Company Reports

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company did not make any land acquisitions in Hong Kong for around 20 years, until late 2020.

Hang Lung Properties' first-half 2026 revenue grew 23% year on year, driven by strong property sales and rising retail rental income. However, operating profit was flat due to weak margins on property sales. The interim dividend for 2026 was unchanged at HKD 0.12 per share.

Hang Lung Properties announced the opening of its Hangzhou Westlake 66 project in April, with a floor area of 105,900 square meters and over 90% occupancy for the retail section. An additional 42,000-square-meter retail space leased from Baida Group is to commence operations in 2028.

We transfer coverage of Hang Lung Properties. The firm delivered an 11% decline in revenue and a 3% increase in underlying profit in 2025, as weak property sales were offset by resilient earnings from retail properties. HLP's final dividend for 2025 was maintained at HKD 0.40 per share.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company did not made any land acquisitions in Hong Kong for around 20 years, until late 2020.

We attended Hang Lung Properties' roadshow in Shanghai and Wuxi. The firm posted a 10% year-on-year retail sales growth in mainland China in the third quarter of 2025, and a 15% increase during Oct. 1-4, driven by rising footfall and strong sales in luxury and jewelry categories.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

Hang Lung Properties reported a 9% year-on-year decline in underlying profit, affected by a soft retail environment and an oversupplied office market in mainland China and Hong Kong. Property sales bookings also fell year on year. Interim dividend was flat year on year at HKD 0.12 per share.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

Luxury retailers are continuing to streamline their retail footprint in mainland China amid subdued consumer sentiment and increased spending abroad.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

Trends within no-moat-rated Hang Lung Properties’ results were in line with our expectations. Underlying net profit declined by 25% year on year as the company’s malls were negatively affected by China’s weak economy and the consumption downgrade trend. Consequently, the 2024 dividend per share was cut by 33% to HKD 0.52. We expect weaker tenant sales to continue weighing on turnover rents, while higher marketing costs will be incurred to attract foot traffic as competition from new supply intensifies. These will put pressure on the gross margin. We have also adjusted the opening timing of Westlake 66 in Hangzhou, based on the latest progress. We assume higher interest expenses as we expect increased debt levels given higher capital expenditure. Overall, we cut our 2025-27 adjusted net income forecasts by 8%-12% and lower our fair value estimate to HKD 9 per share from HKD 10.

We maintain our HKD 10 fair value estimate for Hang Lung Properties after attending the company's reverse road show, which contained few surprises. Management acknowledged that the operating environment remains challenging, with cumulative nine-month 2024 tenant sales for its China retail properties slipping 15% year on year compared with 13% in the first half of 2024.

We cut our fair value estimate for no-moat Hang Lung Properties by 26% to HKD 10 after its disappointing first-half results, which saw a 22% year-on-year drop in underlying net profit and a 33% fall in interim dividend. Property leasing revenue dropped by 7% due to weakness across the Mainland China and Hong Kong portfolio and was further dampened by a weak Chinese yuan. We have adjusted our forecasts to reflect weaker leasing demand and turnover rents, particularly in the China luxury retail segment, and higher marketing costs at malls to attract foot traffic. We revised our property sales assumptions based on the latest contracted sales. We reduce our 2024-26 adjusted net income forecasts by 15%-19%. We expect rental weakness to continue into 2025 before average rents pick up from 2026. Despite cutting our 2024 dividend per share forecast to HKD 0.52 from HKD 0.78, this still implies an attractive 2024 dividend yield of 9.2%. We have cut our payout ratio assumption to 66% from 81%, which is lower than 2023's 85%.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

We lower our fair value estimate for no-moat Hang Lung Properties to HKD 13.50 from HKD 16.80 as we revisit our key assumptions. We cut our 2024-26 revenue forecasts as we now expect milder growth in mainland China's luxury consumption, slower property sales, lower average selling prices for Hong Kong and mainland China residential properties and serviced apartments, and a weaker development properties gross margin given the challenging market conditions. Consequently, we cut our 2024-26 earnings forecasts by 11%-21%. Despite the lower earnings forecasts, we maintain our 2024-26 dividend per share forecast of HKD 0.78, flat from 2023, as we believe the company would mitigate cash flow pressure through the scrip dividend arrangement instead of a dividend cut.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

Hang Lung Properties, or HLP, is a property developer that develops and holds a portfolio of investment properties for rental income in Mainland China and Hong Kong. Beginning in the late 1990s, the company pursued a strategy of pivoting from Hong Kong residential development to Chinese commercial properties. So thorough was the pivot that the company has not made any land acquisitions in Hong Kong for nearly 20 years, until late 2020.

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.