Swire Properties Ltd (01972) shares surged more than 4% in morning trading, with the stock last up 4.18% at HK$23.44, recording turnover of approximately HK$46.88 million.

Citi recently issued a research report forecasting that Hong Kong retail will experience strong growth in the first half of 2026 before leading in the second half, with the bank predicting flat retail property rents for 2026. With a more optimistic retail outlook than initially expected, the strength in residential and Central office markets aligns with market consensus.

On the earnings front, China International Capital Corporation (CICC) expects that Swire Properties shareholders' attributable recurring underlying profit for the first half of 2026 will increase by 28% year-on-year to HK$4.4 billion, primarily driven by profit contributions from the settlement of development projects such as 6 Deep Water Bay Road. The firm also anticipates property investment income to show a low-to-mid single-digit percentage increase year-on-year, with the dividend policy remaining unchanged.

CICC further noted that from this year onward, the profit contribution from settlement of Swire Properties' development sales projects is expected to see a significant uplift. Within the year, settlements from projects in Hong Kong and Shanghai are projected to contribute approximately HK$2 billion in profit, driving growth in recurring underlying profit. In terms of settlement pace, the bank expects the first half to contribute slightly more than the second half.

The brokerage believes that, considering cash inflows from property sales, the company's net gearing ratio is likely to remain relatively stable despite ongoing capital expenditure for project construction. Furthermore, ample cash flow and profits from commercial and residential operations are expected to support the company's dividend policy, which aims for "a mid-single-digit percentage increase in dividends per share annually."