Hang Lung Properties Earnings: Results in Line; Weaker China Economy Remains a Headwind

Hang Lung Properties’ 2023 results were within expectations. Despite a lack of property sales booking in 2023, revenue was flat against last year as mainland China's retail properties benefited from a post-COVID recovery. While we continue to expect Hang Lung Properties’ luxury malls to benefit from the secular growth in the middle and high-income mainland Chinese population, we lower our near-term rental and occupancy assumptions to reflect a weaker economic outlook in mainland China. In our view, luxury spending from the ultra-high-net-worth segment will remain resilient through economic cycles, but we expect a pullback in luxury spending from middle-income shoppers in the near term, given the challenging economic environment.