Morningside Retains SWIRE PACIFIC A Fair Value Estimate at HK$86, Notes Dividend Exceeds Expectations

Stock News
03/17

Morningside has released a research report maintaining its fair value estimate of HK$86 for SWIRE PACIFIC A, which carries a narrow economic moat rating. The forecast remains largely unchanged, with the view that the stock is reasonably valued. Morningside anticipates a compound annual growth rate of 12.6% in operating profit over the next three years, supported by a lower base in 2025 and a recovery in the property segment by 2027-2028. Cathay Pacific Airways is expected to contribute to robust growth in 2025, although its influence is projected to diminish thereafter. Rising aviation fuel costs present a near-term risk. As expected, weak rental conditions in the Hong Kong office market have negatively impacted property earnings for 2025. However, the firm believes that projects under the HK$100 billion investment plan will support mid-term profit growth, including the launch of new investment properties in mainland China and the sale of residential units. SWIRE PACIFIC A reported a 5% increase in recurring underlying profit for 2025, primarily driven by a 19% rise in the aviation business, partially offset by a decline in the property segment. Dividends grew by 13% to HK$3.8 per share. The dividend exceeded expectations, largely due to improved capital recycling in the property business. Management reaffirmed its progressive dividend policy and ongoing commitment to maintaining a core payout ratio of at least 50%. As a result, Morningside has raised its 2026 dividend forecast to HK$3.99 per share.

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