Goldman Sachs has released a research report adjusting its profit forecasts for Swire Pacific A (00019) for the current and next fiscal years, with revisions ranging from a decrease of 9% to an increase of 2%. The investment bank has raised its target price for the stock from HK$96.80 to HK$102.10 and maintains a "Buy" rating on both Swire Pacific A and Swire Properties (01972).
Swire Pacific recently announced its full-year results for the period ending December last year. A slightly positive surprise was the group's decision to increase its final dividend by 19% year-on-year to HK$2.50. Combined with the interim dividend, the total dividend for the 2025 fiscal year amounts to HK$3.80, representing a 13% increase compared to the previous year. Goldman Sachs suggested that this may be partly attributed to the conclusion of the company's HK$6 billion share buyback program in May 2025, with no subsequent program announced. When questioned about the possibility of another buyback initiative, management indicated that it remains a possibility, citing liquidity and public float as considerations.
During the results briefing, Swire Pacific's management expressed cautious optimism regarding its business outlook, expecting its three core divisions to perform well despite macroeconomic uncertainties. Swire Properties has five rental projects under construction in mainland China, scheduled to be progressively launched between the 2026 and 2028 fiscal years. Along with an accelerated sales strategy for its residential property portfolio, the company anticipates that contributions to the group's earnings will grow at a compound annual growth rate of 11% during this period.
In Hong Kong, encouraging signs of recovery have been observed in the residential and office markets since the second half of the 2025 fiscal year. Regarding the beverages division, management believes that fundamentals will improve, particularly in mainland China. However, Cathay Pacific's plans to utilize the new third runway at Hong Kong International Airport in the 2026 fiscal year to expand passenger and cargo capacity present a potential downside risk. Recent conflicts in the Middle East and a sharp rise in oil prices could also negatively impact profit growth.