Simons Trading Research
Fortune REIT - FY18 Interim Results Preview
- 1H18 distribution income expected to grow by a modest 3% on higher rental income.
- Reversionary growth should stay healthy.
- BUY With HK$10.50 Target Price.
What ’s New
Fortune REIT will announce its interim results for FY18 on 27 July. We forecast its distribution income to rise 3% to HK$501m, led by a modest growth in rental income.
We forecast total revenue to grow 3% to HK$1.03bn, thanks to positive rental reversion. We expect its rental reversion to stay healthy at 10-15% on renewals in 1H18. Cost-to-income ratio is estimated to remain stable at 25- 26% (1H17: 25.3%). NPI should also grow 3%.
Fortune REIT has just commenced the asset enhancement works at West Block of Fortune Kingswood, which are carried in three phases with targeted completion in 2020.
Key things to watch for include asset enhancement progress update, outlook of retail reversionary growth, interest-rate hedging, and acquisition prospects, among others.
Source: DBS Research - 24 Jul 2018
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