Swire Properties: We Trim Our Fair Value to HKD 22; Dividend Yield of 7.3% Remains Attractive

Narrow-moat Swire Properties’ guidance for 2024 recurring underlying profit attributable to shareholders of HKD 6.5 billion is in line with our forecast, but the company expects to record a loss attributable to shareholders of HKD 0.8 billion due to a larger fair value loss for investment properties compared with last year. We think a weaker property valuation is no surprise as Hong Kong office rents remain weak, while the elevated interest rates could imply capitalization-rate expansion pressure. That said, the noncash fair value losses do not affect our discounted cash-flow-derived valuation.