Citi has released a research report stating that positive retail factors have largely been priced in. HYSAN DEV (00014) faces challenges from the office segment, uncertainties surrounding the Lee Gardens Eight project, and limited balance sheet flexibility. As a result, the firm downgraded its rating from "Buy" to "Sell."

The bank expanded its discount to net asset value (NAV) from the previous 45% to 65%, slashing the price target by 35.4% from HK$24.3 to HK$15.69, corresponding to a target yield of 7%. HYSAN DEV's first-half retail revenue and core rental income were 15% and 22% higher, respectively, compared to the first half of 2023.

However, Citi believes the upside driven by asset enhancement initiatives has been realized from 2024 to 2025 through flagship expansion and tenant upgrades. The gap between a 17% increase in first-half tenant sales and a 1% rise in retail rental income also reflects diminishing profit upside. The report indicates that HYSAN DEV's capital recycling program is progressing well, but with a debt ratio of 49%, further deleveraging may be needed to maintain stable dividend per share.