CICC has released a research report stating it has broadly maintained its 2026 earnings forecast for SWIREPROPERTIES (01972), expecting a 28% year-on-year increase. Based on more aggressive residential property settlement and property investment rental forecasts, the firm has raised its 2027 attributable recurring underlying profit forecast by 9% to HK$7.82 billion, representing a 2% year-on-year decline. CICC keeps its "outperform industry" rating and HK$28.5 target price unchanged.

The company's first-half results slightly exceeded CICC's expectations. Revenue reached HK$9.41 billion, up 8% year-on-year, while recurring underlying profit hit HK$4.66 billion, a 36% year-on-year increase, outperforming the firm's earlier forecast by 7%, primarily due to slightly higher-than-expected settlement profits from property sales. The interim dividend per share was HK$0.37, a 6% year-on-year increase, which was broadly in line with expectations.

CICC noted that office rental income in Hong Kong was broadly flat year-on-year. While contract rent adjustments remain in negative double-digit territory, current market rents have shown signs of stabilization or even a slight uptick. Operating profit from property investment operations rose 13% year-on-year, but attributable recurring underlying profit from property investments fell 8% to HK$3.45 billion, mainly due to changes in the interest capitalization rate and deferred tax items.

The report highlights that the company is entering a development settlement cycle from 2026 to 2027. In the first half, the property sales division contributed HK$1.2 billion in underlying profit, with the full-year contribution expected to be no less than HK$2 billion. Benefiting from ongoing capital recovery, the company has maintained a low net gearing ratio of 15%. Potential properties for sale in Hong Kong and overseas are also expected to support future cash inflows.