Bocom International has released a research note stating that LINK REIT (SEHK: 00823) reported a 2% year-on-year decline in revenue and a 3.7% drop in net property income for the 2026 fiscal year, reaching HK$13.938 billion and HK$10.23 billion respectively. This was primarily impacted by a negative rental reversion rate of 8.2% for its Hong Kong retail portfolio during the period. The firm maintains its "Buy" rating on the stock, with an unchanged target price of HK$45.7.

For the full year, the distribution per unit was HK$253.61 cents, approximately 0.3% higher than the firm's expectations, while net asset value per unit declined by 8.8% year-on-year to HK$57.75. The report cites management's comments indicating that retail conditions have improved in recent quarters, with rental declines stabilizing, although the rental reversion rate for the 2027 fiscal year is anticipated to be similar to that of the 2026 fiscal year.

The portfolio occupancy rate remained at a high level of 97.8%, and the year-on-year decline in tenant sales narrowed to negative 1%, with the food and beverage segment recording positive growth. The company expects to reduce annualized expenses by over HK$200 million through organizational streamlining and plans to intensify efforts to divest approximately HK$10 to HK$20 billion in non-core assets to recycle capital for unit repurchases.

Bocom International forecasts that LINK REIT's overall distributable amount for the 2027 fiscal year can be largely maintained at the 2026 fiscal year level. The firm views the unit buyback program and the potential inclusion of the REIT in the Southbound Stock Connect scheme as catalysts for the company's medium to long-term share price performance.