable.