Unit Price for Link REIT Capped in a Rising Interest Rate Environment

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Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

Ahead of the interim results announcement for the fiscal year ending March 2017, Link REIT released some operating results. For the Hong Kong portfolio, retail sales were up 4.3% for April-June 2016. This compared favorably with the city’s retail sales, which decreased by 6.2% year on year. Overall results were slightly better than our projection.We expect growth of the company’s core retail portfolio in Hong Kong to slow, given a still-tough environment, while the development of new asset types in China and Hong Kong alters the company’s risk profile. At the current share price of HKD 56, the stock is trading at 1 time the book value and a distribution per unit yield of 3.8%, expensive relative to the respective historical ranges.Analyst: Phillip Zhong

Ahead of the interim results announcement for the fiscal year ending March 2017, Link REIT released some operating results. For the Hong Kong portfolio, retail sales were up 4.3% for April-June 2016. This compared favorably with the city’s retail sales, which decreased by 6.2% year on year. Overall results were slightly better than our projection.We expect growth of the company’s core retail portfolio in Hong Kong to slow, given a still-tough environment, while the development of new asset types in China and Hong Kong alters the company’s risk profile. At the current share price of HKD 56, the stock is trading at 1 time the book value and a distribution per unit yield of 3.8%, expensive relative to the respective historical ranges.Analyst: Phillip Zhong

Retail Sales in Hong Kong Better Than Expected, but Growth Slows