Morgan Stanley says Link REIT (00823.HK) saw overall tenant sales down 1% YoY in
FY2027 Q1 (ending June 2026). Food & beverage sales rose 1.5% YoY while
supermarkets fell 1.9% YoY. Management expects Hong Kong renewal rents in H1
FY2027 (ending Sept 2026) to be down 5% YoY, an improvement from FY2026
full-year -8.2% and H1 FY2026 -6.4%, but it maintains a full-year renewal-rent
guide of -8%, implying H2 will be weaker than H1. A 200 mln annual cost-cutting
program is progressing well; combined with buybacks, Morgan Stanley sees FY2027
distribution per unit roughly flat YoY. Blended financing cost remains 3.4%. The
Anderson Road project is 80% pre-leased and due to open in October, which Morgan
Stanley expects to support FY2028 rental income. Morgan Stanley rates the stock
overweight with a HK$44 target price.
