CICC has reiterated its earnings forecast for SWIREPROPERTIES (01972), maintaining an "Outperform" rating and a target price of HK$23.8. This reflects a 30% discount to the target NAV, a 2025 dividend yield of 4.8%, and a 10% upside potential. The stock currently trades at a 36% NAV discount, with projected dividend yields of 5.3% and 5.5% for 2025 and 2026, respectively. The company follows a dividend policy targeting single-digit annual growth in DPS, and CICC advises monitoring progress in property sales proceeds and asset disposal cash recoveries to support dividend payouts.

Key highlights from CICC include: - **Strong Performance in Mainland Luxury Retail**: High-end shopping centers in mainland China, such as Shanghai Taikoo Hui, Beijing Sanlitun Taikoo Li, and Shanghai Qiantan Taikoo Li, reported robust year-on-year retail sales growth of 42%, 8%, and 6%, respectively, in the first three quarters. This reflects SWIREPROPERTIES' position as a beneficiary of consolidation in the mainland luxury market, with expansion and renovation efforts by luxury brands driving results. Other projects also recorded positive retail sales growth during the same period. - **New Projects Underway**: Key retail developments, including Guangzhou Julong Bay Taikoo Li (Phase 1 focused on F&B and leisure, set to open by end-2025), Sanya Taikoo Li (phased completion from 2026), and Xi'an Taikoo Li (phased completion from 2027), are progressing as planned. - **Resilient Hong Kong Office Leasing**: Despite high vacancy rates in Hong Kong's office market due to increased supply, SWIREPROPERTIES' office portfolio maintained a strong occupancy rate of 92% in Q3 2025 (up 1ppt quarter-on-quarter). This resilience is attributed to expansion demand from key tenants like FWD Hong Kong, which leased 330,000 sq ft in Taikoo Place for its headquarters under a 10-year lease. Office rents saw a 13-15% decline in renewal adjustments for Q1-Q3 2025, as the company prioritizes occupancy stability and long-term tenant relationships. - **Recovery in Hong Kong Retail**: Retail sales at luxury mall Pacific Place and mass-market mall Cityplaza in Hong Kong grew 3.6% and 3.0% year-on-year, respectively, in Q1-Q3 2025 (compared to +1.4% and +2.0% in H1 2025), outperforming Hong Kong's overall retail sales decline of 1.0%. The recovery is driven by rebounding luxury sales and targeted marketing initiatives to attract younger, diverse customer segments. With Hong Kong retail sales improving since May, CICC sees positive factors for the company's retail rental outlook.

**Risks**: Slower-than-expected recovery in mainland luxury consumption; additional pressure on Hong Kong office rents.