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Investing.com - Morgan Stanley upgraded Hang Lung Properties (HK:0101) (OTC:HLPPY), a $5.4 billion market cap real estate company, from Equalweight to Overweight and raised its price target to HK$9.00 from HK$6.50. The stock has demonstrated strong momentum, delivering a 55% return over the past year.
The upgrade reflects Morgan Stanley’s positive outlook on improving luxury sales in Shanghai malls, particularly those operated by Hong Kong developers, supported by local brands, inbound travelers, and simplified tax-free shopping processes.
Morgan Stanley projects China’s inbound travel retail sales to quadruple over the next decade, with Hang Lung’s new Hangzhou project, Westlake 66, identified as a potential growth driver that requires minimal capital expenditure while adding 452,000 square feet of gross floor area.
The firm also noted potential upside from the possible sale of Hang Lung’s luxury investment property in Hong Kong, the Summit, and residential units, which could further boost the share price if realized.
Morgan Stanley highlighted Hang Lung Properties’ attractive valuation at 0.3 times price-to-book ratio and a 6.5% dividend yield, which exceeds that of industry peers despite a dividend reset in 2024. According to InvestingPro, the company has maintained dividend payments for 34 consecutive years, with 8 additional ProTips available to subscribers.
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