Link REIT: South China Retail Malls Revitalized by Asset Enhancements; Competition Remains Intense

We maintain our fair value estimate of HKD 59 for Link REIT after a tour of the trust’s retail assets in Guangzhou, Shenzhen, and Hong Kong. In our view, Link REIT’s malls are professionally managed with a tenant mix that is well curated and carefully positioned across the malls. We think this is an important differentiating factor in mainland China where there are many shopping malls competing for shoppers. Within Guangzhou and Shenzhen, we visited Link CentralWalk, Link Plaza Guangzhou, and Link Plaza Tianhe. Of these three malls, we like Link Plaza Guangzhou the most as it is well connected by two subway lines and serves local residents. There is also potential to capture tourist shoppers as the mall is near popular tourist destinations YongQing Fang and Shamian Island. According to management, the mall’s current footfall has already surpassed its pre-COVID-19 level and we expect this to grow further as new residential developments in the area are completed, coupled with a recovery in tourism.