UBS has issued a research report adjusting its price target for SINO LAND (00083), lowering it by 6% from HK$14.3 to HK$13.4.

This revision primarily reflects the company's updated accounting schedule for property development profits, while the firm's Buy rating remains unchanged.

The bank has raised its profit forecasts for fiscal years 2027 and 2028 by 6% to 8%, citing a more robust outlook for interest income.

For the fiscal year ending June 2026, UBS anticipates SINO LAND's profit to reach HK$4.6 billion, representing a 10% year-on-year decline.

This expected decrease is attributed to lower interest income and a reduced profit contribution from the St. George's Mansions project, leading to a lower recognition of property development profits.

However, the overall development profit margin is projected to remain stable at approximately 7%, compared to 7.2% in the first half of fiscal 2026.

The report forecasts a slight increase in rental income for the second half of fiscal 2026, driven primarily by improved office occupancy rates, despite continued negative high-single-digit rental reversions.

In the retail segment, rental reversions in Hong Kong have remained in the low to mid-single-digit negative range year-to-date.

UBS expects rental adjustments to continue improving and potentially turn positive by 2027.

Furthermore, the hotel business is anticipated to show ongoing improvement in the latter half of fiscal 2026, supported by margin expansion from rising room rates and improved occupancy in Hong Kong.

The bank predicts that SINO LAND will maintain its final dividend at HK$0.43 per share, bringing the full-year dividend to HK$0.58 per share, implying a dividend yield of 5.7%.

UBS also notes that it does not expect significant corporate actions, such as share buybacks, to be announced with the fiscal 2026 results.

On a positive note, given the company's strong net cash position, the firm believes SINO LAND is well-positioned to benefit from a rising interest rate environment.

The effective cash yield is also projected to increase from approximately 3.1%-3.2% in fiscal 2026 to around 4% in fiscal 2027.