Morningstar

Morningstar, Inc.

Equity Bottom-Up

Swire Pacific’s Corporate Day on its beverage division reflected on the progress made since it’s last corporate day two years ago. Operations in the U.S. and China were integrated in 2017 and the focus remains on product enhancement and expansion, improving its distribution channels with enlarged footprint and outlets, digitalisation of platforms with overlay in data analytics
Our fair value is increased to HKD 111 from HKD 102 as we factor in a more optimistic growth forecast for beverages…

Swire Pacific posted a good second-half result in line with our expectation. Overall, it was a solid year for the group, with Cathay Pacific and Haeco returning to profitability, adding to strong performance in properties and beverages. We increase our fair value estimate to HKD 102 per share from HKD 87 by factoring in the time value of money and the divestments at Swire Properties. Our thesis for the conglomerate is unchanged, and we expect improving returns in the medium term. While return on…

As Swire Pacific is a conglomerate, its earnings are dictated by the performance of its various divisions. While each division faces widely different competitive environments, 45%-50% of the group's earnings are resilient, as they come from businesses with recurring income. We identify these businesses as Swire Properties' flagship investment properties in Hong Kong; Haeco's aviation maintenance, repair, and overhaul, or MRO, business; and Swire Beverages' Coca-Cola bottling operation. Cathay…

The key highlight to Swire Pacific’s preclose meeting was that overall positive momentum from the first half of 2018 was sustained in the second half, albeit at a slower pace, and our thesis for the conglomerate is unchanged. We continue to see the group’s diversified businesses across multiple geographies as resilient in weathering economic downcycles. This is supported by management’s prudence with recurring income from Swire properties and the beverage division offsetting the more cyclical…

Swire Properties reported mixed and unexciting operating results for third-quarter 2018. In Hong Kong, the office portfolio at Pacific Place is largely unchanged from second quarter as there were few additional renewals during the quarter. Reversions for other office assets remained tepid at 6% to 7%. The aggregate occupancy rate retreated a bit to 99% at end of the quarter. The company announced it has signed leases for 100% of space at One Taikoo Place. The project will drive the company’s…

Hong Kong

Swire Pacific Limited, through its subsidiaries, operates in the real estate, aviation, beverage, industrial, marine services, trading, and industrial businesses.

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