Daiwa Research raised its target price for Prosperity REIT (00808) to HK$3.72 from HK$3.42, but downgraded its rating to "outperform" from "buy".
The research house said Prosperity REIT's distributable income for 1H rose by 5.3% YoY to HK$131m. Its rental reversion remains in positive territory, which should bode well for the REIT's DPU growth prospects in the years ahead.
Daiwa expects its DPU growth to be sustainable but at a slower pace than in recent years. Overall, it cut its 2016-17 DPU forecasts by 3.2%-7.1% to reflect the slower pace of rental growth for the REIT's properties beyond Prosperity Place.
That said, it thinks the company has established that it has the credentials to upgrade its properties and that it should be able to maintain the growth in the achieved rent for Prosperity Place.
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